Column · 2026-11-10
[Kwangsoo's Take] Market Stability Must Begin with Urgent Action
Kwangsoo Lee argued that inclusion in the MSCI developed-market index is an important goal, but not an urgent one. Policymakers and the government should distinguish between importance and urgency when setting priorities, and should not delay responses to sharp market swings while focusing on long-term tasks related to index inclusion. He criticized a meeting of relevant parties to discuss forced liquidations for amounting to no more than something that could have been handled by phone.
He said that during periods of high market volatility, unexpected and swift policy action can affect investor sentiment. Taiwan convened a meeting quickly after its market plunged and deployed the fund from the next trading day, while South Korea had scheduled an emergency economic meeting several days later, he noted. His criticism was that authorities and market makers were responding slowly as the market fell sharply.
Lee emphasized that the market cannot be viewed as a space made up solely of investors and securities firms; the government and its policies are also market participants. He argued that it is wrong to assume government intervention inherently runs counter to market principles, and said governments in various countries play a role in stabilizing markets. Citing the possibility that foreign investors might interpret a fund deployment in Taiwan as a sign of undervaluation rather than all leaving at once, he said the government’s failure to send any message could instead heighten investor anxiety.
He stressed that the request was not for the government to artificially push up share prices, but to recognize the losses and anxiety of the public and take necessary action. He also compared the market capitalization erased by falling share prices to roughly the total value of apartments across Seoul, about 2,000 trillion won. He added that while Nasdaq futures have a major impact on Asian trading, investors should guard against mechanical trading that follows futures movements and amplifies volatility.
[Kwangsoo's Take] Shareholder Rights and Class-Action Lawsuits Need Reform
Kwangsoo Lee compared shareholder-protection frameworks in the United States and South Korea in light of the Nvidia shareholder lawsuit. In the United States, a single individual can bring a case against the management of a large company and have it proceed, but in South Korea, he said, securities-related class actions are difficult from the outset, beginning with gathering plaintiffs and obtaining permission to sue. In South Korea, multiple stages of hearings can be required just to contest whether permission should be granted, meaning it can take a long time to reach a hearing on the merits, he argued.
He said gathering plaintiffs takes time for a class action to proceed in South Korea, the applicable grounds for lawsuits are limited, and there are also constraints on retaining specialist lawyers. He added that the permission process could take around six years and that the entire process could exceed 10 years if it reaches a hearing on the merits. He qualified the figure of only 12 or 13 cases reaching the merits and a Supreme Court ruling over several decades as being based on his recollection.
Lee also said it was problematic to require shareholders, who have difficulty obtaining internal company documents, to find the evidence themselves. He argued that, as under the U.S. discovery system, both sides should be required to disclose relevant evidence during litigation, and that meaningful compensation and sanctions should follow when corporate liability is established. His argument was that companies in South Korea face little real cost even when they harm shareholders, making it difficult to deter management.
He criticized the Lee Jae-myung administration and the Democratic Party of Korea for having pledged to address the Korea discount and pursued amendments to the Commercial Act and measures related to shareholder rights, while making insufficient progress on class-action reform. He said that discussing the introduction of a discovery system alone was not enough and that further reform was needed, including changes to the requirements and procedures for lawsuits. He emphasized that legal mechanisms enabling shareholders to hold management and controlling shareholders accountable are important for strengthening market confidence.