Aug. 21 (UPI) — “Lee Jae Myung gets things done.”
The phrase has long encapsulated South Korean President Lee Jae Myung’s political brand. From the launch of his presidential campaign in 2021, he used the slogan, “A new Republic of Korea! Lee Jae Myung gets things done!” After winning the Democratic Party’s presidential nomination, he emphasized: “Lee Jae Myung has done it. Lee Jae Myung will do it. Lee Jae Myung gets things done.”
But in financial markets, that determination is not always welcome. Finance is not a market that moves solely on a president’s decisions. What markets need is not merely a declaration of what the government intends to do, but predictable principles explaining when it will intervene and according to what standards.
Since the Lee administration took office, financial policy has frequently reflected that “get it done” approach. The government has tightened household lending and then loosened it. It has intervened in the National Pension Service’s asset allocation and financial product rules in an effort to support the stock market. It has even raised the possibility of relocating private financial institutions outside Seoul.
Each policy has its rationale. The problem is that financial markets are struggling to identify the consistent rules they are expected to follow.
Household lending is a prime example. Financial authorities in April set this year’s target for household loan growth at 1.5%, only to double it to 3% several months later. When loans for actual homebuyers, including final payments, interim payments and relocation expenses, became constrained by the lending cap, authorities revised the management system again.
For financial institutions and consumers that made decisions based on government standards, having those standards change within a matter of months is itself a burden.
The administration has been even more assertive in the stock market. As the government and ruling party pushed their goal of taking the benchmark KOSPI to 5,000, the National Pension Service postponed domestic stock rebalancing until the end of June and raised its target allocation to Korean stocks from 14.9% to 20.8%.
That has fueled suspicions that even the asset allocation principles governing the public’s retirement savings have been influenced by the government’s stock market support policy.
The same issue has emerged with single-stock leveraged exchange-traded funds.
The products were introduced quickly under the rationale of redirecting money flowing into overseas markets back into South Korean equities. But as leveraged products designed to deliver twice the daily movement of Samsung Electronics and SK hynix shares were rushed to market, concerns about investor risk grew. Authorities subsequently tightened eligibility requirements.
In effect, the goal of bringing money back into the domestic stock market came first, while consideration of the risks investors would be asked to bear came later.
More recently, speculation has emerged that private financial institutions could be required to relocate to regions outside Seoul.
Neither the institutions affected nor the method of relocation has been determined, but even the possibility of legislative changes has been discussed, leaving financial companies wondering which institution could be next. Once again, the government’s determination to say, in effect, “We will move them,” appears to have reached the market before sufficient consideration of financial clustering and competitiveness.
There is nothing inherently wrong with a government changing policy in response to market conditions. But predictability is as important as change in financial markets.
When authorities repeatedly tighten and loosen restrictions and revise their principles, markets inevitably begin worrying about what the government’s next “we will do it” policy will be.
The government repeatedly says it will act to strengthen finance. What financial markets need, however, is not another enthusiastic promise to act but predictable principles.
The problem is not simply what the government does. It is that markets cannot anticipate what it will do next. Government officials should remember that policy uncertainty inevitably carries the risk of market contraction and confusion.
This commentary is the Asia Today reporter Lee Bo-ra’s Op-Ed.
— Reported by Asia Today; translated by UPI
Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260819010006297
