AJU PRESS ASIA FIRST NEWS AGENCY

Journalist

Kim Yeon-jae
Kim Yeon-jae김연재
ReporterBank of Korea & Market, Macroeconomics
Kim Yeon-jae is a journalist at AJU Press (AJP's English platform),
covering macroeconomics, international finance, and geopolitics.
He closely tracks central bank monetary policies, global energy supply chains,
and the Korean defense industry. "Peering into the risks behind the euphoria."
Latest by Kim Yeon-jae
  • Won breaks from yen as SK hynix dollar flows reshape FX outlook
    Won breaks from yen as SK hynix dollar flows reshape FX outlook SEOUL, July 24 (AJP) - "Excess volatility is undesirable." That identical message from the U.S. Treasury Department applied to both the South Korean won and Japanese yen in its latest semiannual currency report to Congress, even as it kept both countries on its monitoring list. Treasury said recent depreciation pressures were not in line with South Korea's strong economic fundamentals and reiterated that foreign-exchange intervention should be reserved only for episodes of excessive volatility or disorderly market conditions. Yet the two Asian currencies are now telling markedly different stories. Despite both remaining weaker than their economic fundamentals would suggest, the won has staged a sharp rebound while the yen continues to languish near multi-decade lows, creating one of the widest divergences between the two currencies in years. The U.S. dollar traded around 1,465 won and ¥163.4 on Friday. The won has strengthened more than 5 percent this month, while the yen has slipped about 0.5 percent. For the year, the won is still down roughly 1.9 percent against the dollar, but the yen has fallen more than 4 percent. The key difference lies not in monetary policy but in capital flows. ADR windfall changes the equation The catalyst was SK hynix's record $26.5 billion American depositary receipt offering on Nasdaq, one of the largest overseas equity offerings ever by an Asian company. The won briefly weakened into the 1,470 range in offshore non-deliverable forward trading after Houthi attacks on Saudi vessels renewed concerns over Middle East shipping risks. The move proved short-lived as expectations resurfaced that a sizeable portion of SK hynix's dollar proceeds would eventually be converted into won. The company plans to use part of the funds to finance domestic projects, including its Yongin semiconductor cluster and advanced chip-packaging facility in Cheongju. Construction costs, wages and local procurement will ultimately require won funding, creating what analysts see as a sizeable new source of dollar supply. "The actual dollar-supply effect could continue through August or September," said Kwon Ah-min, an FX analyst at NH Investment & Securities. Kwon expects conversions to begin gradually rather than all at once, as SK hynix will retain part of the proceeds in dollars to pay overseas equipment suppliers such as ASML. That suggests the ADR proceeds are more likely to cap rebounds in the dollar-won exchange rate than trigger a one-way appreciation of the Korean currency. Stronger domestic backdrop The capital-flow effect has coincided with improving domestic fundamentals. The Bank of Korea resumed monetary tightening this month, raising its benchmark interest rate for the first time since January 2023. South Korea's economy has also continued to outperform expectations, while foreign investors have returned aggressively to local equities. Overseas investors purchased a net 2.136 trillion won ($1.46 billion) of Kospi shares on July 23 alone, adding another source of dollar inflows. Park Sang-hyun, an economist at iM Securities, said the combination of stronger economic data, higher interest rates and sustained foreign equity purchases could give the won a firmer foundation than in recent months. "There is now considerably greater scope for the exchange rate to decline on a sustained basis," Park said. If expectations for further won appreciation become entrenched, exporters and shipbuilders could accelerate dollar sales and forward hedging, reinforcing downward pressure on the dollar-won rate. Breaking away from the yen The stronger won has produced an increasingly unusual divergence from the Japanese yen, which has historically moved closely alongside Korea's currency because both economies share export-driven industrial structures. The won-yen cross fell below 900 won per ¥100 on July 23 for the first time in roughly 20 months as the Korean currency appreciated while the yen remained trapped near ¥163 per dollar. Park expects the decoupling to continue in the near term because the won is benefiting from a uniquely Korean factor — SK hynix's impending dollar conversions. Over the longer run, however, he believes the traditional correlation between the two currencies is likely to re-emerge once the temporary supply effect fades. That would again make the yen's direction an important determinant of the won. Not everyone is convinced Some economists caution that markets may be overestimating the immediate impact of the ADR proceeds. "Companies are strategic actors as well," said Baek Seok-hyun, an economist at Shinhan Bank's S&T Center. He argued that SK hynix has little incentive to convert large amounts of dollars before the funds are actually needed because its domestic investment programme will unfold over several years. If conversions are spread across a longer period, additional dollar supply could be largely absorbed by import demand and continued overseas investment by Korean households. Another offsetting factor could emerge if foreign shareholders reduce their holdings of Seoul-listed SK hynix shares, convert the proceeds into dollars and shift their exposure into the newly listed U.S. ADRs. Bank of Korea officials said they are closely monitoring how the ADR proceeds could affect foreign-exchange supply and demand. For now, the inflows appear sufficient to restrain any renewed rise in the dollar-won rate through the third quarter. Beyond September, however, the won's trajectory is likely to depend less on one-off corporate flows and more on broader market drivers — the Bank of Korea's policy path, foreign demand for Korean equities, corporate dollar selling, outbound investment by Korean residents and, perhaps most importantly, whether the long-standing relationship between the won and the yen ultimately reasserts itself. 2026-07-24 15:40:27
  • Finance chief raises growth outlook as South Korea nears $40,000 per-capita income
    Finance chief raises growth outlook as South Korea nears $40,000 per-capita income SEOUL, July 24 (AJP) - Deputy Prime Minister and Finance Minister Koo Yun-cheol said Friday that stronger-than-expected economic growth has put South Korea on track for annual growth of around 3 percent and per-capita income of US$40,000, although many households have yet to feel the effects of the stronger economy. The finance chief said the economy had sustained its growth momentum after a robust first quarter. "The likelihood of achieving 3 percent annual growth and per-capita national income of $40,000 this year has increased significantly," Koo said at a meeting in Seoul. He then pledged to advance the government's so-called "3-4-5 vision," which targets potential growth of 3 percent, a place among the world's four largest exporters and per-capita income of $50,000. South Korea's gross domestic product expanded 0.6 percent in the second quarter from the previous three months and 3.7 percent from a year earlier, according to preliminary data released by the Bank of Korea (BOK). Growth slowed from the first quarter's 1.8 percent pace but remained firm as semiconductor-led exports and private consumption offset continued weakness in construction. Exports increased 1.4 percent from the previous quarter and private consumption rose 0.4 percent, while construction investment declined 0.2 percent. Real gross domestic income, which reflects changes in purchasing power caused by shifts in trade prices, rose 3.6 percent from the previous quarter and 15.6 percent from a year earlier. Koo also pledged to contain inflation as renewed tensions in the Middle East threaten to raise oil prices and disrupt supply chains. The government will extend fuel-tax reductions through the end of September and maintain restrictions against the hoarding of urea and urea solution through August. It will ease inventory and sales restrictions on syringes and needles as supplies improve and introduce legislation next month to strengthen penalties for hoarding and allow confiscated goods to be released into the market. Despite the stronger headline figures, annual growth of 3 percent would not necessarily indicate robust momentum through the second half. The BOK has said the economy could still grow 3 percent this year even if GDP contracted by an average of 0.1 percent in each of the third and fourth quarters, reflecting the unusually strong expansion already recorded in the first half. Construction weakness and an uneven recovery outside the semiconductor industry therefore remain potential drags even if the annual target is reached. The prospect of per-capita gross national income reaching $40,000 is also heavily dependent on the exchange rate. Per-capita GNI rose 4.6 percent in won terms last year but increased only 0.3 percent in dollar terms to $36,855 as the currency weakened. Crossing the $40,000 threshold this year would require an increase of about 8.5 percent in dollar terms, meaning continued won weakness could offset growth in domestic nominal income. The central bank said in March that, assuming no exchange-rate effect and annual GNI growth of 4.4 percent, the average since 2014, South Korea would surpass $40,000 in 2027 rather than this year. Even reaching the threshold would not necessarily translate into comparable gains for middle- and lower-income households because GNI includes income earned by companies and the government and divides the total by the population. Average monthly household income rose 2.4 percent from a year earlier in the first quarter but increased only 0.4 percent after inflation, while earned income grew just 0.3 percent in nominal terms. Disposable income increased 2.7 percent, but consumption spending climbed 5.3 percent, reducing the average household surplus by 3.1 percent. Income-distribution indicators also deteriorated in 2024, with the Gini coefficient rising to 0.325 and the income ratio between the richest and poorest fifths widening to 5.78. The relative poverty rate, which measures the share of people living on less than half the median income, rose 0.4 percentage point to 15.3 percent. Annual growth of 3 percent and per-capita GNI of $40,000 would mark significant milestones for the size of the Korean economy, but broader improvements in living standards will depend on whether export and corporate income spreads into wages and household disposable income. 2026-07-24 14:34:14
  • Stricter cash requirements for leveraged ETFs to take effect late this month
    Stricter cash requirements for leveraged ETFs to take effect late this month SEOUL, July 24 (AJP) - South Korea is set to introduce tougher minimum deposit requirements for single-stock leveraged exchange-traded funds (ETFs) late this month, requiring retail investors to hold at least 30 million won (US$20,300) in cash for new or additional purchases. The Financial Services Commission said Friday that it moved up the implementation date from early August to July 31 after consultations with financial authorities and the securities industry. The measure is intended to stabilize demand for high-risk leveraged products. The requirement, part of a regulatory package announced on July 16, applies to domestically and overseas-listed ETFs and exchange-traded notes that track individual stocks. Under the current framework, investors must maintain a minimum deposit of 10 million won and may use stocks, ETFs and bonds to meet the requirement at up to 70 percent of their market value. From July 31, securities posted in place of cash will no longer be recognized. Brokerages will also be barred from lowering the minimum requirement based on a client's trading experience, although they may impose a requirement above 30 million won. Proceeds from securities sales will count toward the requirement only after settlement, typically two business days after the transaction. Loans secured against unsettled sale proceeds will also be excluded from the calculation. The requirement will apply when existing investors make additional purchases, although they will be allowed to sell products they already hold regardless of their cash balance. The FSC said it would recommend that brokerages unable to complete the necessary system upgrades by the deadline restrict new transactions in the products. Separate measures aimed at narrowing gaps between market prices and underlying asset values will take effect on Aug. 19 following revisions to Korea Exchange rules. The changes will strengthen liquidity providers' pricing obligations and accelerate the designation of products as requiring investor caution. Authorities are also considering bringing forward a plan to raise the minimum order size to 20 units from one, originally scheduled for November. A suspension of new product listings and a ban on advertising took effect after the regulatory package was announced on July 16. The FSC said it would continue to monitor market conditions and consider additional measures if demand for the products fails to stabilize. 2026-07-24 10:23:45
  • Won surges amid foreign inflows as stronger-than-expected GDP
    Won surges amid foreign inflows as stronger-than-expected GDP SEOUL, July 23 (AJP) - The South Korean won strengthened sharply against the dollar on Thursday as foreign investors poured more than 2 trillion won into local shares following stronger-than-expected economic growth and renewed optimism over artificial intelligence-related chip demand. Government bond yields, by contrast, ended little changed as the prospect of further monetary tightening was offset by buying interest after their recent climb. The won gained 13.3 won to close daytime trading at 1,466.8 per dollar, its strongest level in about two and a half months. The currency opened near 1,477 per dollar and briefly weakened before reversing direction and advancing into the mid-1,460s later in the session. Foreign investors purchased a net 2.136 trillion won (US$1.46 billion) of shares on the main Kospi market, adding to demand for the won and accelerating the currency's rise. The benchmark KOSPI climbed 4.40 percent to 7,096.89 as overseas investors concentrated their purchases in large-cap stocks, including semiconductor companies. The scale of foreign buying strengthened expectations of equity-related dollar selling, while exporters also sold dollars as the exchange rate extended its decline. The market rally followed data showing that South Korea's real gross domestic product expanded 0.6 percent in the second quarter from the previous three months, exceeding the 0.4 percent median forecast in a Reuters poll. The economy grew 3.7 percent from a year earlier, also beating expectations, as exports increased 1.4 percent on strong shipments of semiconductors, machinery and equipment. The figures eased concern that economic momentum would fade sharply after 1.8 percent growth in the first quarter and reinforced expectations that the Bank of Korea will raise its annual growth forecast next month. They also strengthened the case for at least one more interest-rate increase, improving the won's relative yield outlook despite continued strength in the broader dollar. Renewed optimism over global artificial intelligence (AI)-related investment provided additional support, lifting South Korean chipmakers and drawing foreign funds back into a market that had recently experienced sharp volatility. Government bonds showed a much more restrained response to the GDP surprise, with yields ending on opposite sides of their previous closes. The yield on the three-year government bond rose 0.4 basis point to 3.917 percent, while the benchmark 10-year yield declined 0.8 basis point to 4.392 percent. The stronger growth figures kept expectations for another BOK rate increase intact, but the possibility had already been largely reflected in short-term yields after their recent advance. The central bank raised its benchmark interest rate by 25 basis points to 2.75 percent on July 16, and economists broadly expect at least one additional increase to 3.00 percent by the end of the year. Buying interest emerged as the three-year yield approached 3.9 percent and the 10-year yield neared 4.4 percent, limiting further losses in bond prices despite the stronger-than-expected GDP data. The decline in the longer-dated yield slightly flattened the yield curve, indicating that investors were reluctant to extend the bond sell-off without clearer evidence that stronger growth would generate persistent inflation. Thursday's trading highlighted a divergence across South Korean financial markets, with the won and equities responding strongly to foreign inflows and the chip-led growth surprise while bonds remained caught between additional rate-hike risks and perceptions that yields were near a short-term peak. 2026-07-23 17:12:19
  • Seoul weighs separate crypto custody regime
    Seoul weighs separate crypto custody regime SEOUL, July 23 (AJP) - South Korea’s financial regulator is considering establishing cryptocurrency custody as a separate regulated business as it prepares to expand corporate access to the country’s digital asset market. The Financial Services Commission is reviewing licensing requirements and conduct rules for custody providers under the government’s planned second-phase digital asset legislation, Kim Sung-jin, director of the FSC’s Virtual Asset Division, said Thursday. “There is little room for disagreement over classifying custody as a separate business,” Kim told a conference at the National Assembly in Seoul. The regulator is examining several approaches to entry requirements and business conduct rules, he added. Crypto custody services hold and manage digital assets and the private keys needed to access them, while separating client holdings from a provider’s own assets. The FSC regards custody as an essential part of the financial infrastructure needed to protect customer assets and support transactions involving corporate and institutional investors. The regulator is also considering how crypto custodians should be positioned alongside traditional trust businesses, given that both safeguard client assets but custodians primarily manage private keys rather than conventional property. Kim said the commission was studying the European Union’s approach to assessing whether different regulatory systems provide functionally equivalent protections. The FSC, however, appeared cautious about requiring crypto exchanges to spin off their custody operations into separate companies. Few overseas jurisdictions have forcibly separated the two functions, Kim said, suggesting tighter conduct rules could better balance customer convenience against potential conflicts of interest within exchanges. The proposed framework comes as the government works on guidelines allowing listed companies and professional investors to buy and sell crypto assets. The FSC announced a phased roadmap in February 2025, initially opening the market to non-profit organisations and virtual asset service providers before allowing listed companies and professional investors to participate. Detailed rules for the later stages have yet to be released, with the regulator saying the timing is closely tied to legislation covering stablecoins and the broader digital asset market. Asked whether corporate trading could begin this year, Kim said he was personally positive about several aspects of the plan but stopped short of providing a timetable. The government is also preparing legislation governing stablecoins and other digital assets, although Kim said the submission schedule was still being discussed with the National Assembly and other government agencies. The FSC would seek to move “as quickly as possible,” he said, in line with the government’s economic policy agenda for the second half of the year. Kim said stablecoin regulation spanned several laws, with issuance expected to fall under the planned digital asset legislation, cross-border transfers under foreign exchange rules and payments under electronic financial transaction laws. Industry representatives urged the government to establish an independent custody framework before fully opening the market to companies, arguing that the current exchange-centred structure was insufficient to support taxation, anti-money laundering controls and external audits. Harry Ryoo, chief executive of digital asset custodian BDACS, estimated that the potential custody market involving domestic and overseas corporate clients could be worth at least 75 trillion won. Ahn Do-geol, a lawmaker from the Democratic Party of Korea, called for faster follow-up measures, saying corporate participation could improve liquidity and price discovery while supporting related industries including custody, asset management and digital payments. Ahn said the market should be opened alongside safeguards including custody systems, internal controls to prevent conflicts of interest and risk management standards. 2026-07-23 16:19:42
  • Nearly half of jobless young Korean graduates out of work for over a year
    Nearly half of jobless young Korean graduates out of work for over a year SEOUL, July 23 (AJP) -Nearly half of South Koreans aged 15 to 29 who had completed their education but were not working had remained without employment for at least a year as of May, the highest share since the global financial crisis. Nearly two in 10 — a record high — had gone at least three years without work, pointing to a widening pool of young adults left on the sidelines. The proportion of graduates unemployed for at least one year rose 2.0 percentage points from a year earlier to 48.6 percent, equivalent to 605,000 people, according to a supplementary youth survey released Thursday by the Ministry of Data and Statistics. It was the highest level since the 51.7 percent recorded in 2009 during the global financial crisis, while the share without work for at least three years rose to a record 19.4 percent, or 241,000 people. The survey’s non-employed category covers people who have graduated, withdrawn from or completed their final level of education but are not currently working, including both officially unemployed people and those outside the labor force. The number of young people who had completed their education fell by 171,000 to 4.003 million, with employment declining by 202,000 to 2.76 million and the non-employed population rising by 31,000 to 1.243 million. Job training and preparations for employment examinations were the most common activities among non-employed graduates at 39.3 percent, followed by simply passing the time at 25.3 percent and preparing for further education at 12.5 percent. The average time required to graduate from college increased by 1.3 months to four years and 5.7 months, the longest since the series began in 2007, while the share who had taken a leave of absence rose 2.5 percentage points to 48.9 percent. Kim Rak-hyun, director of the ministry’s Employment Statistics Division, attributed the increase to the growing proportion of four-year college graduates and more students taking leave to prepare for jobs or qualification examinations. The proportion of graduates who had held at least one job after completing their education fell 1.6 percentage points to 84.8 percent, the lowest since the related series began in 2004. Among young people outside the labor force, 600,000 had prepared for an employment examination during the previous week, up by 15,000 from a year earlier, although their share remained unchanged at 14.5 percent. The proportion preparing for private-sector jobs fell 2.0 percentage points to 34.0 percent, while the share studying for general civil service examinations climbed 3.9 percentage points to 22.1 percent, its first increase in five years. Kim said improved conditions for lower-ranking civil servants and companies’ growing preference for experienced workers and rolling recruitment had made private-sector entry more difficult for young applicants. For graduates whose first job was a paid position, the average time required to find work shortened by 0.1 month to 11.2 months, while average tenure at their first workplace increased by 0.4 month to one year and 6.8 months. Monthly pay of between 2 million won and less than 3 million won was the most common starting income bracket at 42.1 percent, followed by 1.5 million won to less than 2 million won at 23.3 percent and 500,000 won to less than 1 million won at 11.8 percent. Dissatisfaction with pay, working hours and other employment conditions was the leading reason for leaving a first job at 44.4 percent, followed by the completion of temporary or seasonal work at 18.0 percent and personal or family reasons at 14.5 percent. The overall number of employed people aged 15 to 29 fell by 255,000 from a year earlier to 3.427 million, lowering the youth employment rate by 2.4 percentage points to 43.8 percent. The number of unemployed young people increased by 5,000 to 266,000, pushing the unemployment rate up by 0.6 percentage point to 7.2 percent. 2026-07-23 15:57:15
  • Korean growth runs above potential of 2% H1 on AI chip boon
    Korean growth runs above potential of 2% H1 on AI chip boon SEOUL, July 23 (AJP) - South Korea's economy cooled in the second quarter from the blistering pace of the previous three months, but stayed comfortably above its estimated growth potential and on track to achieve the government's annual growth target of 3.0 percent, Bank of Korea data showed Thursday. Gross domestic product expanded 0.6 percent in the April-June period after expanding 1.8 percent in the first quarter. The Bank of Korea portrayed the moderation as a healthy normalization rather than the start of a slowdown. "When growth is exceptionally strong in one quarter, it often falls sharply or even turns negative in the next, but the economy continued to expand in the second quarter," said Lee Dong-won, director general of the BOK's Economic Statistics Department II. From a year earlier, GDP grew 3.7 percent in the second quarter after a 3.8 percent increase in the January-March period, keeping the broader expansion comfortably above the economy's estimated growth potential of around 2 percent. "Even if quarter-on-quarter growth averages minus 0.1 percent in the third and fourth quarters, annual growth could still reach 3 percent," Lee said. Annual growth compares the average level of GDP over all four quarters of 2026 with the average for 2025, rather than simply adding quarterly growth rates. The strong gains already accumulated in the first half would therefore cushion modest weakness later in the year. The BOK's latest official growth forecast, released in May, remains at 2.6 percent, making Lee's 3 percent figure an arithmetic possibility rather than a revised central bank projection. The central bank will update its outlook in August. If achieved, 3 percent growth would mark South Korea's strongest annual expansion in five years. Financial markets took the stronger-than-expected GDP figures in stride. The benchmark KOSPI rose 3.2 percent to 7,012 as of 11 a.m., extending gains as investors welcomed signs of economic resilience. The three-year Korean government bond yield was little changed at 3.909 percent, hovering just below the 4.0 percent threshold, while the 10-year yield rose 2.3 basis points to 4.377 percent. The stronger growth figures reinforced expectations that the Bank of Korea could tilt toward a more aggressive pace of monetary tightening. The Korean won, which opened at around 1,476.6 won per dollar at about 9 a.m., strengthened sharply to around 1,468 after the data release. Another upside surprise was that the composition of second-quarter growth suggested momentum was not confined entirely to exports. Domestic demand and net exports each contributed 0.3 percentage point to quarterly growth, contrary to expectations that external demand would account for most of the increase. Still, stronger exports and chip-facility expansion remained the primary growth engines. Private consumption remained lackluster, hovering around zero growth. Higher oil prices weighed on passenger-car fuel consumption, but discretionary spending increased on household appliances, department-store goods, clothing, bags and travel, supported by income gains from the stock market and the AI boon. Beyond the stock market and the semiconductor sector, domestic demand remained broadly subdued, with elevated household debt continuing to weigh on consumer spending. The AI-driven chip boon, however, boosted the economy's income far more than its output. Real gross domestic income rose 15.6 percent from a year earlier, its strongest annual gain in 38 years, as semiconductor export prices increased much faster than crude oil import prices. The widening gap between GDP and GDI indicated that the purchasing power generated by the economy rose much faster than real output, reflecting a sharp improvement in South Korea's terms of trade. Officials cautioned that more evidence was needed to determine whether the income windfall would feed through to corporate investment, employment and broader household consumption. The second-quarter figures therefore suggest that while the economy likely passed its quarterly growth peak in the first three months of the year, the broader expansion has held up better than expected. Yet the figures also point to an increasingly two-speed economy, with the AI-driven chip boom generating outsized gains in national income while much of the domestic economy continues to struggle under weak consumption, sluggish private demand and elevated household debt. The second-half trajectory will depend on developments in the Middle East, energy prices and whether the semiconductor upswing broadens beyond favorable pricing into sustained gains in production, exports, investment and domestic demand. 2026-07-23 11:21:37
  • Koreas Q2 GDP slows, but annual growth stays above 3% on chip demand
    Korea's Q2 GDP slows, but annual growth stays above 3% on chip demand SEOUL, July 23 (AJP) -South Korea’s economy grew 0.6 percent in the second quarter, with quarter-on-quarter growth nearly halving from a surprising 1.8 percent jump in the first three months of the year, but maintaining a robust annual pace and staying on track to meet the government's 3.0 percent growth target on strong semiconductor demand, preliminary data showed Thursday. According to the Bank of Korea, gross domestic product expanded 3.7 percent from a year earlier, little changed from the 3.8 percent growth recorded in the first quarter. The moderation in quarterly growth largely reflected weaker capital spending and construction investment amid persistently sluggish domestic demand. Facilities investment rose just 0.2 percent after surging 6.6 percent in the first quarter, although spending on semiconductor manufacturing equipment continued to increase. Construction investment slipped 0.2 percent, compared with a 1.4 percent gain in the previous quarter. Private consumption increased 0.4 percent as spending on household appliances and other goods rose alongside expenditure on restaurants, accommodation and other services, while government consumption edged up 0.2 percent on higher health insurance benefit payments. Services contributed 0.6 percentage point to quarterly growth, double the 0.3 percentage-point contribution from manufacturing, while construction shaved 0.1 percentage point off overall growth. Services output rose 1.1 percent, led by wholesale and retail trade, accommodation and food services, finance and insurance, and information and communications. Manufacturing expanded 1.2 percent as production of computers, electronic and optical products, along with machinery and equipment, increased. The gain was substantially weaker than the 3.9 percent manufacturing expansion recorded in the first quarter, when surging demand for artificial intelligence-related chips powered one of Korea's strongest quarterly performances in years. Construction output fell 1.9 percent as civil engineering activity declined, reversing part of the sector's 2.2 percent rebound in the previous quarter. Agriculture, forestry and fishing contracted 7.1 percent, reflecting weaker crop production and fishing activity. Exports rose 1.4 percent from the previous quarter, supported by semiconductors and machinery and equipment, while imports increased 0.8 percent on stronger purchases of automobiles and machinery. Net exports contributed 0.3 percentage point to quarterly growth, matching the contribution from domestic demand. Investment in intellectual property products climbed 3.3 percent, driven by research and development and software. 2026-07-23 08:25:39
  • Foreign holdings blunt Koreas wealth gains
    Foreign holdings blunt Korea's wealth gains SEOUL, July 22 (AJP) - South Korea's national wealth grew at less than half the previous year's pace in 2025, as a record rally in domestic stocks produced an accounting paradox: rising share prices boosted household wealth but simultaneously eroded the country's net financial position by 326 trillion won ($229 billion) as the value of Korean equities owned by foreign investors surged. National net worth rose 2.2 percent, or 531 trillion won, to 24.56 quadrillion won at the end of 2025, slowing sharply from a 5.0 percent increase, or 1.14 quadrillion won, a year earlier, according to preliminary national balance sheet data jointly released Wednesday by the Bank of Korea and the Ministry of Data and Statistics. The slowdown came despite robust gains in real assets. Non-financial assets climbed 857 trillion won, or 3.8 percent, to 23.29 quadrillion won as land and housing prices continued to rise. But net financial assets fell 20.4 percent to 1.27 quadrillion won after financial liabilities expanded by 3.12 quadrillion won, outpacing the 2.79 quadrillion won increase in financial assets. The main driver was South Korea's surging equity market. The benchmark KOSPI advanced 75.6 percent during 2025, far outperforming the S&P 500's 16.4 percent gain and the Euro Stoxx 50's 18.3 percent rise. Because Korean shares owned by overseas investors are recorded as external financial liabilities under the national accounts, the rally sharply increased the country's liabilities to non-residents. The appreciation of those holdings exceeded gains on overseas equities owned by Korean investors, generating a 505 trillion won negative valuation effect on equity and investment fund positions and turning overall financial valuation gains from a positive 440 trillion won in 2024 to a negative 486 trillion won in 2025. Real assets continued to underpin wealth creation. Land values rose 554 trillion won, or 4.6 percent, to 12.66 quadrillion won, while the market value of housing increased 571 trillion won, or 8.0 percent, to 7.71 quadrillion won, the fastest increase since 2021. Nearly 93 percent of the increase in housing values came from the Seoul metropolitan area, underscoring how concentrated the property recovery remained. The asset rally substantially strengthened household balance sheets. Net wealth held by households and nonprofit institutions jumped 9.0 percent, or 1.17 quadrillion won, to 14.20 quadrillion won, the strongest increase in four years. Household net financial assets increased by 674 trillion won and non-financial assets by 494 trillion won, helped by a 534 trillion won increase in housing values and a 525 trillion won gain in equity and investment fund holdings. The same market rally had the opposite effect on non-financial corporations. Their net worth fell 21.6 percent, or 1.01 quadrillion won, as the higher market value of listed shares they had issued was recorded as an increase in financial liabilities under national accounting rules, outweighing gains in their real assets. Officials said 60 percent of last year's increase in national wealth came from transactions such as asset accumulation, while the remaining 40 percent reflected valuation and other changes. Holding gains on non-financial assets totaled 610 trillion won, but these were largely offset by the deterioration in the country's net financial position caused by the revaluation of foreign-owned Korean equities. 2026-07-22 14:28:51
  • Richest income rise while the rest 80% Korean families see fall Q1
    Richest income rise while the rest 80% Korean families see fall Q1 SEOUL, July 22 (AJP) - South Korea’s top-income urban households gained purchasing power in the first quarter as public and private transfers increased, while real incomes fell across the remaining 80 percent amid weaker employment and business earnings. Real income, which adjusts household income for inflation, declined from a year earlier in each of the bottom four income quintiles, according to Ministry of Data and Statistics figures available through the Korean Statistical Information Service, or KOSIS. Only the highest-income 20 percent recorded an increase. It was the first time since the second quarter of 2023 that real income had fallen simultaneously across the bottom 80 percent of urban households. The top quintile also recorded a decline during the earlier period. Average monthly real income for the top quintile rose 1.6 percent, or 163,368 won, from a year earlier. The fourth quintile, immediately below the top-income group, suffered the steepest decline at 2.3 percent, or 130,585 won a month. Real income fell 1.7 percent in the second quintile, 1.5 percent in the third and 1.3 percent among the lowest-income fifth. Weaker employment and business earnings weighed on the four lower groups. Employment income dropped 8.2 percent in the bottom quintile, 6.8 percent in the second and 7.3 percent in the fourth. The middle quintile recorded a 0.3 percent increase in employment income, but business income fell 12.5 percent, leaving its overall real income lower. Income earned from work, businesses and assets also remained weak among the top quintile. Its employment income rose just 0.8 percent, while business income fell 6.3 percent and property income declined 11.8 percent. Transfer income instead rose 24.6 percent to an average of 1.12 million won a month. Public transfers increased 9.4 percent. The category includes contributory pensions such as the national and private-school pension schemes, which are not limited to low-income households, as well as government benefits. Private transfers surged 69.1 percent and include money received from relatives or other households, such as living expenses, allowances and family support. The ministry said transfers often rise during the first quarter as families exchange money around the Lunar New Year holiday. Among top-income households, the increase reflected larger amounts being transferred rather than a sharp rise in the number of recipient households, according to the ministry. The pattern was different for the bottom quintile, where transfer income accounted for 63.6 percent of total income but fell 1.1 percent as public transfers declined 3.2 percent. Employment income for the group also dropped 8.2 percent. The urban breakdown contrasted with the nationwide average released in May. Average monthly income among all households rose 2.4 percent from a year earlier to 5.48 million won, while real income increased 0.4 percent. Four of the five urban income groups nevertheless recorded lower real income, while the gain among the top quintile came mainly from public and private transfers rather than stronger employment, business or property income. Income inequality also widened. After adjusting for household size, disposable income among the top 20 percent was 6.59 times that of the bottom 20 percent, up from 6.32 times a year earlier. The ministry cautioned that quarterly household income can fluctuate because of seasonal factors such as holiday transfers and corporate bonuses, and said longer-term changes should be assessed alongside annual household surveys. 2026-07-22 12:52:01