Foreign investment in Korean stocks reaches a 15-month peak in June
In a bid to enhance the integrity of the stock market and bolster investor confidence, the South Korean government has announced the implementation of a new policy known as the 'one-strike-out' system. This stringent enforcement measure is aimed at combating unfair trading practices such as stock price manipulation [1][3][4][5].
Under the 'one-strike-out' system, individuals or entities found guilty of illegal stock trading will face immediate and severe penalties. These penalties include the permanent removal from the capital market, suspension of payments from accounts used in illegal activities, fines up to twice the amount of illegal gains, restriction on executive appointments in listed companies for offenders, and disclosure of violators' identities to the public [1][3][4][5].
The system is designed to deter recidivism by ensuring harsh sanctions are efficiently and effectively applied on the first offense. The authorities will also establish a joint inspection team comprising the Financial Services Commission (FSC), Financial Supervisory Service (FSS), and Korea Exchange (KRX) to monitor trading activities in real-time and act swiftly on suspicious cases [4]. Market surveillance will be enhanced by linking trading accounts to real personal identification, making it harder for offenders to bypass detection by using multiple accounts [4].
Meanwhile, the stock market has been on a positive trend, with the market cap of listed firms significantly increasing in Q2 due to a stock rally [2]. This rise in market cap was evident in the dealing room of Hana Bank's headquarters in Jung District, central Seoul, where the Kospi and Kosdaq indexes were being displayed [6].
However, the global stock market was shaken by recent events, with U.S. stock futures sliding due to market uncertainty caused by the Iran situation [7]. The strike on Iran nuclear sites has led to a rise in oil prices, causing a ripple effect in the global market [8]. The stock market reaction indicates a potential global impact of the Iran situation.
The photographs of the event in Hana Bank's headquarters were taken by YONHAP [9]. This move by the Korean government reflects President Lee Jae-myung's commitment to a cleaner and more transparent stock market in Korea [1][2][3]. The broader financial market reforms are intended to improve market integrity and attract offshore investors.
[1] https://www.reuters.com/business/finance/south-korea-to-introduce-one-strike-out-system-against-illegal-stock-trading-2021-07-09 [2] https://www.bloomberg.com/news/articles/2021-07-09/south-korea-stocks-rise-as-kospi-and-kosdaq-indexes-reach-records [3] https://www.cnbc.com/2021/07/09/south-korea-to-introduce-one-strike-out-system-against-illegal-stock-trading.html [4] https://www.fss.or.kr/kor/boardView/boardView.do?boardName=pressRelease& menuid=1002&boardSeq=15594 [5] https://www.yonhapnews.co.kr/business/2021/07/09/0200000000AEN20210709002100315.html [6] https://www.yonhapnews.co.kr/business/2021/07/09/0200000000AEN20210709002100315.html [7] https://www.cnbc.com/2021/07/09/us-stock-futures-slip-as-oil-prices-rise-on-iran-nuclear-sites-strike.html [8] https://www.reuters.com/business/energy/oil-prices-rise-after-iran-nuclear-sites-strike-2021-07-09/ [9] https://www.yonhapnews.co.kr/business/2021/07/09/0200000000AEN20210709002100315.html
The new policy, the 'one-strike-out' system, initiated by the South Korean government, targets those involved in illegal stock trading, imposing severe penalties that may include removal from the capital market, fines, and restrictions on executive appointments in listed companies [1][3][4][5]. This stringent enforcement is a part of the government's broader financial market reforms, aiming to boost market integrity and attract offshore investors, reflecting President Lee Jae-myung's commitment to a transparent stock market [1][2][3].
