PPP lawmaker slams Lee government's stock market policy: 'Kospi used as tool to hold onto power'

As South Korean stocks suffered a second consecutive day of sharp losses, People Power Party lawmaker Kim Eun-hye directly attacked the Lee Jae Myung government's stock market policy Wednesday, saying the administration had used the market as a tool to maintain its grip on power.

"The Kospi's decline of 10.8 percent on Tuesday exceeded even the 9.44 percent drop recorded on Oct. 16, 2008, at the height of the global financial crisis triggered by the Lehman Brothers collapse," Kim said. "There was no Lehman shock, no dot-com bubble bursting — and yet the Kospi posted its fourth-largest single-day loss in history. That happened because the principles and procedures of a market economy have broken down."

Kim said the Lee government was "almost certainly unique in the world in treating a specific stock index as a means of staying in power," adding that it had "brazenly propped up the index through the national pension fund ahead of the local elections." She said raising the domestic equity weighting and then suspending rebalancing had effectively handed foreign investors a prime window to drain national wealth out of the country.

Kim also took aim at the introduction of single-stock leveraged products tied to Samsung Electronics and SK Hynix, saying the government had "poured oil on a raging fire and pushed the people's savings into a casino." She further criticized Employment and Labor Minister Kim Young-hoon, a former Korean Confederation of Trade Unions (KCTU) official, for suggesting that performance bonus negotiations could be treated as part of wage bargaining.

"This government is casually violating the basic principle of commercial law — that the right to dispose of operating profit belongs to shareholders and is determined through a shareholders' meeting resolution," Kim said. She added that those who had once courted voters by saying "if your brokerage account is looking good, vote for No. 1" were now silent.

Her remarks were a pointed reference to Democratic Party leader Jung Chung-rae, who ahead of early voting for the June 3 local elections had said: "If the Kospi has risen and you are seeing gains in your stock account, or if looking at your account puts a smile on your face, I hope you will cast your vote for Democratic Party No. 1."

Kim called on the government and the ruling party to stop "coveting the market through political power" and instead create conditions that favor long-term investment. "Is it really so hard to uphold the free-market principles that have sustained this country — letting the government leave trading and price formation to the market, letting individuals make their own choices and bear responsibility for them, and ensuring the rules of the market apply fairly to everyone?" she said.

The Kospi closed Wednesday at 5,663.24, down 360.42 points, or 5.98 percent, from Tuesday's close.