South Korea will ease the stock investment limit for the state postal service agency as part of a comprehensive strategy to help invigorate the slumped local stock market and strengthen the market's role in providing corporate capital, the financial regulator said Wednesday.
Korea Post, one of the country's biggest public funds, will be able to invest in securities with up to 20 percent of its deposited funds, up from the current limit of 10 percent, the Financial Services Commission (FSC) said.
The agency had 105 trillion won (US$94.6 billion) in assets as of 2013.
Local banks will also be allowed enlarge their stock investment to 100 percent of their capital from 60 percent, the FSC said.
In a related move, the FSC said it will develop a new industrial index of 30 blue-chip companies, a South Korean version of the U.S.-based Dow Jones Industrial Average.
The new KTOP 30 index will be composed of major companies that represent the country's economic and industrial structure, taking into consideration their market capitalization, revenues, share prices and trading volume, according to the regulator.
The bourse operator currently operates the benchmark KOSPI and
134 sub-indices, including the KOSPI 200 and KOSPI 50, but these smaller indices have been less popular among investors as they do not reflect real market conditions.
The regulator said the price limit will be one of the most important criteria in selecting the 30 companies, as the limit is expected to encourage companies to split their super-expensive stocks and lower the prices. The price ceiling may be set at 500,000 won, it said.
Shares of Samsung Electronics Co., the biggest listed firm by market cap, traded at 1,201,000 won on the Seoul bourse on Wednesday, while shares of cosmetics giant Amore Pacific Corp. were priced at 2,410,000 won.
The daily limit for stock price fluctuations will be raised to 30 percent from 15 percent during the first six months of next year and eventually be removed. The limit was imposed in 1995 as a protection against excessive market volatility and manipulation.
The FSC said it will adopt electronic securities within the first half of next year to reduce costs and enhance transparency in stock trading.
"We will make the stock market more efficient and credible, and help investors return to the market," said Lee Hyun-chul, head of the Financial Policy Bureau at the FSC.
The main KOSPI hit the 2,000-point level for the first time in 2007, but it has swung within a narrow box for seven years since.
The number of companies which went public fell to 28 in 2012, compared with 96 in 2010 and 73 in 2011. (Yonhap)
