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
  • Koreas manufacturing share hits 10-year high on chip power
    Korea's manufacturing share hits 10-year high on chip power SEOUL, July 22 (AJP) - Manufacturing accounted for 27.2 percent of South Korea’s real gross domestic product last year, the highest share in a decade, as the country’s industrial growth became increasingly concentrated in semiconductors and other electronics. Real value added generated by manufacturers rose 2.3 percent, or 14.5 trillion won, ($10 billion) from a year earlier to 632.4 trillion won in 2025, according to the National Assembly Budget Office’s Economic Overview of the Republic of Korea 2026. The sector expanded for a third consecutive year, although the annual increase slowed to about half of the 28.6 trillion won recorded in 2024. Manufacturing’s share of real GDP also rose for a third year to 27.2 percent, the highest in data reviewed by the budget office covering the period since 2016. Manufacturing value added has increased from 498.4 trillion won in 2016, producing average annual growth of about 2.7 percent through last year. That outpaced the roughly 2.3 percent annual expansion in real GDP over the same period, lifting manufacturing’s weight in Asia’s fourth-largest economy. The headline increase, however, masked a growing concentration of industrial activity in a narrow section of the economy. Computers, electronic and optical products accounted for 37.4 percent of manufacturing value added last year, up 14.7 percentage points from 22.7 percent in 2016. The budget office said the sector’s share had risen over the past three years, reflecting a structural shift towards semiconductor-led electronics production. By contrast, the relative contributions of transport equipment, machinery and chemicals have either declined or remained broadly stagnant, pointing to a widening gap between electronics and more traditional manufacturers. South Korea’s reliance on manufacturing is also pronounced by international standards. Manufacturing accounted for 27.4 percent of Korean GDP in 2024 on an OECD-comparable basis, the second-highest share among member countries after Ireland’s 31.1 percent. The figure was well above Germany’s 19.9 percent and Japan’s 19.0 percent, and exceeded the OECD average of 15.2 percent by 12.2 percentage points. The budget office said high-technology industries, including semiconductors and displays, remained particularly important to South Korea because of the economy’s heavy reliance on manufactured exports. Maintaining the country’s existing technological lead while strengthening the competitiveness of those industries would therefore remain a central economic challenge, it said. The broader report said the Korean economy was gradually emerging from last year’s weakness on the back of semiconductor exports and a recovery in domestic demand, while warning that external uncertainty, demographic change and entrenched low growth continued to pose risks. 2026-07-22 10:05:31
  • Koreas June producer prices plateau as pipeline inflation mounts
    Korea's June producer prices plateau as pipeline inflation mounts SEOUL, July 22 (AJP) - South Korea's producer prices plateaued in June after nine consecutive monthly increases, but broader price gauges tracking costs through the domestic supply chain surged at their fastest pace in nearly four years, signaling mounting inflationary pressure still working its way through the economy. The producer price index stood at 130.03 in June, unchanged from May but 8.6 percent higher than a year earlier, according to data released by the Bank of Korea on Wednesday. May's increase was revised up to 1.0 percent from a preliminary 0.8 percent, while the annual gain was raised to 8.6 percent from 8.5 percent. The domestic supply price index, which includes imported and domestically produced goods and services supplied within Korea, rose 0.7 percent from May and 13.2 percent from a year earlier. The annual increase was the steepest since July 2022, when the index rose 14.7 percent. Prices rose across all stages of production, with raw materials gaining 2.1 percent from May and intermediate and final goods each advancing 0.5 percent. Imported raw material prices jumped 45.5 percent from a year earlier, compared with increases of 31.4 percent for imported intermediate goods and 10.9 percent for imported final goods. The widening gap suggested cost pressures remained concentrated at the upstream end of the supply chain and have yet to be fully passed on to consumers. The BOK said the sharp rise in import prices also reflected the weaker won, changes in international oil prices during May and the time lag between import contracts and customs clearance. The headline producer price index remained flat because manufactured goods prices fell 0.3 percent from May as declines in petroleum and chemical products offset higher prices for semiconductors and other electronics. Coal and petroleum products fell 5.3 percent from May and chemical products declined 1.8 percent, with naphtha down 23.5 percent, jet fuel 23.4 percent and ethylene 18.9 percent. Even so, petroleum product prices remained 65.8 percent higher than a year earlier. The total output price index, which covers exports as well as products sold domestically, rose 0.4 percent from May and 17.6 percent from a year earlier. The annual increase was the largest since the BOK began compiling the series in 2010. The record rise was driven overwhelmingly by exports. Export prices climbed 1.3 percent from May and 50.5 percent from a year earlier, while prices for goods sold domestically were unchanged on the month and rose 8.6 percent from a year earlier. Prices for computers, electronic and optical equipment advanced 2.4 percent from May and 24.6 percent from a year earlier, while semiconductor prices rose 3.6 percent on the month and 145.9 percent on the year. DRAM prices soared 476.4 percent from a year earlier, while computer memory devices gained 300.4 percent and computers and peripheral equipment rose 141.7 percent. Price pressures extended beyond chips. Primary metal products rose 16.0 percent from a year earlier, nonferrous metal ingots and primary products climbed 36.9 percent and refined copper products increased 55.3 percent. Service prices rose 0.2 percent from May, led by a 2.5 percent increase in financial and insurance services. Financial and insurance service prices jumped 35.2 percent from a year earlier as stock brokerage commissions surged 143.6 percent, underscoring the retail trading boom. Among prices affecting households and businesses more directly, pork rose 4.3 percent from May, beef prices were up 24.1 percent from a year earlier and industrial city gas climbed 10.6 percent on the month. International passenger airfares and air cargo rates, however, fell 6.5 percent and 3.4 percent, respectively. The plateau in producer prices offers little room for comfort as upstream cost pressures have yet to fully feed through to consumer prices, while lingering tensions in the Middle East continue to pose upside risks to energy costs and inflation. 2026-07-22 07:51:20
  • BOK to plug 24-hour won settlement gap in latest MSCI push
    BOK to plug 24-hour won settlement gap in latest MSCI push SEOUL, July 21 (AJP) - South Korea will pilot a round-the-clock international won payment network in September, seeking to fill a key settlement gap in its newly opened 24-hour foreign exchange market and strengthen its bid for developed-market status from MSCI. The Bank of Korea said Tuesday it had formally named the planned offshore settlement system the Bank of Korea Won International Wire Network, or BOK-WireInt. The network will allow foreign investors and financial institutions to complete won payments during their own business hours, regardless of the time difference with Seoul. KB Kookmin Bank, Woori Bank, Hana Bank and Shinhan Bank will participate in the initial trial, with the central bank and the four lenders currently conducting system tests. The BOK plans to complete the introduction and revision of related payment-system regulations by August. BOK-WireInt will run for 24 hours on business days, from 9 a.m. to 9 a.m. the following day, excluding weekends and public holidays. The system is intended to give overseas investors continuous access not only to won trading but also to the infrastructure needed to settle and manage the funds. South Korea moved its domestic foreign exchange market to 24-hour trading on July 6 as part of a broader drive to improve overseas access to the won. The change enabled investors to trade spot won-dollar and foreign exchange swap products during London and New York hours, but the expansion also increased the need for a payment network capable of supporting transactions beyond conventional domestic operating hours. The new network is designed to provide that missing link, allowing foreign institutions to complete won settlements during their local market hours rather than waiting for systems in Seoul to reopen. The BOK said the change should improve the convenience of using and managing won funds and widen foreign access to the country’s settlement infrastructure. The central bank also expects the project to contribute positively to South Korea’s efforts to join MSCI’s developed-market index. Restrictions surrounding offshore won trading and settlement have long been among the market-access issues facing South Korea, which remains classified as an emerging market by the global index provider. The September pilot will test whether the new network can support stable 24-hour settlements before participation is expanded more broadly. The won strengthened 5.0 won to close at 1,473.4 per dollar at 3:30 p.m. Tuesday - supported by the Bank of Korea’s July 16 rate increase and expectations that proceeds from SK Hynix’s U.S. ADR offering will add to dollar supply in the domestic foreign exchange market. 2026-07-21 16:23:21
  • Chip boom puts BOK on tightening path, but spillover debate clouds outlook
    Chip boom puts BOK on tightening path, but spillover debate clouds outlook SEOUL, July 21 (AJP) - South Korea's bond market is increasingly pricing in another interest-rate increase this year after the Bank of Korea's July hike, as Governor Shin Hyun-song argues that the country's chip-driven income boom is beginning to generate demand-side inflation despite a still-sluggish domestic economy. Investors now widely expect the benchmark policy rate to reach 3.0 percent by year-end after the central bank last week raised it by 25 basis points to 2.75 percent, its first increase since January 2023. Some analysts see the next move coming as early as the Aug. 28 policy meeting. "We are seeing an exceptional condition. The gross domestic product has grown 3.8 percent (from a year earlier) in the first quarter whereas the gross domestic income grew much greater at 13.2 percent," Shin said after the July 16 monetary policy meeting. "We have to see if this is a temporary phenomenon or one that could have a big impact on the economy." Shin said the divergence suggested the economy may be entering a new phase in which income growth, fueled by soaring export prices, begins to feed domestic demand. "If income improvement continues at this kind of strength, we may have to be wary of inflationary pressure from the demand side," he said. Markets have already begun positioning for that possibility. The benchmark 10-year Korean government bond yield climbed to an annual high of 4.365 percent by midday Tuesday, up from an average of 4.252 percent in June and 3.612 percent in February before the outbreak of the Iran conflict. Shin has also indicated that the latest rate increase marks the beginning of a broader tightening cycle. Alongside imported inflation stemming from elevated energy prices and a weaker won, he has increasingly pointed to domestic pressures, including faster wage gains linked to the AI boom. The government's recent decision to raise its 2026 economic growth forecast to 3.0 percent — the strongest pace since 2021 — has reinforced that narrative. Semiconductor exports have powered much of the recovery, with outbound shipments reaching $551.3 billion as of July 20, keeping the country on course to touch the $1 trillion mark for the first time. Government officials and the central bank argue that the current semiconductor cycle differs fundamentally from previous booms. Unlike earlier upcycles, they contend, the AI-driven surge is generating unprecedented corporate earnings that are flowing into wages, shareholder income, investment and tax revenues, creating a broader economic impact. The BOK maintains that stronger semiconductor earnings will gradually spread through investment, household income and consumption while lifting corporate and earned-income tax receipts. Shin has rejected the view that the benefits will remain confined to a handful of chipmakers, although he acknowledged much of the fiscal windfall will become visible next year. The central bank strengthened that argument in an Issue Note released Sunday, saying the latest improvement in Korea's terms of trade could have a more durable effect on domestic demand because it stems from structural AI-related semiconductor demand and higher export prices rather than temporary declines in oil prices. According to the report, previous improvements in the terms of trade often reflected cheaper imported energy, which boosted purchasing power but faded as commodity prices recovered. This time, however, higher export prices driven by AI memory chips may sustain income gains for longer, encouraging consumption and business investment. Yet evidence that the semiconductor windfall is spreading across the broader economy remains mixed. Retail sales, construction activity and many service industries have recovered only gradually despite record exports and surging corporate earnings. Corporate data also point to a disconnect between profits and employment. Employment at 282 of Korea's 500 largest companies rose just 0.2 percent over the past three years even as sales increased 10.9 percent and operating profit jumped 81.0 percent, according to corporate tracker Leaders Index. The contrast is even sharper in the semiconductor-heavy IT, electrical and electronics sector. Sales climbed 34.4 percent and operating profit surged 2,740.5 percent, yet employment increased by only 1,727 workers, or 0.6 percent. The BOK itself acknowledges many of those limitations. Its report noted that IT manufacturing accounts for only 2.6 percent of business-sector employment, limiting the direct transmission of semiconductor gains into household income. It also said most wage increases and equity gains accrue to high-income households with relatively low propensities to consume. Investment spillovers may also prove weaker than headline figures suggest. Roughly 60 percent of semiconductor manufacturing equipment is imported, while Korean chipmakers have increasingly expanded production overseas, reducing the domestic impact of capital spending. Persistent weakness in construction, retail, smaller manufacturers and other non-IT industries could further dilute the benefits from the export boom. By contrast, the pressures supporting tighter monetary policy are already visible. The won remains one of Asia's weakest major currencies. Shin has repeatedly argued that the Korea-U.S. interest-rate gap deserves close attention because cheaper won funding can encourage carry trades into dollar assets and increase hedging costs for overseas investments, reinforcing depreciation pressure. Following last week's policy meeting, he said the BOK is closely monitoring offshore non-deliverable forward markets and is preparing additional research on how changes in the interest-rate differential affect currency flows. Even after the July rate increase, Korea's benchmark rate remains 1 percentage point below the upper end of the U.S. Federal Reserve's 3.50-3.75 percent target range. Currency weakness has also offset part of the income gains generated by stronger exports. While Taiwan has benefited from the same AI-driven semiconductor cycle, the Korean won has fallen about 13 percent against the U.S. dollar since the end of 2023, compared with roughly 5 percent for the Taiwan dollar. That depreciation has continued to raise import costs for energy, food and raw materials, with Shin noting that import prices remain around 20 percent higher than a year earlier. Meanwhile, financial stability concerns continue to build. Housing prices have accelerated across Seoul and much of Gyeonggi Province, while household lending has continued expanding by roughly 8 trillion won to 9 trillion won a month despite tighter lending regulations. Those pressures complicate the policy outlook. The immediate beneficiaries of the semiconductor boom remain concentrated among large exporters, shareholders and highly paid technology workers, while higher borrowing costs are felt much more broadly by indebted households, small-business owners, builders and smaller manufacturers. Shin has argued that such distributional issues should be addressed through targeted fiscal and financial policies rather than monetary policy, allowing interest rates to focus primarily on inflation and financial stability. For markets, the debate is no longer whether semiconductors are lifting Korea's national income — they clearly are. The more important question is whether those gains will spread widely enough through wages, consumption and investment to justify a sustained tightening cycle before the broader domestic economy fully recovers. That question is likely to shape not only the Bank of Korea's next rate decision, but also how investors judge the durability of Korea's AI-driven economic resurgence in the months ahead. 2026-07-21 15:13:57
  • BOK governor joins Asia-Pacific policymakers amid AI and inflation risks
    BOK governor joins Asia-Pacific policymakers amid AI and inflation risks SEOUL, July 21 (AJP) -Bank of Korea Governor Shin Hyun-song will join Asia-Pacific central bankers and financial regulators in Singapore this week for talks on inflation, financial stability and the economic risks posed by intensifying artificial intelligence competition and escalating tensions in the Gulf. Shin will attend the 31st Executives' Meeting of East Asia-Pacific Central Banks (EMEAP) Governors and a separate gathering of central bank governors and financial supervisory chiefs from Wednesday through Friday, the BOK said Tuesday. The discussions come as policymakers assess how the rapid adoption of AI is reshaping economic structures while creating new challenges for financial stability, regulation and monetary policy. Shin and fellow EMEAP governors will exchange views on recent economic developments and examine the implications of AI for regional economies and financial systems. They will also review the work of the group's committees on monetary and financial stability, financial markets, payment and settlement systems, banking supervision, information technology and financial institution resolution. At the separate meeting with financial supervisors, participants will focus on how banks and other financial institutions are deploying AI and the regulatory challenges arising from its broader adoption. Officials will also discuss the macroeconomic and financial implications of supply chain disruptions and possible policy responses. Founded in 1991, EMEAP comprises the central banks and monetary authorities of 11 East Asia-Pacific economies, including South Korea, China, Japan, Australia, Singapore and Hong Kong. Financial regulators from South Korea, China, Japan, Australia and Indonesia will also participate in the joint meeting of central bank governors and supervisory authorities. Shin is scheduled to depart for Singapore on Wednesday and return to South Korea on Saturday. 2026-07-21 13:00:38
  • Koreas July exports set 20-day record on chip strength
    Korea's July exports set 20-day record on chip strength SEOUL, July 21 (AJP) -South Korea is set to extend its record-setting export streak in July, with chip-led outbound shipments surging 52.3 percent in the first 20 days to a record $54.93 billion for the period, preliminary customs data showed Tuesday. Exports totaled $54.93 billion from July 1 to 20, while imports increased 20.0 percent from a year earlier to $42.72 billion, generating a trade surplus of $12.22 billion. Final monthly trade data will be released by the Ministry of Trade, Industry and Resources on Aug. 1. The export figure was the highest ever recorded for the first 20 days of July, surpassing the previous record of $36.9 billion set in 2024. Growth moderated from the first 20 days of June, when exports rose 60.2 percent to $61.92 billion. On a nominal basis, early July exports were 11.3 percent lower than during the comparable June period. July had 14.5 working days, one fewer than a year earlier. Adjusted for the calendar effect, average daily exports climbed 62.9 percent to $3.79 billion, accelerating from June's 49.7 percent increase. Semiconductor exports surged 180.6 percent from a year earlier to $22.11 billion. Chips accounted for 40.3 percent of total exports, slightly down from June's 41.2 percent share when semiconductor shipments reached $25.51 billion, but remained by far the country's largest export engine. Computer peripheral exports more than tripled to $2.04 billion. Shipments of ships, wireless communication devices and petroleum products rose 70.8 percent, 65.9 percent and 33.4 percent, respectively. Automobile exports fell 10.6 percent to $3.24 billion, while auto parts shipments declined 9.6 percent. Exports to China nearly doubled to $13.36 billion. Shipments to the United States rose 39.6 percent to $8.96 billion, while those to Vietnam climbed 82.4 percent to $6.21 billion. Exports to the European Union increased 30.3 percent, while shipments to Taiwan gained 41.8 percent. China, the United States and Vietnam together accounted for 51.9 percent of total exports. Imports reflected continued strength in the semiconductor sector. Semiconductor imports rose 54.9 percent to $6.50 billion, while imports of chipmaking equipment increased 56.9 percent to $2.15 billion. Crude oil imports climbed 27.5 percent, while imports of natural gas and coal rose 27.9 percent and 25.7 percent, respectively. Combined energy imports increased 27.4 percent. The trade surplus narrowed from $17.44 billion in the first 20 days of June as energy imports grew and exports eased from the previous month's exceptionally strong pace. Cumulative exports from Jan. 1 through July 20 rose 48.7 percent from a year earlier to $551.28 billion, while imports increased 17.1 percent to $401.37 billion. The cumulative trade surplus reached $149.91 billion. The Korea Customs Service said the preliminary figures may be affected by changes in the number of working days and remain subject to revision when the final monthly data are released. 2026-07-21 11:21:24
  • Won holds at 1,478 as strong dollar offsets BOK hike; bond yields climb
    Won holds at 1,478 as strong dollar offsets BOK hike; bond yields climb SEOUL, July 20 (AJP) - The South Korean won ended nearly unchanged Monday as a strong dollar and renewed U.S.-Iran tensions offset support from the Bank of Korea’s interest-rate increase last week. Government bond yields rose as investors continued to price in the possibility of further monetary tightening. The won closed the daytime trading session at 1,478.4 per dollar, up 0.1 won from the previous session. The currency showed little reaction to the BOK’s decision Thursday to raise its benchmark interest rate by 25 basis points to 2.75 percent from 2.50 percent. The central bank cited stronger export- and investment-led growth, above-target inflation and persistent financial stability risks, while Gov. Shin Hyun-song left the door open to further rate increases depending on incoming data. The dollar index, which measures the greenback against a basket of six major currencies, remained above 100, limiting the won’s gains. Renewed military tensions between the United States and Iran also sustained safe-haven demand for the dollar. U.S. service members were killed in separate incidents involving Iranian missile and drone attacks in Jordan and Iraq, raising concerns that the conflict could spread across the region. The developments kept the won’s recovery limited even after the BOK delivered its first rate increase since November 2022. In the bond market, the yield on the three-year government bond rose 4.7 basis points to 3.895 percent, while the 10-year yield gained 3.9 basis points to 4.336 percent. The larger rise in the three-year yield, which is more sensitive to the policy outlook, reflected expectations that the BOK could raise rates again. The U.S. 10-year Treasury yield traded at around 4.57 percent Monday, roughly 23 basis points above the comparable Korean yield. Korean government bonds therefore continued to offer no nominal yield premium over U.S. Treasuries, potentially limiting their appeal to yield-seeking investors. The yield gap persisted despite foreign inflows linked to South Korea’s phased inclusion in the FTSE Russell World Government Bond Index. The country’s inclusion began in April and is scheduled to proceed in monthly stages through November. Foreign purchases linked to the index have so far failed to fully offset upward pressure on yields from expectations of further BOK tightening and renewed inflation risks stemming from the Middle East conflict. 2026-07-20 17:33:53
  • Koreas Q2 GDP to slow from Q1 but on track for around 3% annual growth
    Korea's Q2 GDP to slow from Q1 but on track for around 3% annual growth SEOUL, July 20 (AJP) - South Korea's economy is expected to have expanded at a slower pace in the second quarter after a surprisingly strong start to the year, but growth is still likely to remain robust enough to keep the economy on track for around 3 percent expansion in 2026. The Bank of Korea will release its preliminary second-quarter gross domestic product data on Thursday, providing the first official gauge of whether the country's semiconductor-led export boom has continued to offset sluggish domestic demand and mounting external uncertainties stemming from the prolonged Middle East conflict. Economists expect quarterly growth to range between 0.5 percent and 1.0 percent, down from the first quarter's exceptional 1.8 percent expansion but comfortably above the central bank's May projection of 0.2 percent. In the January-March period, the economy grew 3.8 percent from a year earlier, driven by record semiconductor exports and strong investment. The momentum has largely continued through the second quarter. South Korea's exports reached a record $496.7 billion in the first half, fueled by booming semiconductor shipments totaling $192.4 billion, raising expectations that annual exports could exceed the $1 trillion mark for the first time. Among major forecasters, ING projects second-quarter growth of 1.0 percent from the previous quarter, the most optimistic estimate reviewed by AJP. The Dutch bank said that although export growth moderated, imports contracted even more sharply, allowing net exports to make a positive contribution to GDP. Government support measures to cushion the impact of higher energy costs also helped prevent a sharp slowdown in private consumption. Citi recently raised its second-quarter growth estimate to 0.7 percent from 0.3 percent after trade data showed net exports were considerably stronger than previously expected. KB Securities forecasts 0.5 percent quarterly growth, citing resilient export volumes and improving service-sector activity, while noting that stronger-than-expected contributions from net exports and services could lift the final figure further. Meritz Securities expects growth of around 0.7 percent as export volumes expanded more strongly than anticipated. Taken together, the forecasts point to a clear moderation from the first quarter's outsized performance but also suggest the economy has substantially outperformed the BOK's earlier expectations. Semiconductor exports, facilities investment related to chip production and net exports are expected to remain the principal drivers of growth, while weak construction investment and lingering effects from the energy shock likely weighed on domestic demand. The stronger-than-expected performance has prompted several institutions to raise their full-year outlooks. Citi now expects the economy to grow 3.7 percent this year, up from 3.5 percent previously, while ING lifted its forecast to 4.0 percent from 3.0 percent. Meritz Securities has also indicated it may revise its projection into the mid-3 percent range after Thursday's data. The government has recently revised up its growth target to around 3.0 percent, while the Bank of Korea indicated upgrade to its May projection of 2.6 percent in August. 2026-07-20 16:43:26
  • BOK to expand CBDC-linked deposit-token trial in Sept
    BOK to expand CBDC-linked deposit-token trial in Sept SEOUL, July 20 (AJP) - The Bank of Korea is preparing to begin the second phase of its deposit-token trial as early as September, expanding the experiment to peer-to-peer transfers, biometric authentication and government-fund disbursement. The central bank, the Financial Services Commission and the Financial Supervisory Service are building the required systems and completing regulatory procedures for the next phase of Project Hangang, according to financial industry sources. Under the project, the BOK issues a blockchain-based wholesale digital currency, which commercial banks use as a settlement asset to issue tokens backed by customer deposits. The number of participating banks will increase to nine as BNK Kyongnam Bank and iM Bank join the seven lenders involved in the first phase. The existing participants are KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, NH Nonghyup Bank, Industrial Bank of Korea and Busan Bank. Banks plan to simplify the registration process and introduce peer-to-peer transfers, biometric authentication and automatic conversions and withdrawals between conventional deposits and deposit tokens. They will also expand the number of online and offline merchants accepting the tokens through individual partnership agreements. Authorities are considering operating the second phase without setting a predetermined closing date. The trial will remain subject to the financial regulatory sandbox, however, which allows testing for a maximum of four years. The government also plans to test the use of deposit tokens for subsidies, official operating expenses and other public funds. Subsidies for the installation of electric-vehicle charging facilities are being considered as the first government payments to be distributed through the system, with a pilot ministry to be selected within this year. Spending purposes and expiration dates can be programmed directly into the tokens, allowing the government to restrict their use and prevent improper claims. Authorities plan to expand the experiment to other government expenditures and conduct a separate trial involving tokenized government bonds in 2027. Project Hangang began after the BOK and financial regulators unveiled a joint plan in October 2023, followed by system development and technical testing before the first live transaction trial ran from April to June 2025. During the first phase, about 81,000 digital wallets were opened at seven banks, with 114,880 transactions completed and 1.64 billion won converted from bank deposits into tokens. The trial confirmed that key functions, including token issuance, interbank settlement and programmable digital vouchers, could operate in a live environment, but its limited merchant network and functions made it difficult to assess sustained consumer demand. Participants cited a wider merchant network, simpler authentication and remittance services as key improvements, prompting the BOK to focus the second phase on convenience and broader practical use. 2026-07-20 11:36:35
  • Authorities halt new single-stock leveraged products amid chip-driven market volatility
    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