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Feb 04, 2021
- New Deal Funds Worth KRW200 Billion Agreed for Future Car and Industrial Digitalization
- FSC Chairman Eun Sung-soo visited Hyundai EV Stationin Seoul on February 4 and delivered congratulatory remarks at an MOU signing event for the promotion of investment cooperation in the areas of future car and industrial digitalization. MOU on Investment Cooperation The MOU highlights an agreement toward a mutual cooperation between the relevant industry entities, financial institutions and the New Deal fund operators (KDB and Korea Growth Investment Corp.) in creating KRW200 billion worth of feeder funds to be invested in the areas of future car and industrial digitalization. To this end, Hyundai Motor Group, the Korea Evaluation Institute of Industrial Technology (KEIT) and the Korea Institute for Advancement of Technology (KIAT) will collectively invest a total of KRW90 billion in New Deal funds in 2021. Over the next five years, the financial institutions will also make matching investments worth KRW1.1 trillion in New Deal funds. Summary of Chairmans Remarks Since the government first announced its plans to create the New Deal fund worth KRW20 trillion in September last year, a master fund was created on January 28 with fiscal investment in the amount of KRW510 billion. In January, fund managers submitted their applications with proposals in the amount of KRW9.7 trillion, which is well over three times the initial investment goal of KRW3 trillion for this year. Their proposals showed an appropriate distribution across all New Deal sectors and demonstrate the significance of digital and green industries in a post-pandemic era. The MOU signed today on investment cooperation between the relevant industry and financial officials is thus significant for the following reasons. First, in order to speed up the creation of New Deal funds, matching investments from the private sector are needed. With the MOU in place, we can expect to see a more speedy creation of feeder funds in the areas of future car and industrial digitalization. Second, in order to generate tangibl
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Feb 04, 2021
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Feb 03, 2021
- FSC Announces Decision on Short-selling Ban
- FSC Chairman Eun Sung-soo held a press briefing on February 3 and announced the decision to extend the short-selling ban until May 2, 2021 and to allow a partial resumption of short-selling from May 3 on KOSPI 200 and KOSDAQ 150 stocks. Summary of Chairmans Remarks (FSCs Decision) The FSC has decided to extend the current short-selling ban until May 2 this year and allow a partial resumption from May 3 on KOSPI 200 and KOSDAQ 150 stocks. The partial resumption is intended to minimize the impact on markets, given these stocks have large market caps and liquidity so that the resumption of short-selling would have limited impact on stock prices. Meanwhile, the short-selling ban will remain on the rest of stocks (2,037 stock items) with further decisions on the resumption of short-selling on these stocks to be made later based on market conditions. The resumption date of May 3 has been decided to give the Korea Exchange (KRX) some time for system development and testing. With the revised Financial Investment Services and Capital Markets Act scheduled to go into effect on April 6 this year, with stronger penalty rules for illegal short-selling activities, there will be no issue of a legislative gap. Today, the FSC commissioners raised the same voice on the need to improve the short-selling system as there are investor demands for more transparency and fairness in the short-selling system. (Improving the Short-selling System) Prior to the May 3 partial resumption, the FSC will work on measures to improve the short-selling rules. First, The FSC will work to ensure the detection of and punishment on illegal short-selling activities. With the revised Financial Investment Services and Capital Markets Act, short-sellers will be required to keep their securities lending data for five years and the securities firms will be required to tighten monitoring of illegal short-selling activities. The securities firms are currently in the process of getting their systems ready according
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Feb 03, 2021
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Feb 02, 2021
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Feb 01, 2021
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Feb 01, 2021
- Securities Firms to Play Bigger Role in Corporate Financing and Venture Capital Market
- The FSC decided on the measures to promote the role of securities firms in corporate financing and venture capital market on January 29. Background To help our economy continue to search for sustainable growth areas and create quality jobs, an innovation-based development is necessary. Amid an acceleration of digital transition and the spread of contactless services, promoting new industries based on technology and intangible assets, such as IT and bio health, should take place. The government has worked on regulatory improvements to boost the role of securities firms in corporate financing.As such, the number of securities firms with equity capital of KRW3 trillion or more increased from five in 2013 to eight in 2019, and their high value-added services such as investment banking has expanded. However, the securities firms role in providing venture capital to innovative SMEs has been lagging. Instead, offering investor credit exposure and providing debt guarantee on real estate project financing took up most of their business. As such, the following measures are intended to promote the securities firms role in providing venture capital to innovative SMEs. Key Measures A. Re-establishing the Role of Comprehensive Financial Investment Businesses Under the current system of comprehensive financial investment business entities, the total credit exposure offered to businesses rose from KRW0.4 trillion in 2013 to KRW14.3 trillion at the end of June 2020. Business loans to SMEs has taken up 51.7 percent (or KRW7.4 trillion), which indicates a significant rise. However, out of KRW7.4 trillion, SME loans excluding SPCs and real estate project financing stood at just KRW0.3 trillion, representing only 2.0 percent of the total credit exposure to businesses. As such, adjustments will be made to the rules on comprehensive financial investment business entities capital exposure limits to remove real estate-related credit offering from the currently allowed special capital exposu
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Feb 01, 2021
- FSC Announces Plans to Improve Competitiveness of Publicly Traded Funds
- The FSC unveiled specific plans to improve the competitiveness of the publicly traded fund market on January 29, with an aim to make the sales and management process more investor-oriented. The plans include (a) increasing the accountability and efficiency of fund management, (b) making the sales process more investor-oriented, (c) encouraging the introduction of diverse types of funds and (d) strengthening support for investors. BACKGROUND Publicly traded funds serve as an importance source of asset management for the general public, allowing small-sum investment and fit for medium risk/medium return appetite. They are also important as they provide capital to productive sectors and help to spread out the real estate-oriented household asset structure. However, the volume of publicly traded funds has stagnated recently as retail investors have become less inclined to invest in publicly traded funds due to the availability of private equity funds, equity-linked securities and other competitive products as well as the relatively low returns, cost burdens related to sellers compensations and fees, inappropriate fund management practices, etc. Meanwhile, amid a low interest rate environment and abundant market liquidity, the general publics interest in financial investment has grown, particularly in direct investing. Over the past 10 years, the volume of private equity funds grew 268.3 percent while that of publicly traded funds rose only 38.3 percent. Stock funds except exchange-traded funds (ETFs) fell 53.2 percent while ETFs and money market funds (MMFs) rose 759.0 percent and 57.3 percent, respectively. The stagnant development of the publicly traded fund market can be attributable to (a) the subpar performance of fund management in generating returns, (b) the declining trust on fund sellers, (c) the lack of diversification in the types of funds and (d) the lack of adequate support for investors. Against this backdrop, the authorities will seek following strategies