Seoul, South Korea - Kim Gyeong-eob used to be a regular at the bars and clubs in Hongdae, a popular university district and nightlife area, drinking and enjoying live music with friends.
Then, in early 2020, COVID-19 brought Seoul's raucous nightlife to an abrupt halt.
Suddenly, Kim, an IT engineer, was saving more money each month than he knew what to do with.
"I couldn't use my money for drinks and I thought 'hmm... I can invest with the money I save.' In some ways, COVID became an opportunity for me,” Kim told Al Jazeera.
Since then, Kim has been a regular investor in the stock market.
Instead of looking for a quick buck, Kim focuses on large, established companies with modest but steady revenue streams.
So far, his slow and steady approach has paid off, netting him a considerable profit of around 7 million Korean won (around $5,100).
“Finding out what to invest in was very easy. I chose the big brands close to me, like Samsung,” Kim said.
"I mainly invest in semiconductors or something related to Nvidia or Samsung," he added.
Kim is part of a growing trend of Koreans, many of them young, trying their hand at investing in stocks.
Korea's stock market capitalization rose 23.1 percent between 2022 and 2023, with foreign investors accounting for nearly a third of shareholders, according to the Korea Financial Investment Association.
The total number of shareholders of listed companies in South Korea nearly tripled between 2016 and 2022 to nearly 14.5 million, according to the Korea Capital Market Institute.
Despite being home to world-renowned brands such as Samsung and Hyundai, the South Korean stock market has long been neglected by both domestic and foreign investors.
The dominance of family-owned conglomerates known as “chaebol,” poor corporate governance, low shareholder returns, and tensions with North Korea have all been attributed to the so-called “Korea discount,” a name given to persistently low valuations of companies. companies. giants of Asia's fourth largest economy.
Last month, US investment bank Goldman Sachs said shares of the country's three biggest K-pop management agencies could be undervalued by 85 to 137 percent, noting that the industry was "ripe for a "change of course."
“Korean stocks tend to be undervalued compared to their peers even when the businesses are very similar,” James Lim, senior analyst in Dalton Investments’ Asia equity research team, told Al Jazeera.
After years of lackluster returns in the local stock market, the South Korean government is now attempting to banish the Korean discount once and for all.
In February, officials announced the launch of the Corporate Valuation Program aimed at encouraging companies to share more of their profits with shareholders.
Proposed measures include tax benefits to incentivize companies to increase shareholder returns and capital efficiency, and the launch of a Korea Value-Up index to highlight top-performing companies.
The move is seen as following the example of neighboring Japan, where regulatory reforms are credited with boosting the Nikkei 225 reaches all-time highs after decades of stagnation.
However, emulating Japan's success could prove challenging.
Although South Korea's Financial Services Commission has pledged to implement “much stronger” incentives than those offered in Japan, the proposals have so far failed to impress investors.
The benchmark Kospi index fell 0.77 percent on the day the program was announced amid criticism that the proposals were too vague, relied on voluntary participation and did not address the root causes of Korea's discount, including high inheritance taxes that encourage chaebol owners to keep stock prices low.
Park Young-gul, a partner at investment advisory firm KPMG, said that while the government's reforms were a positive first step, more needed to be done to improve the attractiveness of Korean companies to investors.
"I believe that for this issue to be fundamentally resolved in the future, concrete policies need to be implemented on an ongoing basis, particularly in terms of tax incentives and strengthening shareholder rights," Park told Al Jazeera.
Lim, of Dalton Investments, said “many more” incentives and sanctions would be needed to force companies to change.
"The majority shareholders control the company, and if they feel there is no need to pay significant amounts of dividends, then the minority shareholders would suffer," he said.
"This could be because controlling shareholders want to keep share prices low so they can save on inheritance taxes, etc."
Lim said measures such as tax cuts will be difficult to implement after the centre-left Democratic Party won 175 of the 300 seats up for grabs in last month's National Assembly elections.
The result means that conservative President Yoon Suk-yeol, who has led efforts to revitalize the stock market, would need the support of opposition lawmakers to pass any legislation supporting his pro-business agenda, which includes a proposal to eliminate the capital gains tax on stocks. .
"This reform will not be a quick and smooth road," Lim said.
Meanwhile, Kim, the small investor, is not deterred by the low prices of Korean stocks and is focused on investing the majority of his salary “for a better future.”
"If I can retire when I turn 40, that would be great," Kim said.
