Chairman Kwon Yong-won of the Korea Financial Investment Association (Kofia) said on March 21 that stock market indices, both Kospi and Kosdaq, have been setting records one after another after breaking out recently, but outside factors look less manageable.
The information technology revolution led by Blockchain, low interest rates, rapid ageing, cuts in quantitative easing in both the U.S. and Europe, and North Korea’s nuke arms risks continue to show that unpredictable factors to world peace would not go away easily, the Kofia chairman continued. “They tell us that if we lose the golden time for reform, we will fail to reach the new ecological structure,” Kim said.
Large IT firms with an overwhelming number of customers would enter the financial industry, with the walls dividing the financial sectors having crumbled, showing that we might be faced with the toughest crisis for our survival, the chairman said.
The capital market’s provision of diverse funds to new startups tuned to their growth cycles becomes the basic power for reformed growth. Supplying funds in general to help increase earnings to a certain level to maintain living standards becomes the base for earnings dominated growth.
Such financial investment is the best for reform business firms, and investors should have the mindset that they are partners for national wealth growth to pull up the purpose of the national policies to another level.
In order to help the situation, the securities firms should work to settle the investment banking system to allow them to be the suppliers of venture capital and also secure a competitive edge by segregating strategies for medium- and small-size securities firms.
The Kofia chairman also called for efforts to maximize the autonomy and creativity of the capital market.
The financial authorities should not stop at just turning them around to a “negative system,” but should make the system detailed enough to show the impacts on the market from those regulations, in comparison with foreign financial regulations.
He said the ultimate purpose of the change is to rationalize financial regulations in such as way that they increase the size of the financial market pie so they can be help the growth of the national economy in a medium- to long-term perspective.
We are living in an age where the company that had developed an Internet engine has become a car maker, and a search engine company is now providing loans. “You can never catch up with the most recent development in the financial industry with our past moves,” said the company.
Fortunately, Kofia and the securities industry have been leading digital reforms by introducing the joint certification technology, which is mixed with Blockchain technology, from last year, Kim said.
As an industry think tank focused on the development of the Korean capital market and financial investment industry, KOFIA studies the various systems and factors that the industry and investors feel need improvement and proposes solutions to the government, supervisory agencies, and lawmakers.
In order to perform such tasks, KOFIA networks with the financial investment industry, academia, and research institutes over current issues and operates various councils and task forces with CEOs, executive officers, and working-level personnel from member firms. As a result, the association is able to further its efforts to reflect the broad interests of the financial investment industry.
In addition, KOFIA tracks statistics related to the capital market, such as the trends of short and long-term funds, and the fund and derivatives markets. It also conducts in-depth analyses of the performance of various financial investment firms.
These services are provided to assist market participants with making well-informed investment decisions and the government with policy-making.
A view of the building in Yeouido, Seoul, where Kofia has its offices.