STOCKS | Korea Investment Management CEO Bae Jae-kyu Proposes Semiconductor Windfall Tax-Funded Stock Backstop

Korea Investment Management CEO Bae Jae-kyu has proposed using windfall-tax revenue from the semiconductor boom to create a long-term backstop for Korean stocks and build assets for younger generations. According to Sina Finance, his plan would establish a self-financing fund that buys shares over time in proportion to market capitalization and eventually distributes its holdings to the next generation, including newborns. Bae wrote on social media on the 11th that he wanted to combine the government’s proposed Future Growth Fund with a stock-market stabilization mechanism. The proposal would direct the additional tax revenue into long-term investments in Korean-listed stocks and global assets such as those in the MSCI indexes, rather than consumer spending programs. The government would make systematic, ongoing purchases of companies listed on the main board and KOSDAQ. Under the proposed compounding mechanism, each newborn would receive a beneficial interest in shares with a purchase cost of 50 million won, redeemable at age 30. Assuming an annualized total return of 5%, the amount would grow to about 216 million won after 30 years. The proposal comes as the KOSPI has experienced sharp swings in recent weeks and institutional buying that had absorbed foreign selling has largely disappeared. As of October, foreign investors had recorded seven consecutive months of net sales of Korean stocks. From the 2nd to the 6th of this month, they sold more than 10 trillion won in main-board shares; on the 5th alone, sales reached about 3.4 trillion won, and the KOSPI fell more than 5%. Calls to use public funds for a market stabilization fund have grown as domestic institutions, including pension funds, have limited resources. Bae said the plan would provide predictable long-term buying, support the market, and help young people achieve financial independence and learn about finance. He also said it was not an implementation plan developed through rigorous review by policy experts; funding, tax changes, and management independence would require careful consideration through legislation and institutional processes. Risks include price distortions, concentrated government voting power, potential losses of principal, and questions of fairness between generations. Bae is one of the pioneers of South Korea’s ETF market. In July, he criticized short-term speculation and urged investors to avoid leveraged single-stock and inverse ETFs, saying such products should “naturally disappear” from the market.