Professor Seo Jun-sik recommends long-term investment in Samsung Electronics amidst stock market volatility and points out problems with the 'stock price suppression prevention act'.
He explained that along with the issue of leverage ETFs, speculative funds flowing into the semiconductor industry exacerbated this volatility. He views the current volatility as part of a market bubble-bursting process and expects this process to continue for some time.
He opined that the stock market can develop in a balanced way when long-term investment funds account for 80% and price-speculation investments account for 20%. However, he diagnosed that in the past market, the amount of foam reached 40-50%, which was excessive, and as a result, the foam is now receding. He predicted that it would take more time for this bubble-bursting process to complete.
Comparing it to the past when the 8,500 level was considered expensive, he diagnosed that the current situation is not so bad. He added advice that investors would be able to sufficiently endure at the current level.
Professor Seo Jun-sik advised individual investors that there is no need to over-sell in the current situation and that they should approach it from a long-term perspective. He specifically emphasized that for Samsung Electronics, the early 200,000 won range is suitable for long-term investment. He added that long-term investment is essential to enjoy Samsung Electronics' performance, and that investing in preferred stocks rather than common stocks, which have high volatility, has a better chance of success for individual investors.
He emphasized that investing in preferred stocks would also allow for more psychologically stable investment.
You get a lot of dividends, and preferred stocks generally have less volatility, so you'll have more peace of mind to endure. Go that way.
Professor Seo Jun-sik evaluated that when Samsung Electronics' stock price was in the 300,000 won range, it was expensive due to a bubble. However, now that the stock price has undergone adjustment and fallen to the 200,000 to 250,000 won range, he diagnosed that this range is an appropriate level that has been re-established. He advised long-term investors who share in Samsung Electronics' performance to continue to endure at the current stock price level.
Professor Seo Jun-sik criticized that the complementary measures for leverage ETFs are already too late. He likened it to 'spilled milk,' pointing out that the current increase in margin requirements is merely a 'blindfold and an eye-covering' temporary measure. He expressed the opinion that it is like spilling water and then trying to scoop it up with soil, indicating a lack of substantial countermeasures.
Professor Seo Jun-sik emphasized that continuous 'bottom-building' policies are needed for the soundness of the capital market, including solving the leverage ETF problem. He argued that government policy makers should strengthen the 'container' to prevent funds from flowing out. He assessed that the Korean stock market is still attractive, especially at the current index level. Therefore, he expressed the view that rather than focusing only on specific companies like Samsung Electronics or Hynix, incentive policies are needed to strengthen and stabilize the entire capital market.
Professor Seo Jun-sik expressed 90% approval for the ISA (Individual Savings Account) system among the tax reform proposals announced yesterday. He evaluated that ISA, while not an account for directly buying Samsung Electronics and Hynix, is a good opportunity to create a fund 'container' that can support the stock prices of these companies to some extent. He projected that if it's possible to invest up to 200 million won per person and at least 1 million accounts are created, 200 trillion won could flow in. He particularly emphasized the importance of 'Growth ISA,' which can only invest in the domestic market and provides unlimited tax exemption on dividend income, advising that it is a system that must be utilized.
He emphasized that this system is a very important policy to attract long-term investors.
Professor Seo Jun-sik suggested that the ISA system's limit should be raised further and it should be converted into a lifetime account. He argued that this would allow long-term investment funds to stably flow into the stock market, and market stability would also increase. Specifically, he added that the limit should be increased to around 300 to 500 million won, and the account should be maintained for life.
He also predicted that it would significantly contribute to increasing investors' income.
However, upon seeing the proposal announced yesterday, he strongly criticized it, stating that investors are calling it the 'stock price suppression encouragement act' instead of the 'stock price suppression prevention act.' He pointed out that the bill lacks economic viability and is logically incomprehensible, representing the dissatisfaction of investors.
Professor Seo Jun-sik pointed out that the current 'stock price suppression prevention act' works by intentionally lowering stock prices and then imposing fines later. He explained that, for example, if the stock price of a 100 billion won company is suppressed to 10 billion won, it effectively provides a guideline to calculate it at 13 billion won later. He criticized that this method condones stock manipulation and allows for benefits in inheritance and gift taxes through low stock prices.
Professor Seo Jun-sik asserted that the current 'stock price suppression prevention act' will never pass. He expected that this bill would be merged with Representative Lee So-young's proposal and would be revised in a better direction, similar to the Presidential Office's proposal or Representative Lee So-young's proposal. This forecast reflects the recognition that the problems with the current bill are so severe that it is difficult for it to pass as is.
Professor Seo Jun-sik elaborated on the problems of major shareholders using corporate entities for stock manipulation to evade inheritance taxes. He pointed out the unreasonable situation where if a 100 billion won building is inherited or gifted to a child, taxes are levied on 200 billion won, but if a corporation is listed and a 200 billion won building is purchased by the corporation, and then the stock price is suppressed to 10 billion won, only 10 billion won is subject to inheritance or gift tax. He added that this method goes against tax justice, and many major shareholders are utilizing it.
He emphasized that this is an unfair act, and the damage to small shareholders is severe.
Professor Seo Jun-sik explained that Representative Lee So-young's bill proposes that if there is a 200 billion won building, at least 80% or around 160 billion won should be valued for inheritance or gifting. He mentioned that this is expected to encourage shareholder returns without suppressing stock prices. In contrast, he pointed out that the bill from the Ministry of Economy and Finance values a company whose stock price has been suppressed to 10 billion won at 10 billion won if it is not among the bottom 10% of KOSDAQ companies, and if it is among the bottom 10%, it is valued at 13 billion won with a 30% premium. He added that this Ministry of Economy and Finance bill is called an 'encouragement act' among experts and is criticized for effectively encouraging stock price suppression.
Answers come from the transcript, with the exact spot cited.
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