SEJONG -- A number of salaried people and ordinary households in South Korea have been resorting to stocks and real estate as their two main investment.

But their investments according to market principles have been restricted under the Moon Jae-in administration, which has dumped a variety of regulations on the market.

Following a series of regulations to the real estate market over the past three years to 2017, the Moon government is poised to tackle the stock market in terms of enhanced taxation policies, frustrating small investors.

For the real estate sector, ordinary households have weakened capacity to purchase apartments in the wake of tough regulations on mortgages despite all-time-high apartment prices in Seoul, satellite cities in Gyeonggi Province and other metropolitan cities nationwide.

The government has actively designated major cities as “speculation-prone areas,” nominally claiming the measures are aimed at hampering speculative investments to have the effect of stabilizing housing prices.

But apartment prices in the speculation-prone areas, including 25 administrative districts in Seoul, have continued to spiral. The more significant point is that the superrich with enough cash to fund a sale outright eventually face less competition to buy apartments, as the middle-income bracket cannot afford home purchases due to drastically slashed access borrowing.

A large portion of ordinary households -- selected in the state-led subscription system for newly built apartments -- had to give up the right to buy apartments due to tough borrowing terms. This is the situation in which unpaid apartments are handed over to those with huge cash.

The Moon administration has reiterated that it would curb housing prices. But some apartment complexes in Seoul posted up to a 100 percent increase in just three or four years, whose prices hover around 2 billion to 3 billion won ($1.7 million to $2.5 million) per unit.

Many households not owning homes had to leave Seoul if they wanted to buy apartments. Further, many are suffering similar financial difficulties in cities in Gyeonggi Province for a housing purchase from a chain effect in spiking property prices. Situations were similar for residents in cities such as Sejong and Daejeon.

Now a larger proportion of Korean investors in the capital market are set to face higher tax rates, starting from next year.

The financial authority is considering drastically widening the territory of majority shareholders: from the current 1 billion won or more for stock in a single company to 300 million won or more.

Those who are holding 300 million won or more of a certain stock as of the end of 2020 should pay capital gains taxes from April 1, 2021, as long as they do not lose from their collective investments involving other stocks. The taxation rate is 20 percent or more when they sell the stocks.

“It seems that the government is indulging in mapping out ways to infringe on people’s private wealth,” said a commenter on a stock traders’ bulletin board.

An online commenter wrote that “the incumbent administration does not want the middle-income bracket to become rich. It is nonsense for investors with only 300 million-won worth to be classified as majority shareholders.”

Policymakers and some ruling party lawmakers cite global standards like those of the US, which levies taxes on capital gains from stock investments in general.

Instead, the Ministry of Economy and Finance has said it would gradually eliminate stock trading taxes of 0.1 percent and 0.25 percent on each stock trade on the first-tier Kospi and second-tier Kosdaq, respectively.

But this has totally failed to placate small investors, who were angered by the big gap between the trading tax and capital gains tax.

To make matters worse for retail investors, as a further step, the government is reportedly planning to levy taxes on capital gains on stock gains in general -- when any investor reaps 20 million won or more in profit -- starting from 2023.

Brokerage industry employees have cast worries over a possible mass exit of small investors and long-term doldrums in the local equity market.

By Kim Yon-se (kys@heraldcorp.com)