President Lee Jae-myung (이재명) expressed strong resolve to eliminate the chronic undervaluation of South Korean stocks known as the "Korea discount" and shift to a "Korea premium" era.

Lee chaired an afternoon meeting at Cheong Wa Dae on Tuesday titled a "meeting for capital market stability and normalisation" and discussed capital market reforms focused on improving corporate governance and strengthening market transparency. About 40 people attended, including officials from financial authorities, the Korea Exchange, listed companies and individual investors.

Lee cited opaque corporate governance and abuse of management control, unfair trading such as stock manipulation, unpredictability in industrial policy and excessively priced geopolitical risk as major reasons South Korean stocks are undervalued.

He pointed in particular to abuse of management control arising from conglomerate structures and said conditions must be improved in which the value of profitable companies is damaged and investors suffer losses.

To establish market transparency, he also reaffirmed his intent to impose strong punishments on stock manipulation forces.

Lee said he would punish stock manipulation at a level that would "ruin" offenders, adding he would implement measures to confiscate even the cash used in manipulation and recover all illegal gains.

He also said the government would review paying rewards of up to 30 percent to whistleblowers reporting illegal acts and reducing penalties if internal participants provide decisive evidence.

On geopolitical risk, he said there is a considerably exaggerated aspect given the world-class level of South Korea's economic and defence capabilities.

Lee said he would raise predictability in markets by easing anxiety amplified by political factors and pushing consistent industrial policy.

The government plans to pursue governance reform through revisions to the Commercial Act and carry out specific tasks including cleaning up poorly performing and insolvent listed companies, improving issues related to duplicate listings and addressing low price-to-book ratio companies.

He also suggested the current settlement structure, under which it takes 2 days to receive proceeds after selling stocks, could be reviewed as an agenda item for institutional improvement.

Lee said, "Revitalising the capital market is an essential element for the development of the Republic of Korea's economy and industry," adding, "If the stock market is normalised, excessive funds concentrated in real estate will flow into the capital market, and the structure of the public's assets will also become healthier."