Lee Eon-won: “Increase fund, limited-time and exceptional use in times of extreme emergency”

Opinions expressed at a capital market policy meeting chaired by President Lee

(Seoul = Yonhap News) Reporters Bae Young-kyung, Kim Ji-yeon, and Kang Ryu-na = Financial Services Commission Chairman Eok-won Lee stated on the 13th that the operation of the stock stabilization fund (increasing fund) should be cautious.

At the policy meeting titled 'Trusted Capital Market, Asking Questions and Finding Answers in the Field' hosted by President Lee Jae-myung at the Korea Exchange in Yeouido this morning, it was suggested that the government should consider operating an expansion fund to alleviate stock market volatility.

Kim Jin-wook, senior director at Citibank Korea, mentioned the need to operate an expansion fund, saying, “This is a time when we need a strong signal from the government that volatility will be further alleviated.”

In response, Chairman Lee Eok-won said, “If we want to continue to extend the expansion fund raised in 2000 and operate it because it is a capital call method, we have a system in place to do so.” A capital call is a method of pouring money whenever there is a demand for funds within a limit.

In response, President Lee asked, “Basically, there are opinions saying, ‘Is this introduced to stabilize the market or is it not market intervention?’ and aren’t they refraining from it because they fear it will increase market distrust?” Chairman Lee answered, “Yes.”

Chairman Lee then explained, “There is a need to discuss whether it is necessary to enter into operation of the expansion fund unconditionally just because there is volatility, or whether it should be entered into when the risk to the market system reaches the level,” adding, “This is because the expansion fund is very urgent, temporary, or exceptional (operating at times).”

In response, President Lee said, “We need to check whether there is a method that can operate effectively, what the scale is appropriate, and whether there is a new method.”

Meanwhile, at the meeting on this day, Seung-Woo Lee, Assistant Director of the Financial Supervisory Service's Disclosure and Investigation Department, suggested the introduction of an 'earnings call' to strengthen shareholder-centered management of companies.

Deputy Director Lee analyzed, “Recently, corporate performance has improved significantly, but there are companies whose stock prices are actually retreating. This means that the market is considering not only current profits, but also whether profits can continue to increase in the future, and how much of those profits can be taken by shareholders.”

He continued, “In that case, companies now need to sufficiently inform shareholders about these issues,” and added, “An earnings call system, where companies announce their performance and directly answer shareholders’ questions, would be an alternative.”

He added, “Earnings calls are common for many of the U.S. S&P 500 listed companies,” and added, “There is a need to proactively and sophisticatedly inform shareholders of the information they want.”