Overview of South Korea’s New Government Policies to Revitalize Capital Markets in 2025

Key Initiatives for Stock Market Modernization & Growth

With the launch of the new administration in 2025, revitalizing the capital market and boosting the domestic stock market have become top economic priorities. A range of structural reforms and support measures across taxation, regulations, and industry policies are being introduced, raising expectations among both domestic and international investors.

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🔧 1. Core Policies for Stock Market Modernization

Efforts are underway to align Korea’s stock market with global standards and to attract more foreign investors through structural reforms.

• Capital Gains Tax Reform
  - Significant easing or possible elimination of capital gains tax on domestic stocks starting in 2025
  - Tax relief focused on long-term holders and small investors
• Improving Foreign Investor Accessibility
  - Expanded English disclosures and enhanced investor relations (IR) by listed companies
  - Simplification or removal of foreign investor registration requirements
  - Laying groundwork for re-entry into MSCI Developed Markets Index
• Advancing ESG and Corporate Governance
  - Expanding mandatory ESG disclosure requirements
  - Encouraging better corporate governance, including board independence and shareholder rights

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📈 2. Policies to Stimulate Stock Market Growth

Various incentives are being rolled out to encourage capital inflow from individual investors and institutions, fostering long-term investment.

• Encouraging Dividend Growth (Shareholder-Friendly Policies)
  - Considering lowering dividend income taxes and expanding separate taxation
  - Policies to promote higher dividends → boost to high-dividend ETFs
• Increasing Pension Fund Investments in Domestic Stocks
  - Relaxing restrictions on domestic stock investments by public pension funds such as the National Pension Service
  - Securing a stable, long-term source of capital inflows
• Promoting Thematic ETFs
  - Facilitating the listing of ETFs focused on strategic sectors (defense, nuclear, secondary batteries, etc.)
  - Creating easier access for individuals to invest in specific industries

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🏗️ 3. Fostering Capital Markets Around Strategic Industries

The government is strengthening the link between capital markets and real industries by expanding support and capital channels for strategic sectors.

Targeted Industries

• Defense
• Nuclear Energy
• Semiconductors
• Shipbuilding
• Aerospace
• Batteries

→ Tax incentives, R&D support, and investment inducements for related ETFs and companies

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💬 Final Thoughts: What Investors Should Watch

2025 marks a period where regulatory easing and growth opportunities open up simultaneously for the Korean capital market.
Policy changes are expected to bring not only short-term momentum but also long-term improvements to the investment environment.