Lee Jae-myung, the presidential candidate of the ruling Democratic Party (DP), said Saturday South Korean stocks are undervalued and he believes the Korea Composite Stock Price Index (KOSPI) can go up to the 5,000-point range.

"KOSPI reaching 5,000 points is not difficult," Lee said on 3Pro TV, a YouTube channel about the economy. KOSPI closed at 3,012.43 on Friday.

Asked why he thinks local stocks are undervalued, Lee pointed to a lack of transparency in the market.

"Since the country's stock manipulation crackdown is very low and punishment is too weak ... people do not trust the market," Lee said.

The former Gyeonggi Governor suggested the National Pension Service (NPS), South Korea's top institutional investor, increase its portion of local stock investments. He also called for "rationalizing" the short-selling system rather than scrapping it.

When it comes to virtual asset investment, Lee proposed making "authorized" virtual assets that offer real assets or underlying assets as collateral.

Lee said the country's housing market is at its peak and soaring home prices were caused by policy mistakes.

"For example, if the market feels that home supply is insufficient, we need to take actions to increase supply, but there seems to be an aspect of denying the market's request," he said. "Suppressing prices actually can bring adverse effects." (Yonhap)