Aju Press - Aasia News Hub

Journalist

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

Authorities halt new single-stock leveraged products amid chip-driven market volatility SEOUL, July 16 (AJP) - South Korea will temporarily halt new listings of single-stock leveraged products and ban advertising for existing ones, tightening regulations after their rapid growth raised concerns that they could amplify market swings in the country's semiconductor-heavy stock market. The minimum deposit required to trade domestic and overseas single-stock leveraged products will be tripled to 30 million South Korean won from 10 million won, with investors required to provide the full amount in cash. Deputy Prime Minister and Finance Minister Koo Yoon-cheol discussed the measures at a joint market monitoring meeting in Seoul on Thursday with Bank of Korea governor Shin Hyun-song, Financial Services Commission chairman Lee Eok-won and Financial Supervisory Service governor Lee Chan-jin. They attributed the recent market volatility to a combination of profit-taking and portfolio rebalancing after a sharp equity rally, divergent views on the global artificial intelligence cycle and semiconductor outlook, and South Korea's heavy economic and stock-market exposure to the chip sector. The products were introduced to address regulatory disparities between domestically and overseas-listed investment products and to broaden the domestic market. Authorities, however, said the market capitalization and trading volume of single-stock leveraged products had increased rapidly, raising concerns that they could add to market volatility. A total of 16 exchange-traded funds and two exchange-traded notes offering two-times long or inverse exposure to Samsung Electronics and SK hynix were listed on the Korea Exchange's main bourse on May 27. Since their listing, program-trading sidecars have been triggered 19 times on the KOSPI through Thursday, while marketwide circuit breakers have been activated five times. These measures reflect overall market volatility, although they do not necessarily mean that single-stock leveraged products were the direct cause of each disruption. Authorities will halt new listings of leveraged, inverse and covered-call products until market conditions stabilize. Securities firms and asset managers will also be barred from advertising or conducting promotional events for products that are already listed. Along with the higher deposit requirement, authorities will strengthen investor education and risk disclosures and increase the minimum trading unit for the products. Rules for liquidity providers will also be tightened to prevent market prices from deviating excessively from underlying asset values. The current deviation-management thresholds are 3 percent for domestic equity ETFs and ETNs and 6 percent for overseas equity products. Securities firms and asset managers that breach the strengthened requirements will face tougher sanctions. Authorities said they would continue monitoring trading flows and the market impact of single-stock leveraged products and consider additional measures if necessary. They said the immediate market reaction had been limited but pledged to closely monitor developments and proceed with measures to ease higher borrowing costs for small and midsized enterprises, self-employed owners and other financially vulnerable groups. 2026-07-16 17:41:00
Rate gap with US narrows to lowest level as BOK signals more hikes SEOUL, July 16 (AJP) - The gap between South Korea and U.S. interest rates narrowed to 1 percentage point, the smallest since February 2023, after the Bank of Korea (BOK) on Thursday raised its benchmark rate by 0.25 percentage point to 2.75 percent. The central bank also indicated that further rate hikes may be needed to control inflation and manage financial risks. The rate gap could narrow further if the BOK continues tightening while the Federal Reserve holds rates steady, although its governor Shin Hyun-song said future rate decisions would depend on trends in growth, inflation, foreign exchange rates, housing markets, and household debt. The seven-member board unanimously backed the rate hike, while the Fed kept its rate unchanged at 3.50 percent to 3.75 percent. The move narrowed the two countries' interest rate gap to 75 to 100 basis points from 100 to 125 basis points. The maximum gap, measured against the upper end of the U.S. range, is now at its smallest since February 2023. One additional quarter-point rate hike by the BOK, while the Fed remains on hold, would further narrow the gap to between 50 and 75 basis points. Softer-than-expected U.S. consumer and producer inflation data reduced the futures-implied probability of a July Fed increase to 10.2 percent. "We believe further rate hikes are still needed," Shin said, adding that future decisions would be based on inflation, economic growth, and financial stability. The remark indicates that the BOK has not predetermined its future policy path and will continue to assess economic conditions before making further decisions. Shin did not give a direct view on the 3.50 percent terminal-rate scenario. He instead pointed to second-quarter GDP and GDI data due next week, July inflation figures due Aug. 4 and developments in the exchange rate, housing market and household lending as key inputs for future decisions. If the Fed remains on hold, a BOK rate of 3.00 percent would reduce the maximum gap, measured against the upper end of the U.S. range, to 75 basis points, while a rate of 3.25 percent would narrow it to 50 basis points. The differential would fall to 25 basis points at 3.50 percent, although these are mechanical scenarios rather than BOK forecasts. A narrower gap could reduce the relative yield disadvantage of won-denominated bonds and short-term assets, easing one source of pressure on the currency and foreign capital flows. The relationship is not mechanical, however, as the won is also shaped by the global dollar cycle, foreign equity transactions, exports, oil prices and geopolitical risks. "The exchange rate remains at a high level and has fluctuated widely," Shin said, adding that the central bank needed to remain attentive to the related risks. He said the BOK was examining how the narrowing gap and round-the-clock onshore won trading affect offshore non-deliverable forward activity, which has yet to contract noticeably, and plans to publish separate research on the issue. The won weakened to the mid-1,500 range against the dollar on foreign stock outflows and broad dollar strength before recovering to the upper 1,400 range as foreign exchange supply-demand conditions improved. The largest external variable remains the Fed's actual policy path and its effect on the global dollar, with renewed U.S. inflation or oil-price pressure capable of reviving expectations for further tightening. Foreign trading in South Korean equities also directly affects demand for the won, and the BOK cited foreign stock outflows as one of the main factors behind the currency's recent weakness. In the opposite direction, strong semiconductor-led exports and a large current-account surplus could increase foreign-currency supply and ease some pressure on the won. May's balance-of-payments data, however, showed how that support could be offset by financial outflows. Korea posted a current-account surplus of US$38.61 billion, while nonresidents' portfolio investment in Korean securities fell by $24.65 billion, including a $31.05 billion decline in equity investment, partly offset by a $6.4 billion increase in debt investment. South Korean residents also increased their overseas portfolio investment by $6.24 billion. The current and financial accounts do not translate one-for-one into exchange-rate movements, but the figures illustrate how foreign equity selling and residents’ overseas investment can limit the immediate support for the won even when export-related foreign-currency inflows are exceptionally strong. Oil prices and developments in the Middle East are another major variable through their effects on South Korea's import bill and global demand for safe-haven assets. Higher crude prices and a weaker won could lift import prices, strengthening the case for further BOK tightening and indirectly contributing to an additional narrowing of the rate gap. Shin said the currency had stabilized somewhat from several weeks earlier but remained elevated, while import prices were still 20 percent higher than a year earlier. Domestically, semiconductor prices are likely to play a central role in determining the timing and pace of further BOK increases. First-quarter gross domestic product rose 3.8 percent from a year earlier, while gross domestic income surged 13.2 percent, largely reflecting an improvement in South Korea's terms of trade driven by higher chip prices. The BOK sees a risk that gains in corporate earnings, investment, wages and tax revenue could spread to consumption and add demand-side inflation to the remaining cost pressure, while 2026 growth is expected to considerably exceed its May forecast of 2.6 percent. Headline inflation stood at 3.2 percent in June and core inflation at 2.5 percent, while rising home prices in the Seoul metropolitan area and monthly household-loan growth of 8 trillion won to 9 trillion won provide additional arguments for further tightening. Policymakers will review second-quarter GDP and GDI data due next week, followed by July core and living-cost inflation figures on Aug. 4, before deciding the timing and pace of their next moves. The bilateral gap could narrow rapidly if the Fed stays on hold while the BOK continues raising rates, but that would remove only one disadvantage facing won-denominated assets rather than guarantee foreign inflows or sustained currency appreciation. Financial markets showed a limited response to the decision. The won traded slightly firmer at 1,483 per dollar at 2 p.m., while the three-year Korean Treasury bond yield fell 0.4 basis point to 3.862 percent and the 10-year yield edged up 0.2 basis point to 4.329 percent at the morning close, suggesting that the quarter-point increase had been largely priced in. 2026-07-16 14:57:48
BOK delivers its first hike since January 2023 SEOUL, July 16 (AJP) - As widely expected, the Bank of Korea (BOK) on Thursday bumped up its benchmark interest rate by 25 basis points to 2.75 percent for the first time in three and a half years to contain imported price pressure and feverish leveraged investment. A combination of factors shifted the central bank toward a tightening bias after it had kept the policy rate unchanged since cutting it to 2.50 percent in May last year. Consumer prices rose 3.2 percent from a year earlier in June, remaining above 3 percent for the second consecutive month and drifting further away from the central bank's 2 percent target. The BOK has warned inflation will remain elevated throughout the second half of the year. The government, in its revised economic outlook, raised its growth forecast for this year to 3.0 percent from 2.0 percent on stronger-than-expected expansion driven by an unexpected boom in semiconductor demand. Korea's economy grew 1.8 percent quarter on quarter and 3.8 percent year on year in the first quarter. Outstanding personal credit loans at Korea's five largest banks rose from 108.67 trillion won at the end of June to 110.06 trillion won as of July 14, an increase of 1.39 trillion won despite tighter lending rules as the stock market turned red-hot. The hike marked the BOK's first rate increase since January 2023, when it raised the policy rate from 3.25 percent to 3.50 percent amid post-pandemic inflationary pressure. All 10 economists surveyed by AJP had forecast a quarter-point increase at the July meeting, with nine expecting the policy rate to rise once more to 3.00 percent by the end of the year. 2026-07-16 09:52:07
Lee orders swift measures for single-stock leveraged ETFs amid market volatility SEOUL, July 15 (AJP) - President Lee Jae Myung on Wednesday ordered financial authorities and the Korea Exchange to swiftly draw up measures for leveraged exchange-traded funds (ETFs) linked to Samsung Electronics and SK hynix amid concerns over heightened stock-market volatility. The matter is expected to be discussed Thursday at a meeting of South Korea's four main economic and financial authorities, commonly known as the F4, as regulators consider stronger protection for investors. The F4 brings together the Ministry of Economy and Finance, the Bank of Korea, the Financial Services Commission and the Financial Supervisory Service. Lee raised the issue during a joint government policy briefing at Cheong Wa Dae, asking Financial Supervisory Service governor Lee Chan-jin about the controversy involving single-stock leveraged ETFs. The governor admitted the regulator's responsibility as a market supervisor. Lee then turned to Korea Exchange chairman Jeong Eun-bo and asked officials to prepare supplementary measures without delay. "Please swiftly draw up the necessary measures," Lee said, stressing that normalizing and strengthening the capital market remains his key policy priority. Single-stock leveraged ETFs, launched in the domestic market on May 27, amplified the daily price swings of individual stocks including those of the country's two biggest chipmakers. Their launch has sparked debate over whether heavy trading in these funds could make swings in the underlying stocks, related derivatives, and the broader market even bigger. Buy and sell sidecars have been triggered 36 times on the benchmark KOSPI so far this year, with 17 of those activations occurring since the leveraged ETFs were launched, according to news outlet Newsis. Five of the 13 circuit breakers activated across the KOSPI and junior KOSDAQ since 2000 have also occurred since May 27. The figures show that the launch of these products coincided with a period of unusually sharp market moves, but do not by themselves establish that the ETFs directly caused the trading halts. Authorities are expected to examine the funds' trading structure, liquidity management, their interaction with spot and derivatives markets and the risk of losses among individual investors. Kim Yong-beom, Lee's chief policy secretary, said last week that the government would closely review the products' market impact at the next F4 meeting and decide whether additional measures were needed. The FSS chief has previously expressed regret over the products' introduction, saying last month that the regulator should perhaps have taken stronger action before accepting their securities registration statements. The Financial Services Commission also held a closed-door meeting Tuesday with major brokerages and asset management companies to discuss potential safeguards. Financial firms, meanwhile, agreed this week to strengthen risk warnings tailored to investors' ages and portfolios, improve mandatory education for leveraged-product trading and consider raising minimum deposit requirements to curb excessive investment. The government's measures are likely to focus on tighter entry requirements, clearer risk disclosures and stronger liquidity and operational controls, with the broad direction expected to emerge after Thursday's F4 meeting. 2026-07-15 15:52:58
South Korea stays awash in cash, bolstering case for rate hike SEOUL, July 15 (AJP)-South Korea's financial system is becoming increasingly awash with cash, adding to the Bank of Korea's case for an interest-rate hike that could come as early as Thursday, as abundant liquidity continues to fuel red-hot asset markets from stocks to housing. Broad money, or M2, under the Bank of Korea's current definition averaged 4,184.4 trillion won ($2.81 trillion) in May, up 5.8 percent from a year earlier, slightly faster than April's 5.7 percent increase. On a seasonally adjusted basis, M2 expanded by 32.2 trillion won, or 0.8 percent, from the previous month, accelerating from a 0.6 percent rise in April. An alternative calculation under the central bank's previous methodology painted an even stronger picture of liquidity growth. Under the old definition, which included investment fund shares, M2 averaged 4,789.0 trillion won, up 11.7 percent from a year earlier and 2.2 percent from the previous month. Annual growth accelerated from 10.4 percent in April, extending a run of double-digit increases. The difference between the two measures largely reflected investment fund shares, which are excluded from the revised definition. Those holdings surged 61.7 percent from a year earlier, contributing 6.1 percentage points to the old M2's annual growth and underscoring how strongly money has flowed into investment products during this year's asset rally. The composition of money holdings also illustrated where liquidity is accumulating. Transferable savings deposits jumped by 24.3 trillion won in May after increasing by just 700 billion won in April as more funds migrated in highly liquid accounts to join the booming stock market. Money trusts with maturities of less than two years rose by 3.8 trillion won, reversing a 3.2 trillion-won decline a month earlier, as semiconductor companies increased trust deposits. By contrast, time deposits and installment savings with maturities of less than two years fell by 4.7 trillion won, mainly because households reduced their holdings. The divergence became even more apparent when viewed by sector. Nonfinancial corporations increased their M2 holdings by 30.1 trillion won from the previous month, while other financial institutions added 11.8 trillion won. Social security organizations, local governments and other public-sector entities increased holdings by another 3 trillion won. Households and nonprofit organizations, meanwhile, reduced their money balances by 19 trillion won, suggesting retail investors continued shifting cash into assets outside traditional bank deposits as stock and property markets gathered momentum. The central bank cautioned against interpreting the figures as a direct measure of household wealth or income, noting that money holdings are affected by borrowing, consumption, investment activity and shifts into nonmonetary financial assets. Other liquidity indicators pointed in the same direction. Narrow money, or M1, averaged 1,398.2 trillion won, rising 10 percent from a year earlier and 1.9 percent from the previous month. Liquidity at financial institutions, known as Lf, climbed 8 percent on year to 6,309.0 trillion won, while the broadest liquidity measure, L, increased 9.2 percent to 8,053.8 trillion won. The figures reinforce a dilemma facing policymakers ahead of Thursday's monetary policy meeting. While higher borrowing costs are intended to cool inflation and curb speculative demand in stocks and housing, the latest data suggest the financial system remains flush with liquidity, giving policymakers another reason to tighten policy even as higher interest rates risk weighing on an economy still heavily dependent on exports. 2026-07-15 15:10:49
Seoul reaffirms 3% growth target, addresses high prices SEOUL, July 15 (AJP) - President Lee Jae Myung pressed economic policymakers Wednesday to identify the structural causes of South Korea’s high living costs and address barriers delaying the country’s inclusion in MSCI’s developed-market index. The government reaffirmed its projection that Asia’s fourth-largest economy will grow 3.0 percent this year, supported by strong semiconductor exports and investment in artificial intelligence. “South Korea is being described as an expensive country by global standards, and there must be reasons for that,” Lee said during a joint policy briefing by the Ministry of Economy and Finance, the Financial Services Commission and other economic agencies. He called on officials to identify and remove the market and distribution structures behind persistently high consumer prices rather than relying mainly on short-term price controls. Prime Minister Han Sung-sook also urged the government to focus on longer-term reform of distribution networks, particularly those involving food and everyday consumer goods. Lee cited petroleum prices, which tend to rise quickly when international oil prices increase but fall slowly when global prices decline, as an example of abnormal practices becoming accepted as normal. Finance Minister Koo Yun-cheol said the economy grew 1.8 percent from the previous quarter in the first three months of the year and was on course to expand 3.0 percent for the full year. The government also aims to keep annual inflation below 3 percent while pursuing its “3-4-5” vision of raising the potential growth rate to 3 percent, becoming one of the world’s four largest exporters and lifting per capita income to $50,000. The potential growth target is a medium- to long-term objective separate from the government’s 3.0 percent real GDP growth forecast for this year. To sustain growth beyond the semiconductor upcycle, authorities plan to concentrate fiscal, financial and regulatory support on semiconductors, AI data centers and physical AI, while preparing measures for employment-weakened manufacturing and construction. The government will also introduce tax credits for domestic production of strategically important goods and strengthen early-warning systems for supply-chain disruptions highlighted by the conflict in the Middle East. Lee separately questioned officials over South Korea’s failure to enter MSCI’s watch list for a potential upgrade to developed-market status in its latest annual review. “We intend to move forward step by step at our own pace toward MSCI inclusion,” Koo said. “It is not that things are going badly.” Koo cited the launch of round-the-clock onshore foreign exchange trading this month as a key measure to improve market accessibility and said additional solutions would be prepared by the first half of next year. MSCI’s concerns, however, extend beyond trading hours to restrictions on offshore won transactions, liquidity during overseas hours and operational burdens involving foreign investor accounts, settlements and short selling. The effectiveness of the expanded foreign exchange market and whether global investors can use it without significant operational constraints are therefore expected to influence future assessments. Lee also asked what measures were being taken to restore confidence in the domestic stock market. Financial Services Commission Chairman Lee Eog-weon said authorities were expanding rewards for reporting stock manipulation, strengthening shareholder protection and accelerating the delisting of companies that no longer meet listing standards. The government also plans to ease entry barriers for technology companies and redirect financial resources away from excessive property investment toward advanced industries, innovative businesses and regional development. The discussion later turned to fraudulent claims involving government subsidies, with Lee calling for stronger rewards for whistleblowers and tougher restrictions on entities found to have deliberately abused public support programs. Officials said more than 10,000 suspected cases were under investigation and that repeat offenders could face participation restrictions or corporate dissolution. “With the introduction of a CBDC, a purpose can be assigned to the currency and transactions can be traced more easily, making it possible to prevent fraudulent claims at the source,” Koo said. The proposal would involve purpose-bound digital payment instruments for distributing and settling public funds, rather than necessarily representing an immediate rollout of a retail central bank digital currency. Opening the meeting, Lee praised officials for their work over the past year but said the administration’s remaining three years and 11 months would be critical for implementing long-term policies and institutional reforms. 2026-07-15 13:06:28
Korea's youth and manufacturing hiring subdued despite June job recovery SEOUL, July 15 (AJP) - South Korea's youth and job-sensitive manufacturing and construction hiring remained subdued despite headline payroll increase in June, data showed Wednesday. The number of employed people aged 15 and older rose by 63,000 from a year earlier to 29.154 million in June, according to the Ministry of Data and Statistics. The increase reversed a decline of 40,000 in May. The recovery, however, remained uneven. Employment among people aged 15 to 29 fell by 197,000 from a year earlier to 3.428 million, although the decline narrowed from May's 255,000 drop, the steepest since January 2021. The youth employment rate fell 1.7 percentage points to 43.9 percent, while the youth unemployment rate rose 0.9 percentage point to 7.0 percent. Manufacturing employment also remained under pressure. The sector shed 97,000 jobs from a year earlier in June, marking a 24th consecutive month of declines, although the pace improved from May's 140,000 loss. Construction employment fell by 67,000, extending its contraction to 26 consecutive months and worsening from a decline of 43,000 in May. Agriculture, forestry and fisheries also lost 95,000 jobs, extending the sector's decline to a 15th straight month. The weakness in goods-producing industries was partly offset by continued hiring in services. Health and social welfare services added 214,000 jobs, followed by arts, sports and recreation with 55,000 and transportation and storage with 48,000. Despite the increase in overall employment, labor market indicators remained soft. The employment rate for people aged 15 and older stood at 63.4 percent, down 0.2 percentage point from a year earlier. The employment rate for people aged 15 to 64, the OECD's standard measure of working-age employment, slipped 0.1 percentage point to 70.2 percent and was unchanged from May. On a seasonally adjusted basis, employment rose by 66,000 from the previous month to 28.809 million, while the employment rate edged up 0.1 percentage point to 62.6 percent. The unemployment rate stood at 2.8 percent, unchanged from a year earlier and down from 2.9 percent in May. The number of unemployed people increased by 10,000 from a year earlier to 834,000. On a seasonally adjusted basis, the unemployment rate eased to 2.7 percent from 2.8 percent in May. The composition of employment also remained fragile. The number of regular employees increased by just 16,000 from a year earlier, while temporary and daily workers declined by 51,000 and 45,000, respectively. Meanwhile, the economically inactive population—people who were neither employed nor actively seeking work—rose by 181,000 from a year earlier to 16.009 million. The increase was driven mainly by people attending school or training programs and those engaged in housework, while the number of people outside the labor force because of childcare declined. 2026-07-15 09:46:06
Korea's import prices fall steepest in 3 years, chip exports still firm SEOUL, July 15 (AJP) - South Korea's import prices posted their steepest monthly decline since late 2022 in June as lower oil prices reduced import costs, while semiconductor exports remained resilient, Bank of Korea data showed Wednesday. The won-denominated import price index fell 4.4 percent from May, reversing a 0.2 percent increase a month earlier, according to preliminary export-import price data released by the central bank. It was the sharpest monthly decline since December 2022, when import prices fell 6.5 percent. The reversal followed a volatile second quarter. Import prices surged 18.0 percent in March after the U.S.-Iran conflict pushed crude prices sharply higher, before falling 2.1 percent in April and edging up 0.2 percent in May. The Bank of Korea said the June decline reflected lower prices for mining products, coal and petroleum products as international crude prices retreated. Dubai crude, the benchmark used in Korea's import price calculations, averaged $79.45 a barrel in June, down sharply from $103.15 in May. The monthly decline would have been even steeper without the weaker won. Import prices measured in contract currencies fell 6.4 percent from May, compared with a 4.4 percent decline in won terms, as the average won-dollar exchange rate weakened to 1,527.30 in June from 1,490.11 a month earlier. Compared with a year earlier, import prices were still up 20.6 percent, although the pace slowed from 25.4 percent in May. Raw material prices fell 10.3 percent from May, led by an 11.3 percent decline in mining products. Intermediate goods prices dropped 3.2 percent as coal and petroleum products and chemical products became cheaper. Capital goods and consumer goods each rose 1.6 percent, reflecting the weaker won and firmer non-energy import prices. Energy-related prices nevertheless remained well above year-earlier levels. Import prices for mining products rose 25.2 percent from a year earlier, while coal and petroleum products increased 38.9 percent. Export prices, meanwhile, were unchanged from May as higher semiconductor prices offset weaker petroleum products. The flat monthly reading was the weakest since June 2025, when export prices fell 1.2 percent. On an annual basis, however, export prices surged 48.9 percent, the fastest increase since March 1998. Contract-currency export prices fell 2.2 percent from May, indicating that the weaker won helped prevent the headline export price index from declining. The contrast between energy and technology became more pronounced during the month. Export prices for coal and petroleum products fell 13.9 percent from May, led by declines in diesel and jet fuel. By contrast, prices for computer, electronic and optical products rose 4.5 percent from the previous month and jumped 117.4 percent from a year earlier. Memory chips continued to drive the gains. DRAM export prices rose 3.1 percent from May and soared 277.9 percent from a year earlier, while flash memory prices gained 11.7 percent during the month and climbed 268.1 percent on the year. The strength extended beyond prices into export volumes. Export volumes increased 29.8 percent from a year earlier in June, marking the eighth consecutive month of growth and the fastest expansion since January 2010. The Bank of Korea attributed much of the increase to continued global investment in artificial intelligence infrastructure, which boosted shipments of computer, electronic and optical products. Export volume growth in the sector accelerated to 40.0 percent from 25.9 percent in May. Outside the semiconductor sector, export performance remained mixed. Chemical product export volumes slipped 0.7 percent from a year earlier, while transport equipment and electrical equipment posted single-digit growth. Primary metals and machinery performed better, with export volumes rising 20.5 percent and 11.5 percent, respectively. Export value climbed 74.8 percent from a year earlier, accelerating from a 57.0 percent increase in May. Import volumes rose 12.0 percent, supported by computer, electronic and optical products as well as machinery and equipment, while import value increased 30.5 percent. Korea's net barter terms of trade improved for a 36th consecutive month, rising 15.6 percent from a year earlier in June, although the pace slowed from 18.6 percent in May as import prices continued to reflect earlier spikes in oil costs. The income terms of trade index climbed 50.0 percent on stronger export volumes. Looking ahead, easing oil prices could provide further relief after the June 18 U.S.-Iran framework agreement helped calm energy markets. However, uncertainty surrounding shipping through the Strait of Hormuz and continued volatility in global crude prices remain key risks. Lower oil prices are easing pressure on import costs, but the weaker won is limiting the benefit. At the same time, Korea's external sector remains increasingly dependent on semiconductors, with AI-driven demand continuing to offset softer momentum across much of the rest of manufacturing. 2026-07-15 08:42:18
Home ownership becoming a pipe dream for young Korean SEOUL, July 14 (AJP) - Home ownership among young South Koreans has fallen at one of the fastest rates in recent years, underscoring how soaring housing costs are pushing ownership further out of reach even as the government expands housing support that remains largely centered on public rentals rather than ownership. An analysis of anonymized household microdata from the Survey of Household Finances and Living Conditions, reported by Munhwa Ilbo on July 13, showed that the owner-occupancy rate among households headed by people in their 20s and 30s fell to 27.7 percent in 2025 from 38.3 percent in 2021. The decline coincided with a widening wealth gap between generations. Average net assets of younger households dropped to 219.5 million won ($159,000) from 256.6 million won over the same period, while households headed by people in their 50s and 60s saw average net assets rise to 574.2 million won from 473.1 million won. The owner-occupancy and net asset figures are measured at the household level according to the age of the household head. The deterioration comes as the government's latest youth housing policy increasingly relies on expanding rental housing rather than ownership opportunities. Under the 2026 Youth Policy Implementation Plan finalized on April 28, the government plans to provide 67,000 homes for young people this year. Of those, 43,000 units, or 64.2 percent, will be public rental housing, while 24,000 will be publicly supplied homes available for purchase. The rental program consists mainly of 29,000 existing homes purchased or leased by public agencies and rented to young tenants, along with 10,000 newly built public rental homes, 1,000 youth-specialized housing units and 2,400 privately supplied rental homes supported and regulated by the government. While public rental housing offers lower rents and longer tenancy security, it does not allow occupants to build housing wealth in the way homeownership does. Publicly supplied homes transfer ownership to buyers, although the eventual financial gains depend on purchase prices, location and future market conditions. The emphasis on rental housing reflects a broader trend in government policy over the past decade. According to the government's second Basic Plan for Youth Policy, about 460,000 public homes for young people were approved between 2021 and 2025, including 295,000 rental units and 164,000 homes for sale. The government said most of those figures represented project approvals, meaning a considerable time lag remained before construction, completion and actual occupancy. An earlier youth housing initiative announced by the Moon Jae-in administration in 2018 likewise focused heavily on rental support, comprising 140,000 public rental homes and 130,000 government-supported private rental units through 2022. Separate administrative statistics also point to a persistent gap between generations. The Ministry of Data and Statistics' "Administrative Statistics by Life Cycle in 2024," released on Dec. 23, showed that only 11.5 percent of individuals aged 15 to 39 owned a home, unchanged from a year earlier. That compared with 45.5 percent among those aged 40 to 64 and 46.3 percent among people aged 65 and older. The ministry noted that younger homeowners earned nearly twice as much income from wages and business as non-homeowners but also carried significantly heavier debt, with median loan balances 6.5 times larger than those without homes. The administrative homeownership figures are calculated for individuals, while the owner-occupancy and net asset figures from the household finance survey are measured at the household level and therefore are not directly comparable. Economists have increasingly argued that rising housing costs are becoming a structural drag on Korea's economy rather than simply a housing affordability issue. In an issue note published on Jan. 19, the Bank of Korea estimated that every 1 percent increase in housing costs reduced the total assets of young people by 0.04 percent. The central bank said rising housing expenses constrain consumption as well as spending on education, skills and career development, describing youth employment and housing as "structural problems constraining Korea's growth." A separate BOK study released on Feb. 12 found that a 5 percent increase in housing prices reduced the economic well-being of households headed by people younger than 50 by 0.23 percent while increasing that of older households by 0.26 percent. According to the central bank, younger households typically respond to higher home prices by saving more aggressively or taking on larger mortgages to purchase their first home or move into better housing, reducing current consumption. Older households, already holding substantial housing assets, benefit from rising property values without facing the same financial burden. Kang Min-joo, ING's senior economist for South Korea and Japan, said in Asia 2026: 6 Questions for Korea's Recovery, published on Dec. 3, that persistently strong demand and chronically limited housing supply in Seoul continued to push prices higher. Kang noted that Korean households hold roughly 46 percent of their total assets in real estate. However, because property is difficult to convert into cash and mortgage repayments consume a growing share of income, rising home values have provided only limited support for private consumption. The housing market has also complicated monetary policy. When the Bank of Korea kept its benchmark interest rate unchanged at 2.50 percent on May 28, it warned that housing prices in the Seoul metropolitan area and expectations of further gains had strengthened while housing-related lending continued to accelerate. Korea's household debt stood at nearly 89 percent of nominal gross domestic product at the end of last year, among the highest levels in the developed world. Kang said the growing divergence between the overheated Seoul housing market and weaker regional markets could constrain the central bank's policy flexibility in either direction, making it more difficult to balance inflation, financial stability and economic growth. The property market is also intersecting with broader capital flows. According to the BOK, Korean residents' investment in overseas stocks and bonds more than doubled to $140.3 billion last year from $67 billion in 2024, increasing its share of gross domestic product to 7.5 percent from 3.6 percent. The central bank said overseas investment strengthens Korea's external asset position and future investment income but can temporarily weaken the won by increasing demand for foreign currencies. Kang also said whether Korean investors increasingly favor overseas assets over domestic investments could become an important factor influencing the won. No official study, however, has established a direct causal relationship between declining youth homeownership and rising overseas investment. For now, the government's latest housing plan leaves several critical questions unanswered. While it specifies the number of homes to be supplied, it provides few details on regional allocation or when projects will move from approval to construction, completion and actual occupancy. For many younger Koreans, those timelines may prove just as important as the number of homes promised, as each year spent waiting for new supply risks placing homeownership even further beyond reach. 2026-07-14 17:39:12
Tycoons' stock wealth falls 6 trln won without Samsung, SK chiefs SEOUL, July 14 (AJP) - The combined stock wealth of South Korea’s major business group chiefs jumped by more than 29 trillion won ($19.6 billion) in the second quarter, but the headline increase masked losses across most of the group as gains were overwhelmingly concentrated in Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Chey Tae-won. Excluding Lee and Chey, the value of shares held by the remaining 44 group leaders fell by 5.97 trillion won, or 8.6 percent, between the end of March and the end of June, according to corporate tracker Korea CXO Institute. Twenty-eight of the 46 business leaders surveyed, or 60.9 percent, saw their stock wealth decline during the quarter. Including Lee and Chey, the group’s combined stock holdings rose 28 percent to 133.62 trillion won at the end of June from 104.43 trillion won three months earlier. The two chairmen recorded a combined increase of 35.16 trillion won, more than offsetting the losses posted by the other group chiefs. Lee accounted for most of the overall gain, with the value of his stock holdings surging by 28.25 trillion won to 59.19 trillion won from 30.94 trillion won. His stock wealth alone represented more than 44 percent of the combined holdings of all 46 business leaders at the end of June. The value of Lee’s Samsung Electronics shares nearly doubled to 32.54 trillion won from 16.29 trillion won, while his Samsung C&T holdings rose to 16.72 trillion won from 9.05 trillion won. His total stock wealth crossed 60 trillion won for the first time in early June and reached 64.33 trillion won on June 25 before retreating by the end of the month. Chey posted the fastest growth rate, with his holdings soaring 176.9 percent to 10.83 trillion won from 3.91 trillion won. Chey does not directly hold shares in chipmaker SK hynix but owns about 12.98 million common shares in SK Inc., the group’s holding company. SK Inc. shares climbed to 834,000 won at the end of June from 301,000 won at the end of March, driving the sharp increase in Chey’s stock wealth. Other group leaders posted comparatively modest gains. Hyosung Group Chairman Cho Hyun-joon saw his holdings increase by 971.3 billion won, followed by LG Group Chairman Koo Kwang-mo with a gain of 386.2 billion won and Doosan Group Chairman Park Jeong-won with 279.9 billion won. Hyundai Department Store Group Chairman Chung Ji-sun and Hyundai Motor Group Executive Chair Euisun Chung recorded increases of 260.1 billion won and 235 billion won, respectively. By contrast, Celltrion Group Chairman Seo Jung-jin suffered the largest decline in absolute terms, with the value of his holdings falling by 1.64 trillion won. HYBE Chairman Bang Si-hyuk recorded the steepest percentage drop, losing 35.8 percent of his stock wealth as the value of his holdings declined to 2.53 trillion won from 3.93 trillion won. Kakao founder Kim Beom-su’s holdings also fell by 1.19 trillion won to 3.64 trillion won. As of the end of June, 16 group leaders held shares valued at more than 1 trillion won. Lee topped the ranking with 59.19 trillion won, followed by Seo with 11.89 trillion won, Chey with 10.83 trillion won and Euisun Chung with 7.76 trillion won. The survey covered leaders of large business groups designated by the Fair Trade Commission whose stock holdings were worth at least 100 billion won as of the end of June. The valuations were based on closing prices on March 31 and June 30 and included both directly owned listed shares and indirect stakes held through majority-owned unlisted companies. Korea CXO Institute said roughly two-thirds of about 150 stocks held by the business leaders declined during the second quarter, underscoring the narrow concentration behind the increase in their combined wealth. The institute warned that volatility could intensify in the third quarter as investors take profits from stocks that have risen faster than their earnings, while interest rates, exchange rates and geopolitical developments remain key risks. 2026-07-14 16:18:42