South Korean President Lee Jae-myung’s recent remarks in support of dividend investing have gone far beyond campaign rhetoric. During his visit to the Market Surveillance Committee at the Korea Exchange, most media and analysts focused on his strong stance against stock manipulation.
But for me, one statement stood out even more:
"We will make stocks an investment asset on par with real estate."
This wasn’t just another campaign soundbite. It felt like a clear signal that the administration is ready to create a more favorable environment for dividend investors—one that could include real tax benefits.
President Lee did strike a cautious tone, saying, “Blindly cutting dividend taxes isn't always the right answer.” Still, he concluded by stating that his government would seriously consider adjusting the current system—particularly by supporting a plan proposed by Democratic Party lawmaker Lee So-young.
A Targeted Approach to Dividend Tax Cuts
The proposed policy would reduce dividend income taxes only for shareholders of companies with a dividend payout ratio of 35% or higher—that is, companies that return a substantial portion of their net profits to investors.
This kind of “selective incentive” aims to encourage better dividend practices while minimizing the fiscal burden on the government.
Korea’s Dividend Culture Still Has Room to Grow
In recent years, South Korea's largest corporations—particularly those with high foreign ownership—have gradually moved toward U.S.-style dividend schedules and payout practices. But the high price of individual shares often makes these blue-chip stocks inaccessible for retail investors, also known as “ants” in Korean finance slang.
Had there been more mid-range, steady dividend-paying stocks in the domestic market, it’s quite possible that a portion of Korean capital flowing into U.S. markets might have stayed home.
The growing popularity of monthly-dividend ETFs and the long-standing appeal of names like Macquarie Infrastructure Fund also demonstrate just how hungry retail investors are for income-generating assets within Korea.
A Policy for the People, Not Just the Corporations
President Lee’s comments revealed a broader vision—not just rewarding corporations that pay dividends, but supporting ordinary investors who rely on this income for living expenses.
He stated:
“If companies are distributing dividends responsibly and the impact on public finance is manageable, it’s worth considering lowering tax rates to encourage more payouts.”
Moreover, Lee emphasized that dividends shouldn’t be paid just once a year. By promoting more frequent, interim dividends, companies can help stabilize their stock prices by discouraging investors from selling off shares prematurely just to realize returns.
This is a policy clearly designed with the real needs of dividend investors in mind.
Calling on Corporate Korea to Do Its Part
President Lee also took the opportunity to challenge the corporate culture in Korea, which has historically lagged behind global standards when it comes to shareholder returns.
“Korea pays fewer dividends than even China. In other countries, people buy blue-chip stocks, collect interim dividends, and use them for daily expenses—benefiting domestic consumption and the broader economy. But not here.”
He pointedly criticized the outdated notion that companies exist solely for their owners, calling for a cultural shift toward viewing businesses as belonging to society and their shareholders.
Time for a Cultural Reset — and Real Policy Change
It’s time for South Korea to embrace a system where dividends are not an exception, but a norm—and where investors can confidently invest in companies that are transparent, responsible, and reward shareholders fairly.
“This isn’t North Korea. Companies shouldn’t be inherited like a royal bloodline. Yet in Korea, we still speak casually about chaebol second and third generations as if it’s normal.”
President Lee’s remarks may have planted the seeds for a long-overdue transformation:
A stronger dividend culture
A fairer tax policy
And a deeper understanding that companies ultimately belong to the people who fund them—the shareholders.
Let’s hope this marks the beginning of a more balanced, investor-friendly future for Korea’s capital markets.
No comments:
Post a Comment