South Korea's Lee vows to fix stock undervaluation through reform

South Korean President Lee Jae Myung pledged on Friday to address what he called the undervaluation of local stocks by reinforcing capital market reform, South Korea's national news agency Yonhap reported.

Lee made the pledge during a policy discussion at the Korea Exchange that brought together experts, corporate representatives and government officials, (Yonhap News Agency

Lee described the discount on South Korean shares as an "unreasonable abnormality" and said the government would keep the capital market on a sound footing as a firm policy course, (Yonhap News Agency

His remarks came as the benchmark Korea Composite Stock Price Index, KOSPI, traded in the mid-5,000-point range on Friday after the market has seen significant volatility in recent months.

The index reached an all-time closing high of 9,114.55 points in late June, Yonhap reported.

Lee said investor confidence was the most important value for a sound capital market and vowed to restore it through institutional reforms and efforts to tackle irregularities.

He pointed to worries that another geopolitical crisis could erupt, including an exchange of gunfire along the ceasefire line, and said easing such fears and restoring trust would be most important.

The president noted that the government has introduced reforms to address unfair trading practices and abuses by major shareholders, but said the country still has a long way to go.

Lee said the government is sternly responding to unfair practices such as stock price manipulation at the pan-government level.

He said he had instructed an investigative body to crack down firmly on such irregularities in the financial and capital markets.

The term "Korea discount" is widely used by investors to describe South Korean shares trading at lower valuations than comparable companies in other markets.

The KOSPI tracks shares listed on the country's main stock market, making it a closely watched gauge of investor sentiment.