Aju Press - Asia 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

Korea's mortgage rates hit four-year high SEOUL, September 30 (AJP) — South Korea's average mortgage rate rose to 4.66 percent in August, its highest since November 2022, as borrowing costs increased across household and corporate loans, central bank data showed Wednesday. According to data released by the Bank of Korea (BOK), the average rate on new household loans rose 0.12 percentage point from July to 4.76 percent. Mortgage rates climbed 0.18 percentage point to 4.66 percent, extending their rise for a fourth consecutive month. Rates on unsecured personal loans jumped 0.36 percentage point to 6.33 percent, while Jeonse loan rates rose 0.16 percentage point to 4.35 percent. Jeonse is a rental system unique to South Korea in which tenants pay the landlord a large lump-sum deposit, often more than half the home's value, which is returned in full when the lease ends. Both fixed- and variable-rate mortgages became more expensive, with the fixed rate rising to 4.88 percent from 4.76 percent and the variable rate to 4.53 percent from 4.35 percent. The fixed mortgage rate has risen for 11 consecutive months since October 2025. The share of fixed-rate mortgages rose to 35.3 percent from 31.9 percent, marking its first increase in 10 months as the share of variable-rate lending declined. Across all household loans, the fixed-rate share rose to 23.5 percent from 21.0 percent, its first increase in 13 months. Corporate borrowing costs also increased, with the average corporate lending rate rising 0.10 percentage point to 4.30 percent. Rates for large companies edged up 0.03 percentage point to 4.21 percent, while those for small and medium-sized enterprises rose 0.16 percentage point to 4.38 percent. The BOK said higher short-term market rates, including three-month certificates of deposit and short-term bank bonds, contributed to the increase in corporate lending rates. Across all newly issued bank loans, the average lending rate rose 0.13 percentage point to 4.40 percent, while the average rate on new savings deposits remained unchanged at 3.21 percent. The gap between lending and deposit rates consequently widened to 1.19 percentage points from 1.06 percentage points, marking its first increase in seven months. On an outstanding-balance basis, however, the average lending rate rose 0.03 percentage point to 4.40 percent and the average deposit rate increased 0.05 percentage point to 2.20 percent, narrowing the spread to 2.20 percentage points from 2.22 percentage points. Among nonbank institutions, deposit and lending rates fell at savings banks but rose at credit unions, mutual finance companies and community credit cooperatives. AJP Takeaways - Korea's average mortgage rate rose to 4.66 percent in August, its highest since November 2022 and the fourth straight monthly increase. - Unsecured personal loan rates jumped 0.36 percentage point to 6.33 percent, while household lending rates rose to 4.76 percent. - The spread between new bank lending and deposit rates widened for the first time in seven months as lending rates rose while savings deposit rates held steady. 2026-09-30 13:37:59
Japan leads Asian stocks while Korean bonds rebound SEOUL, September 30 (AJP) -Japanese shares led East Asian markets Wednesday as Seoul and Shanghai managed only modest gains amid a continued rise in U.S. Treasury yields, with the 30-year yield reaching a 24-year high. Japan’s Nikkei 225 rose 1.2 percent to 66,271.28 as of midday. South Korea’s KOSPI edged up 0.1 percent, while the Shanghai Composite gained 0.3 percent to 3,842.30. Hong Kong’s Hang Seng Index fell 0.25 percent to 24,463.22. The subdued regional performance followed overnight losses on Wall Street. The Dow Jones Industrial Average fell 0.26 percent, the S&P 500 slipped 0.17 percent and the Nasdaq Composite shed 0.08 percent. The U.S. 30-year Treasury yield touched 5.6206 percent, its highest since June 2002, while the benchmark 10-year yield reached 5.293 percent, the highest since June 2007. Rising energy costs have fueled inflation concerns and expectations of further Federal Reserve tightening. In Seoul, foreign investors sold a net 385.6 billion won ($285 million) of KOSPI shares and institutions offloaded another 349.2 billion won. The junior KOSDAQ outperformed the main board, rising 1 percent to 858.93. Chip heavyweights diverged. SK hynix rebounded 1.1 percent to 1,785,000 won, while Samsung Electronics fell 0.8 percent. The auto sector lost 0.95 percent following weak industrial activity data. Hyundai Motor declined 0.9 percent to 347,000 won. Data released Wednesday showed automobile production plunged 24.8 percent in August from July, helping drive a 4.8 percent decline in mining and manufacturing output. Semiconductor production fell 2.2 percent. Officials attributed part of the automobile slump to summer factory holidays being concentrated in August. South Korean government bonds rallied after authorities signaled interventionist measures to contain the rise in market yields. The two-year government bond yield slipped below 4 percent, while the 10-year yield fell 4.8 basis points to 4.422 percent. Bond prices move inversely to yields. Deputy Prime Minister and Finance Minister Lee Hyoung-il said Wednesday that the government would deploy emergency bond buybacks and reduce issuance using part of its excess tax revenue if needed to stabilize the market. The government expects tax receipts to exceed its supplementary-budget forecast by 63.2 trillion won this year, giving it room to reduce borrowing. Buybacks would retire outstanding debt before maturity, while smaller new offerings would ease the supply burden on investors. The won was little changed at 1,353.7 per dollar. AJP takeaways - Japan leads: The Nikkei gained 1.2 percent as Seoul and Shanghai eked out modest gains amid rising U.S. bond yields. - Korean bonds rebound: Yields retreated after Seoul signaled emergency buybacks and reduced issuance funded by excess tax revenue. - Domestic weakness weighs: Auto shares fell as August data showed simultaneous declines in production, consumption and investment. 2026-09-30 11:41:56
Seoul mulls buyback and issuance cut to tame bond yields SEOUL, September 30 (AJP) —South Korean authorities are ready to intervene to contain the spike in bond yields through buybacks and new issue cutback, according to government release. South Korea's economic authorities on Wednesday agreed to deploy emergency government-bond buybacks and curb new offerings if yield rises are deemed excessive, using part of around 63.2 trillion won ($46.6 billion) in tax windfall. The measures were discussed at an expanded macro-fiscal-financial meeting chaired by Deputy Prime Minister and Minister of Finance and Economy Lee Hyoung-il at the Government Complex Seoul earlier Wednesday. The meeting brought together Minister of Planning and Budget Park Hong-keun, Financial Services Commission Chairman Lee Eog-weon and Bank of Korea (BOK) Gov. Shin Hyun-song. Officials assessed that domestic bond yields have continued to rise as higher global interest rates, tightening by major central banks and domestic factors weigh on the market. The three-year Korean government bond yield recently climbed to 4.119 percent, its highest since November 2022, while the 10-year yield reached 4.600 percent. The three-year yield fell 4.3 basis points to 4.076 percent on Tuesday, while the 10-year yield dropped 6.3 basis points to 4.476 percent. They agreed to closely monitor the Korean government bond market and take stabilization measures if the rise in yields becomes excessive, including emergency buybacks and reductions in planned bond issuance. Part of this year's excess tax revenue could be used to reduce planned government bond issuance, the authorities said. The government expects tax revenue to exceed the supplementary budget estimate by 63.2 trillion won, citing a faster economic recovery supported by strong semiconductor activity. Officials agreed that the additional revenue should be used strategically, including for housing, jobs and financial support for lower-income households, with the aim of easing inequality and helping the economic recovery translate into improved living conditions. The meeting came after the BOK recently raised its base rate and ahead of parliamentary deliberations on next year's budget, bringing fiscal, monetary and financial authorities together to discuss the policy mix. Officials said exports and investment have remained strong and economic growth has accelerated, but pointed to elevated uncertainty from higher interest rates in major economies and geopolitical risks, as well as continued pressure on household livelihoods. They also said fiscal and monetary policy could complement each other if government spending is directed toward vulnerable groups and investment in future growth engines, helping raise potential growth over the medium term while easing inflationary pressure. The authorities agreed to maintain frequent communication on macroeconomic, fiscal and financial issues to improve coordination among their policies. AJP Takeaways - South Korea will consider emergency government-bond buybacks and reduced issuance if domestic yields rise excessively. - The government expects 63.2 trillion won in excess tax revenue and plans to use it strategically for housing, jobs and financial support for lower-income households. - Fiscal, monetary and financial authorities agreed to strengthen policy coordination as global and domestic interest rates remain elevated. 2026-09-30 11:09:38
Korea's Aug factory output in steepest decline in 10 months *Updated with additional information SEOUL, September 30 (AJP) — South Korea’s factory output sank 5.1 percent in August - the steepest monthly decline in 10 months - amid rising inventories, easing external demand and a deepening slump in domestic demand, government data showed Wednesday. The broader mining, manufacturing and utilities output index fell 4.8 percent from the previous month, also the biggest pullback since October 2025, according to the Ministry of Data and Statistics. Automaking was the main drag, with output plunging 24.8 percent from July, while semiconductor production fell 2.2 percent. Lee Doo-won, deputy commissioner for short-term economic statistics at the ministry, said at a briefing Wednesday at Government Complex Sejong that automobile production was hit by fewer operating days as summer holidays, which had previously tended to be spread across July and August, were concentrated in August this year. "Partial strikes at some automakers that began in July also weighed on production," Lee said. The decline in vehicle production also spilled over into related industries, reducing demand for products including tires and plastics. Rubber and plastics output fell 11.0 percent from July. The Ministry of Trade, Industry and Resources had separately said in its monthly automobile industry report released on Sept. 17 that fewer operating days during the summer holiday period and production disruptions from strikes contributed to the decline in automobile production. Chip shipments remained solid, rising 7.1 percent, with export shipments up 7.9 percent. Automobile shipments fell 20.7 percent, including a 23.2 percent drop in shipments for export. Across manufacturing, domestic shipments declined 3.9 percent and export shipments fell 3.2 percent. Inventories rose 0.6 percent overall, although stocks of semiconductors and automobiles declined. The manufacturing inventory-to-shipment ratio rose to 100.9 percent from 96.7 percent in July, while the sector's average capacity utilization rate fell 4.0 percentage points to 70.8 percent. The all-industry production index fell 1.3 percent from the previous month after slipping 0.1 percent in July. Services output rose 0.5 percent and construction increased 1.9 percent. Retail sales declined 1.8 percent from July, extending a revised 2.6 percent drop in the previous month. Sales of durable goods, including passenger cars and home appliances, fell 4.5 percent, while nondurable goods such as food and beverages declined 1.6 percent. Passenger-car sales fell 13.6 percent from July, following an 11.1 percent decline in the previous month. The August drop was the steepest since January 2024. Lee said at the same Wednesday briefing that weaker automobile production affected vehicle sales, while softer demand for home appliances partly reflected purchases being brought forward by promotional programs involving Onnuri gift certificates in June and early July. Facility investment dropped 9.5 percent from the previous month, reversing an 8.0 percent increase in July. Investment in transport equipment sank 32.8 percent, while machinery investment rose 1.6 percent. The sharp decline in transport equipment followed an 18.2 percent increase in July and reflected lower investment in ships and aircraft. Despite the monthly retreat, facility investment remained 16.1 percent above its year-earlier level, with machinery investment — owing to brisk chip facility upscaling — up 25.4 percent. Forward-looking construction orders fell 10.6 percent from a year earlier despite the monthly rebound in completed construction work. Orders for buildings, including factories and warehouses, dropped 14.1 percent. Broader business-cycle indicators were mixed. The cyclical component of the coincident index, which tracks current economic conditions, rose 0.5 point, while the corresponding leading index, a gauge of the outlook, slipped 0.1 point. Lee said at Wednesday's briefing that weakness in the automobile sector affected both production and consumption in August and that more data would be needed to gauge the underlying direction of the economy. AJP Takeaways - South Korea's factory output fell 5.1 percent in August, led by a 24.8 percent plunge in automobile production. - Semiconductor output slipped 2.2 percent, but semiconductor shipments rose 7.1 percent and export shipments increased 7.9 percent. - Retail sales declined for a second month, while equipment investment fell 9.5 percent after rising in July. 2026-09-30 08:38:41
Korea's mortgage bomb ticks as market rates surge SEOUL, September 29 (AJP) — Rapidly rising mortgage rates as domestic markets track a surge in U.S. Treasury yields are unnerving South Korean borrowers carrying more than $850 billion in housing debt and complicating the central bank’s fight against renewed inflationary pressure. Mortgage loans stood at 1,190.8 trillion won ($852 billion) at the end of June, accounting for about 63 percent of the country’s 1,891.3 trillion won in outstanding household loans, according to Bank of Korea (BOK) data released Aug. 19. Higher market rates were already feeding into borrowing costs in July. New bank mortgages averaged 4.48 percent. Fixed-rate mortgages rose 23 basis points from the previous month to 4.76 percent, while variable-rate loans increased by a smaller 8 basis points to 4.35 percent. As the gap widened, the share of fixed-rate products among new mortgages fell to 31.9 percent. At an Aug. 26 briefing, the BOK attributed the increase in mortgage rates partly to higher benchmark rates, including five-year bank bond yields. Many fixed or mixed-rate mortgages are priced against medium-term financial bond yields, so banks can raise new loan quotations as those benchmarks climb. Variable-rate loans generally respond through funding benchmarks such as COFIX and borrowers’ scheduled rate resets. The pressure therefore reaches borrowers at different speeds. The BOK’s monthly lending-rate averages capture loans actually extended during the month, after banks have begun repricing. “When central banks broadly turn hawkish, market rates price that in first, and the move then feeds through to bank bonds,” said Park Hyung-jung, an economist at Woori Bank. Park said the AAA-rated five-year financial bond yield, a key benchmark for fixed mortgage products, stood at around 4.57 percent Tuesday and was approaching 4.6 percent. The upper end of five-year fixed mortgage rates at major banks has already risen above 7 percent for some products, he said. “If the rate-hike cycle continues and bank bond yields rise accordingly, we may need to consider the possibility of the upper end of mortgage rates exceeding 8 percent if the five-year yield approaches 5 percent,” Park said. Pressure on domestic borrowing costs could persist as major central banks maintain tighter policy settings. “The three-year government bond yield moved above 4 percent around Sept. 11 and has not returned to the 3 percent range since,” said Min Hyun-ha, a research fellow at Hana Institute of Finance. “The BOK is one factor, but the Fed and the Bank of Japan are also raising rates, while the Bank of England has left open the possibility of an increase,” Min said. “From here, bond yields broadly point to the upside, and lending rates are likely to rise accordingly.” Tighter bank lending controls have also raised questions about whether borrowers are turning to nonbank lenders. Official figures show an uneven shift. Nonbank household lending fell by 0.8 trillion won in August, although mortgage lending increased by 0.3 trillion won, according to Financial Services Commission (FSC) data released at a Sept. 9 household-debt review meeting. Over the first eight months of the year, however, nonbank household lending rose by 13.5 trillion won, far exceeding the 5.1 trillion-won increase for all of 2025. Mutual-finance institutions accounted for 10.1 trillion won of this year’s increase. The growth has not extended broadly to card and capital companies. Household lending at credit-specialized finance companies fell by 0.3 trillion won in August and rose by just 0.4 trillion won over the first eight months. The FSC said BOK rate increases and higher market rates were adding to repayment burdens, calling for particular care to protect lower-income and vulnerable borrowers. Authorities would also encourage banks to expand long-term fixed-rate mortgages to reduce exposure to future rate swings. For the BOK, household debt cuts both ways. Higher rates can curb housing demand and borrowing, easing financial-stability risks. But they also raise repayment costs for households already carrying large debts. The central bank has maintained its tightening stance, raising its base rate by 25 basis points in both July and August to 3.00 percent. At his Aug. 27 policy press conference, BOK Gov. Shin Hyun-song said a preemptive response was needed because inflation was expected to remain above target. Tighter policy could also help moderate the recent rise in Seoul-area housing prices and household debt, he said. The BOK reiterated that position in its Sept. 10 Monetary Policy Report, saying it would determine the “timing and pace” of additional rate increases while monitoring inflation, growth and financial stability. How quickly higher market rates reach household borrowers will help shape that calculation. The next reading comes Wednesday, when the BOK releases August lending-rate data. By the Monetary Policy Board’s Oct. 22 meeting, policymakers will have to weigh how much further to tighten as households absorb the increases already under way. AJP Takeaways - South Korean households carried 1,190.8 trillion won in mortgage debt at the end of June, about 63 percent of outstanding household loans. - Rising bond yields are pushing up mortgage rates, with the timing of the impact depending on loan benchmarks and borrowers’ rate-reset schedules. - The BOK continues to signal further tightening as it balances inflation and housing-market risks against mounting household repayment burdens. 2026-09-29 17:47:39
Korea's youth fret hiring cuts if retirement age rises: KEF SEOUL, September 29 (AJP) — Eight in 10 young South Koreans expect companies to reduce new hiring if the statutory retirement age is extended, a Korea Enterprises Federation survey showed Tuesday. The survey of 1,052 job seekers and employed people aged 20 to 34 found that 81.0 percent expected an extension to reduce new recruitment. Of the respondents, 51.4 percent expected hiring to fall to some extent and 29.6 percent anticipated a sharp decline. Another 12.4 percent expected no impact, while 6.7 percent said they were unsure. Among those expecting recruitment to fall, 31.6 percent said large companies would see the biggest impact, followed by public institutions at 29.9 percent, midsized companies at 22.7 percent and small and midsized enterprises at 15.8 percent. Broader perceptions of the labor market were also weak. Some 62.9 percent described the current job market as difficult, including 31.9 percent who said conditions were somewhat difficult and 31.0 percent who said they were very difficult. Asked why finding work had become difficult, 49.5 percent cited the growing preference for experienced workers, while 49.2 percent pointed to reduced recruitment from a year earlier and 49.1 percent cited lower labor demand linked to the use of artificial intelligence. Multiple responses were allowed. Expectations for next year were similarly subdued, with 57.0 percent expecting new hiring in 2027 to decline from this year. Another 37.7 percent expected hiring to remain at a similar level, while 5.2 percent anticipated an increase. Pay was the most frequently cited consideration when choosing an employer, selected by 66.6 percent of respondents in a multiple-response question. Job security followed at 46.0 percent and job suitability or relevance to a respondent's academic major at 34.7 percent. Civil service and public institutions were the most preferred workplaces at 30.2 percent, closely followed by large and midsized companies at 29.3 percent. Preferences differed by region. Among young people living in the Seoul metropolitan area, 32.5 percent preferred large or midsized companies, compared with 28.4 percent for civil service or public institutions. Outside the capital region, public-sector employment led at 33.3 percent, compared with 24.1 percent for large and midsized companies. A separate KEF survey released on March 10 showed that 66.6 percent of 500 companies with at least 100 employees planned to recruit new workers this year, up 5.8 percentage points from 2025. The same survey found that 67.6 percent of companies regarded job-related work experience as the most important factor when evaluating new recruits. Official labor data have meanwhile continued to show weakness among younger workers. The Ministry of Data and Statistics said in its Aug. employment report released Sept. 9 that the unemployment rate for people aged 15 to 29 rose 0.5 percentage point from a year earlier to 5.4 percent, even as total employment increased by 184,000. AJP Takeaways - South Korean young adults are increasingly concerned about recruitment, with 81.0 percent expecting a statutory retirement-age extension to reduce new hiring. - South Korean respondents cited experienced-worker hiring, reduced recruitment and AI-related labor demand as the leading reasons for difficult job-market conditions. - The Korea Enterprises Federation's March survey found that 66.6 percent of companies planned new hiring in 2026, while job-related work experience was their most frequently cited evaluation factor. 2026-09-29 16:55:06
Korea's H1 card payments rise 7.6% as cardless use grows SEOUL, September 29 (AJP) — South Korea's card payments rose 7.6 percent in the first half of 2026 despite slower growth in in-person spending, central bank data showed Tuesday. The Bank of Korea (BOK) said the daily average value of payment-card transactions reached 3.8 trillion won ($2.8 billion), up from 3.5 trillion won a year earlier. The growth pace from 3.7 percent in the first half of 2025 to 7.6 percent in the first six months of this year. Credit-card transactions, which accounted for 79.7 percent of total card use, rose 7.3 percent to a daily average of 3.0 trillion won. Debit-type payments, including check cards, increased 7.5 percent to 751 billion won per day. A separate breakdown of credit and check cards used at domestic merchants showed a faster increase in transactions made without presenting a physical card. Such payments rose 10.6 percent from a year earlier to a daily average of 1.8 trillion won, compared with a 2.5 percent increase to 1.4 trillion won for transactions using physical cards. The category covers payments using card information stored on mobile devices or entered manually and is separate from whether a transaction is made face to face or remotely. Face-to-face card payments rose 5.6 percent to 1.8 trillion won per day, while non-face-to-face transactions increased 8.6 percent to 1.4 trillion won. Simple payment services, in which card information is stored on devices and transactions are authenticated through methods such as fingerprint recognition, accounted for 52.6 percent of payments made without presenting physical cards. Fintech providers accounted for 72.0 percent of those card-based simple payment services. Account transfers through Korea's retail payment networks showed a sharper increase, rising 26.8 percent from a year earlier to a daily average of 127.9 trillion won. The electronic financial network, which accounted for 92.5 percent of such transfers, handled 118.4 trillion won per day, up 28.8 percent. The increase was driven mainly by internet banking and firm banking, which rose 22.9 percent and 30.4 percent, respectively. Firm banking refers to financial systems used by companies for transactions such as payroll payments and settlement of business payments. The daily value of bills and checks also rose 14.9 percent to 19.3 trillion won, led by increases in current-account checks, promissory notes and electronic bills. A separate BOK tally showed the daily value of domestic banks' internet banking transactions, including mobile banking, increased 23.9 percent to 106.4 trillion won. Mobile banking transactions rose 12.1 percent to 20.1 trillion won per day. Mobile banking accounted for 90.7 percent of all internet banking transactions by number but just 18.9 percent by value. Internet-based non-face-to-face loan applications moved in the opposite direction, with the number of applications falling 10.5 percent from a year earlier and their value declining 26.0 percent. AJP Takeaways - South Korea's daily card payments rose 7.6 percent from a year earlier to 3.8 trillion won in the first half of 2026. - Payments made without presenting physical cards increased 10.6 percent, compared with a 2.5 percent increase in transactions using physical cards. - Retail payment network transfers jumped 26.8 percent to 127.9 trillion won per day, led by growth in internet and firm banking. 2026-09-29 12:57:11
Korea's business sentiment slips on weakening manufacturing SEOUL, September 29 (AJP) -South Korea's business sentiment turned lower in September as manufacturing confidence weakened sharply, while nonmanufacturing sentiment was helped by the Chuseok holiday demand and expectations of higher consumer income. The Composite Business Sentiment Index (CBSI) for all industries fell 0.5 point from August to 99.1, marking its first decline in three months, according to the Bank of Korea (BOK) Tuesday. The outlook for October remained unchanged at 99.6. A reading above 100 means business sentiment is stronger than its long-term average, while a figure below 100 indicates weaker sentiment. Manufacturing CBSI fell 4.3 points to 99.5, while nonmanufacturing sentiment rose 2.2 points to 98.9, its highest level since September 2023. The October outlook declined 1.4 points to 101.1 for manufacturers, while the nonmanufacturing forecast rose 1.0 point to 98.6. The divergence was also visible among manufacturers by company size. Sentiment among large manufacturers fell 2.5 points to 101.2, while the index for small and medium-sized firms dropped 5.4 points to 94.4. Export-oriented manufacturers remained above the long-term average despite a 4.2-point decline to 104.3, while sentiment among domestically focused firms fell 3.7 points to 95.7. The manufacturing decline was led by product inventories, which subtracted 1.8 points from the CBSI, followed by new orders at 1.0 point and production at 0.6 point. Automakers reported weaker exports and domestic demand, while strikes and the Chuseok holiday reduced operating rates. Chemical producers were affected by shipping disruptions linked to Middle East tensions, restructuring in the petrochemical industry and higher raw-material costs. Electronics, video and communications equipment makers also reported weaker new orders, particularly among display, camera and television manufacturers. Nonmanufacturing businesses moved in the opposite direction, supported by improved funding and business conditions. Wholesale and retail firms benefited from Chuseok-related demand for food and pharmaceuticals, while arts, sports and leisure businesses reported more visitors to stadiums and amusement facilities during the holiday and cooler weather. Professional, scientific and technical service firms also benefited from stronger orders for architecture, design and semiconductor-related engineering. Stronger confidence outside manufacturing contrasted with weaker factory activity. The manufacturing business-conditions BSI fell 2 points to 79, while production declined 3 points to 89, sales fell 4 points to 89 and new orders dropped 5 points to 87. Profitability also weakened, with the manufacturing profitability BSI falling 2 points to 79 and funding conditions slipping 1 point to 81. Raw-material purchase prices eased to 121 from 123, while the selling-price index fell to 98 from 102. Sluggish domestic demand remained the most frequently cited business difficulty among manufacturers, with its share rising 2.2 percentage points to 21.2 percent. Higher raw-material prices followed closely at 20.9 percent, while the share citing exchange-rate conditions rose 3.0 percentage points to 8.7 percent. Among nonmanufacturers, sluggish domestic demand was also the most frequently cited difficulty at 18.8 percent, followed by economic uncertainty at 16.6 percent and labor shortages and higher labor costs at 14.5 percent. Broader economic sentiment improved despite the pullback in business confidence. The Economic Sentiment Index (ESI), which combines business and consumer survey indicators, rose 0.5 point to 99.9 in September. The gain was supported by stronger household expectations, with household income expectations contributing 0.6 point and consumption spending expectations adding 0.3 point. The ESI's cyclical component rose 0.7 point to 98.3. AJP Takeaways - South Korea's all-industry CBSI fell 0.5 point to 99.1 in September as manufacturing sentiment weakened sharply while nonmanufacturing confidence improved. - Manufacturing CBSI dropped 4.3 points to 99.5, with small and medium-sized firms showing a steeper decline, while nonmanufacturing CBSI rose 2.2 points to 98.9. - The ESI rose 0.5 point to 99.9 as stronger household income and consumption-spending expectations offset weaker business sentiment. 2026-09-29 07:23:57
Korean bond yields catch up with U.S. and will BOK notice? SEOUL, September 28 (AJP) - How far and how long South Korean bonds follow the U.S. counterparts. and whether the market movement affects the rate-setting meeting next two months are being closely watched after the Korean bonds joined the selloff in the U.S. The three-year Korean government bond yield rose 11.3 basis points to close at 4.119 percent, while the benchmark 10-year yield climbed 14.7 basis points to 4.539 percent. The won weakened 7.6 won to close at 1,365.1 per dollar. The U.S. 10-year Treasury yield rose 20 basis points between Sept. 23 and 25, when Korean markets were largely closed for the holiday. The two-year yield gained 10 basis points over the same period. Monday’s 14.7-basis-point rise in Korea’s 10-year yield equaled nearly three-quarters of the U.S. 10-year yield’s increase over those three sessions, showing how quickly the domestic market caught up after reopening. “The U.S. 10-year yield breaking above 5.2 percent and the 30-year topping 5.5 percent during the holiday reflect the vulnerability of the global bond market,” said Yoon Yeo-sam, an analyst at Meritz Securities. Yoon said the latest episode differs from the abrupt tightening shock of 2022. Markets are now facing another rise in yields after several years of already-high borrowing costs, adding to the strain of a prolonged higher-for-longer environment. “Global government bond yields rose substantially on changes in monetary policy expectations, further heightening uncertainty in international financial markets,” Kwon Min-soo, deputy governor of the BOK, said at a market review meeting Monday. The BOK raised its policy rate by 25 basis points to 3.00 percent in August. It has said it will decide the timing and pace of any further increases by monitoring inflation, growth and financial stability. The BOK’s next monetary policy meeting is scheduled for Oct. 22, five days before the Federal Reserve’s Oct. 27-28 meeting. That sequence puts the persistence of U.S. long-term yields in focus for Korean markets: the BOK will make its next rate decision before the Fed announces its decision later that month. Meritz expects the BOK to raise its policy rate to 3.50 percent through increases in November and February, while seeing scope for a move to 3.75 percent if external pressure intensifies. Strong exports and renewed oil price pressure could also limit the scope for domestic yields to retreat by keeping concerns over import-price inflation alive, the brokerage said. The BOK said Korea’s economic fundamentals remained sound but warned that U.S.-Iran negotiations, fiscal concerns in major economies and changes in expectations for the artificial intelligence industry could increase volatility in domestic financial and foreign exchange markets. Before the October BOK meeting, investors will assess U.S. job openings, personal consumption expenditures inflation and employment data due this week for signs of whether expectations for further Fed tightening will strengthen or ease. Monday’s move showed how quickly Korean bonds can catch up when global yields rise during a domestic market closure. The next question is whether the U.S. sell-off proves temporary or persists into October, keeping Korean yields elevated as the BOK approaches its next policy decision. AJP Takeaways - Korea’s three-year and 10-year government bond yields rose 11.3 and 14.7 basis points, respectively, as markets reopened after the Chuseok holiday. - Korea’s 10-year yield absorbed nearly three-quarters of the U.S. 10-year yield’s holiday-period increase in one trading session, according to an AJP calculation. - Investors are watching whether elevated U.S. yields persist into the BOK’s Oct. 22 meeting, ahead of the Fed’s Oct. 27-28 decision. 2026-09-28 17:48:16
Korea's Q2 corporate card spending hit record amid chip boom SEOUL, September 28 (AJP) — South Korea's corporate credit card spending topped 60 trillion won ($45.4 billion) for the first time in the second quarter, rising 10.6 percent from a year earlier in line with a surge in corporate earnings from chip boom, central bank data showed. Corporate credit card spending reached 61.7836 trillion won in the April-June period, the highest in the quarterly series, according to data from the Bank of Korea (BOK). Corporate users include companies, associations and public institutions. The number of corporate credit cards stood at 11.75 million, up 1.3 percent from a year earlier, while the number of transactions increased 1.5 percent. Average spending per transaction rose 9.0 percent to 179,320 won from 164,540 won a year earlier, compared with a 1.5 percent increase in transaction volumes. Personal credit card spending increased 6.2 percent from a year earlier to 231.521 trillion won during the same period. Average spending per transaction rose just 0.7 percent to about 48,950 won. The increase in corporate card spending came as corporate earnings improved sharply, led by the semiconductor industry. The BOK said gross operating surplus, which reflects income generated through corporate production, jumped 48.2 percent from a year earlier in the second quarter, the strongest increase since quarterly distribution-income statistics began in 2010. Operating profits at semiconductor manufacturers increased sharply, while the improvement spread to other industries including chemicals, transport equipment, services and wholesale and retail trade, according to the central bank. A separate second-quarter analysis by the Credit Finance Association also cited stronger global semiconductor demand, improved terms of trade and better corporate earnings among factors supporting card spending. Under the association's separate approval-based measure, corporate card approvals rose 8.7 percent from a year earlier to 63.4 trillion won, while the number of approvals increased 1.4 percent. The BOK expects the sharp increase in corporate income to spread gradually to households and the government through bonuses, dividends and tax payments, with the effects becoming more visible in the second half of the year. AJP Takeaways - South Korea's corporate credit card spending increased 10.6 percent from a year earlier to a record 61.7836 trillion won in the second quarter, topping 60 trillion won for the first time. - Corporate credit card spending per transaction rose 9.0 percent while transaction volumes increased 1.5 percent, indicating a much larger increase in payment size than frequency. - The Bank of Korea separately reported a 48.2 percent surge in corporate operating surplus, led by sharply higher semiconductor profits, while industry card data also pointed to improving corporate earnings as a factor supporting spending. 2026-09-28 14:14:03