Mirae Asset Financial Group Chairman Park Hyeon-joo rejects criticism that disappointing shareholder returns are weighing on Samsung Electronics and SK hynix shares, arguing that investment and corporate fundamentals matter more.

“Saying a stock falls because the company does not pay enough dividends is a weak argument,” Park said Wednesday at a dinner with employees of Digital X, formerly Korbit, Korea’s first cryptocurrency exchange acquired and renamed by Mirae Asset Securities in July.

“What matters is the company’s fundamentals,” he added.

Park said companies must accumulate capital and invest aggressively to create the “next Samsung Electronics or SK hynix” rather than prioritize immediate payouts.

He questioned whether shareholder returns of around 5 percent to 7 percent were more attractive than US Treasury bonds and argued that Korea’s chip giants could not have reached their current scale if they had distributed more earnings instead of reinvesting them.

“If they had paid large dividends in the past, would Samsung Electronics and SK hynix exist today?” Park said. “Companies that accumulate capital and invest boldly are the ones that succeed.”

Reflecting that view, he said Digital X should reinvest its earnings rather than pay dividends even if it turns profitable next year.

Park also predicted that the government’s property tax overhaul could accelerate a shift in household wealth from real estate to capital markets.

“The era of making money simply by owning property needs to end,” he said, arguing that higher holding taxes could encourage property owners to seek alternative investments.

Once taxes are considered, returns from some property investments could fall to 2018 levels and become less attractive than Korean equities, he added.

Park separately disputed claims that Korea’s single-stock leveraged exchange-traded funds were responsible for heightened market volatility.

He attributed much of the turbulence to foreign investors’ portfolio rebalancing and leveraged products traded overseas.

Park estimated domestic leveraged ETFs tied to Samsung Electronics and SK hynix at about 13 trillion won ($9.4 billion), compared with roughly 40 trillion won in overseas products beyond Korean regulators’ control.

“It is wrong to say volatility increased because of domestic leveraged ETFs,” he said. “The disruption came from foreign leveraged ETFs and rebalancing by overseas investors.”

By Choi Yeon-jae (ch0221@heraldcorp.com)