AJU PRESS ASIA FIRST NEWS AGENCY

Journalist

Kim Yeon-jae
  • Korean legislative finally moves on FX support as won levels breach crisis levels
    Korean legislative finally moves on FX support as won levels breach crisis levels SEOUL, Mar. 17 (AJP) - South Korea’s National Assembly is scrambling to fast-track a package of exchange-rate support bills after sitting on them for months as the won comes under renewed pressure from the widening Gulf war. The urgency reflects not just broad dollar strength but a sharper loss of confidence in the won itself. According to the Financial Supervisory Service, the won weakened 4.12 percent against the dollar as of Monday from end-February, before the war erupted, with the rate rising from 1,438.4 won to 1,497.6 won. That compares with a 2.82 percent rise in the Dollar Index over the same period and a 2.08 percent gain in the dollar against the Japanese yen — even as the two neighboring economies share similar exposure to disruptions in the Strait of Hormuz. China’s yuan, also dependent on Gulf shipping routes, moved only 0.55 percent. The scale of the move has reinforced market concerns that Korea is being punished more severely than its peers, reflecting heavier foreign outflows from local equities that had outperformed prior to the war. The won-dollar exchange rate averaged 1,476.9 won this month, the highest monthly level since the 1998 Asian financial crisis, while last week’s average climbed to 1,480.7 won. The currency briefly breached the 1,500 won threshold in daytime trading on Monday for the first time since the global financial crisis, triggering speculation authorities may have given up 1,500-won defense. "We are not 100 percent sure about intervention. But the dollar has retreated. It can be attributed to the easing in bond yields," said one trader on Tuesday. The dollar eased to 1,493.40 won as of 4:00 p.m. in Seoul. Volatility still has been topping peers. The won’s average daily swing widened to 14.24 won, the largest since the 2010 euro-area sovereign debt crisis, while intraday moves stretched to 24.82 won — the biggest since Korea introduced overnight foreign-exchange trading. Foreign investors are reacting more sensitively to Korea’s exposure to Gulf energy risks and surging oil prices. Brent crude jumped 42.3 percent from end-February to March 16, to $103.14 a barrel, while WTI surged 47.28 percent to $98.71. Compared with end-2025, Brent is up 69.5 percent and WTI 71.91 percent. Those terms-of-trade pressures are now feeding directly into Korean asset markets. Foreign investors sold a net 16.5 trillion won worth of Korean stocks in March through March 16, including 16.1 trillion won from the KOSPI alone, according to the same FSS data. Korea’s five-year sovereign CDS premium also widened to 28.9 basis points from 24.6 basis points at end-February. Only after the exchange rate broke above 1,500 won did the legislature move to advance the so-called “Triple Exchange Rate Stability Acts.” On Monday, the Tax Subcommittee of the Strategy and Finance Committee approved the package, which includes amendments to the Restriction of Special Taxation Act and the Special Tax for Rural Development Act. Having cleared the subcommittee, the bills are expected to go before the full committee on Tuesday and then to a plenary session on March 19. The measures were first proposed on Jan. 3 by Rep. Jung Tae-ho of the Democratic Party, after the finance ministry outlined the plan in December when the won slid toward crisis-era levels. They were further stalled by political wrangling over tax fairness and broader legislative disputes. The centerpiece of the package is an amendment to the Restriction of Special Taxation Act that would grant a 50 to 100 percent deduction on capital gains taxes for investments in domestic stocks made through Return to Korea Investment Accounts, or RIAs. The aim is to encourage capital repatriation and stem the outflow of won-denominated funds. The package also includes income deductions for investments in currency-hedging products and raises the exclusion rate for dividends received from overseas subsidiaries to as much as 100 percent. Lawmakers say the measures are designed to attract foreign currency holdings back onshore while promoting financial products that cushion exchange-rate volatility. Given the won’s weakening trend, economists remain skeptical about the effectiveness of the incentives. “Capital outflows from the National Pension Service and individual overseas investors exceeded $140 billion last year, surpassing the current account surplus of around $100 billion,” said Lee Seung-ho, a senior research fellow at the Korea Capital Market Institute. While acknowledging the need to attract capital back into domestic markets, he questioned whether the tax breaks would be sufficient to alter investor behavior. He noted that overseas equity investments already benefit from an annual tax exemption of up to 2.5 million won and that many retail investors operate on a relatively small scale, limiting the likely policy impact. Other KCMI researchers, including Kim Min-ki and Kang So-hyun, argue that the shift toward foreign assets reflects deeper fundamentals: stronger returns in global technology stocks, lower barriers to overseas investing and persistent expectations of further won depreciation. Until those conditions change, they say, the outflow trend is unlikely to reverse. Some in the market also warn that the legislation could send an unintended signal. “Currency-related tax support can itself be read by the market as a signal that the authorities expect the won to remain weak,” a foreign-exchange market source said on condition of anonymity. “If it is seen as defensive rather than confidence-building, it could have the opposite effect.” 2026-03-17 16:44:15
  • Chip boom lifts South Koreas export prices to 19-month high but outlook remains bleak
    Chip boom lifts South Korea's export prices to 19-month high but outlook remains bleak SEOUL, March 17 (AJP) - South Korea's export prices climbed to a 19-month high in February, as a historic rally in semiconductor prices completely offset the impact of a stronger Korean won. This highlights the growing pricing power of South Korea's high-tech sector amid explosive artificial intelligence (AI)-driven global demand. The main driver is a massive jump in semiconductor prices, strong enough to counter the effects of a rising won, which would normally make exports cheaper. The trend signals that South Korea's tech industry is gaining pricing power as global demand for chips and AI-related technology continues to surge. The index gauging export prices rose 2.1 percent from the previous month and 10.7 percent compared with the same month last year. It is the highest since July 2024, when it stood at 13.0 percent, a significant leap from the 7.8 percent rise seen in January, according to the Bank of Korea (BOK) on Tuesday. The surge is particularly notable, given that it came despite a 0.5 percent strengthening of the won against the greenback, with the exchange rate moving from 1,456.51 in January to 1,449.32 in February. Typically, a stronger won makes South Korean exports cheaper for foreign buyers, but the strong momentum in the semiconductor market outweighed the effect. Semiconductor-led surge The electronics sector led the rally, with prices for computer, electronic, and optical devices skyrocketing 44.1 percent year-on-year. In particular, DRAM and flash memory prices soared by 123.5 percent and 139.1 percent, respectively. On a monthly basis, computer storage devices saw a staggering 32.6 percent increase. Overall industrial products rose 2.1 percent from the previous month, further supported by a 7.0 percent jump in coal and petroleum products. In contrast, transportation equipment and chemical products continued to struggle, falling 3.1 percent and 6.6 percent year-on-year, respectively. Energy prices drive up import costs The import price index also edged up 1.1 percent month-on-month, primarily due to rising crude oil prices. The average price of Dubai crude rose 10.4 percent in February to $68.40 per barrel, up from $61.97 from the previous month. Raw materials led the increase with a 3.9 percent rise during the same period. However, capital and consumer goods saw slight declines of 0.1 percent and 0.2 percent, respectively, as the strengthening won helped temper the cost of finished imports. Dramatic improvement in trade terms These February figures highlight a significant shift in South Korea's trade dynamics. The net terms of trade index - which measures the volume of imports a country can buy per unit of exports - jumped 13.0 percent year-on-year. This was the strongest growth in years, as export prices in dollar terms rose 10.3 percent while import prices fell 2.4 percent. The income terms of trade index, reflecting the total purchasing power of exports, saw an explosive 31.8 percent growth - fueled by a 16.6 percent increase in total export volume, particularly in the electronics sector where volumes skyrocketed by 50.9 percent. The unprecedented performance in the semiconductor sector has fundamentally altered the trade landscape. The rise in export prices despite the won't appreciation indicates that South Korea's tech exports are increasingly driven by market dominance and structural demand rather than simple price competition. Outlook for March remains grim However, the outlook for March is expected to be sharply different as the escalating conflict in the Middle East that began with U.S.-led airstrikes on Iran late last month has triggered extreme volatility in energy prices and exchange rates. The surge in global crude prices has raised concerns over a spike in import costs. Brent crude, which traded near $72 per barrel at the end of February, has climbed past $100 per barrel as of Monday. West Texas Intermediate (WTI) has also risen above $90 per barrel. Most critically for South Korea, which sources 70 percent of its crude from the Middle East, Dubai crude is approaching $130 per barrel as of last Friday. The won briefly broke the psychological barrier of 1,500 per dollar during intraday trading on Monday, though it closed at 1,497.5, its worst session since the 2008 global financial crisis, a more than 4 percent jump from the Feb. 27 closing price of 1,439.8. 2026-03-17 09:53:04
  • Koreas default risk premiums rise faster than others, yet below 5-year average
    Korea's default risk premiums rise faster than others, yet below 5-year average SEOUL, Mar. 16 (AJP) - South Korea’s sovereign risk indicators are rapidly rising in line with the volatility in capital markets and exposure to oil supply disruptions, potentially further undermining foreign investor confidence in Korean securities. South Korea’s five-year credit default swap (CDS) premium surged 23.83 percent in the past month, exceeding the gain of around 10 percent in China’s CDS and Japan’s remaining largely flat at around 1 percent, even when all three depend heavily on Middle East fuels through the crippled Strait of Hormuz. Last Thursday, the price of South Korea’s CDS rose 4.52 percent to 27.9 basis points, the sharpest single-day increase among major nations, when oil prices hit $100 barrel amid jitters over the prolongment in the war in Iran. Korea's risk premium has risen steeper than emerging markets like Turkey fighting inflation above 30 percent. Among advanced economies, only Italy (30.68 percent) saw a steeper rise in swap rates. Italy’s spike was driven by its massive national debt—approaching 150 percent of GDP—and a widening spread against the German bund, the European benchmark. South Korea’s total household debt reached 2,370 trillion won ($1.62 trillion) at the end of 2025, with a debt-to-income ratio of 174.7 percent. Italy’s trigger was its sovereign debt, which reached 3.13 trillion euros ($3.41 trillion) as of October 2025, or approximately 140 percent of its GDP. Market analysts point to South Korea’s structural weaknesses. A heavy reliance on Middle Eastern crude oil, combined with high leverage, makes the economy hypersensitive to geopolitical "black swan" events. Despite the pace of rise, it is still premature to be alarmed by the CDS level itself, authorities said. "With the CDS premium still below 30 basis points, it is difficult to say it has moved outside the normal range," one Bank of Korea (BOK) official said, noting that the five-year CDS remains stable compared to the 2008 financial crisis or the 2022 shock following the invasion of Ukraine. Still, the rapid rise in CDS could destabilize the bond market. "Rising CDS premiums can increase volatility as they lead to expanded trading in government bond futures," said Kim Yong-gu, head of the Investment Strategy Team at Yuanta Securities Korea. "We are already seeing increased trading volume in three-year bonds by foreigners, and if CDS continues to rise, that volatility could spread to 10-year bonds," he said. A critical theme in common is the heavy dependence on the Strait of Hormuz. The narrow passage between the Persian Gulf and the Gulf of Oman is a strategically crucial choke point and is being impacted by the war. More than 60 percent of South Korea’s oil imports pass through the strait, while Italy relies on it for up to 40 percent of its supply. In a report explaining the KOSPI’s crash on March 5, the PRS Group highlighted South Korea’s 98 percent energy dependence and its 70 percent reliance on Middle Eastern crude. Any disruption in energy supply inevitably causes South Korea’s "risk premium" to skyrocket. Experts warn that unlike Italy, South Korea faces greater risks because it does not use a reserve currency. "Italy operates within the framework of the euro, a reserve currency, and is already included in the WGBI (World Government Bond Index)," one financial official said, speaking on condition of anonymity. "For South Korea, where there are talks of the won depreciating to 1,500, the situation could deteriorate much further." As of Monday, the won traded at 1,496.9 per dollar, standing on the precipice of the psychological 1,500 barrier. While the three-year bond yield edged down 3.3 basis points, the 10-year yield rose 0.8 basis points to 3.709 percent, heightening fears of long-term stagnation. 2026-03-16 17:04:58
  • SK hynix now most favorite workplace among jobseekers, overtaking Samsung
    SK hynix now most favorite workplace among jobseekers, overtaking Samsung SEOUL, March 16 (AJP) - SK hynix has surpassed Samsung Electronics as the most preferred employer among job seekers in South Korea. Online job-search site Saramin said on Monday that it conducted a survey of over 2,000 job seekers and found that about 20 percent of them named SK hynix as their most sought-after employer. It marks the first time Samsung Electronics has lost the top spot since similar surveys began in 2009. The electronics giant, which had long held a dominant lead, slipped to second place with 18.9 percent. Automaker Hyundai Motor came in third at 7.9 percent, followed by Naver at 4 percent and Samsung C&T at 3 percent. Saramin attributed the shift to the chipmaker's lucrative salary packages and record-breaking performance bonuses. High salaries and other perks have recently emerged as the decisive factor for job seekers. Among respondents hoping to land jobs at major conglomerates and tech and digital companies like Naver, "high salary" was cited as the most important reason for their preference. Disparities in bonuses have become particularly stark. In 2025, SK hynix employees received bonuses equivalent to 150 percent of their annual salary. For an employee earning 100 million won ($68,212) annually, this meant an additional 150 million won in performance-related payments. In contrast, Samsung Electronics' mobile division capped bonuses at 50 percent of annual salaries, while even its semiconductor division had a 100 percent bonus ceiling, despite strong sales performance. The survey comes as both top rivals are in the midst of their first-half recruitment drives. Samsung affiliates are accepting job applications until Tuesday, while SK hynix is receiving applications for new hires next Monday. 2026-03-16 11:53:53
  • GULF CRISIS: South Korea to release 22.46 million barrels from strategic reserve
    GULF CRISIS: South Korea to release 22.46 million barrels from strategic reserve SEOUL, March 16 (AJP) -South Korea will release 22.46 million barrels of crude oil from its strategic reserves over the next three months as part of coordinated international efforts to stabilize global energy markets following supply disruptions caused by Iran’s blockade of the Strait of Hormuz. The decision was announced Monday after a meeting between the government and the ruling party, which agreed to gradually release the oil stockpile in line with a collective action plan led by the International Energy Agency (IEA). According to the briefing, the release corresponds to the volume allocated to Korea under the IEA’s emergency response framework. The drawdown will be implemented in stages over the next three months to cushion the impact of surging oil prices triggered by escalating conflict in the Middle East. The IEA said member nations have agreed to release a total of 400 million barrels from strategic reserves. Of that amount, 271.7 million barrels will come from government-held stocks, while 116.6 million barrels will be supplied from obligated industry reserves and another 23.6 million barrels from other sources. The agency said about 72 percent of the planned release will consist of crude oil, with the remaining 28 percent made up of refined petroleum products. Supplies held in Asia–Oceania countries will be made available immediately, while reserves from Europe and the Americas are expected to enter the market later this month. The IEA has deployed coordinated reserve releases during previous energy crises. In 2022, member countries released about 182 million barrels after the outbreak of the Russian invasion of Ukraine triggered a surge in global oil prices. The ruling Democratic Party of Korea and government officials said the oil release forms part of a broader package aimed at stabilizing energy supply, controlling fuel prices and supporting businesses affected by the Middle East conflict. The government reported its plan of proposing a supplementary budget bill by the end of March to mitigate the economic impact of the conflict, including energy price support and assistance for affected exporters. South Korea currently holds crude reserves equivalent to about 208 days of imports, while liquefied natural gas stockpiles cover roughly nine days of consumption, according to the briefing. To secure additional crude supplies, the government is also considering bringing home oil produced overseas by the state-run Korea National Oil Corporation, with about 3.35 million barrels expected to be imported by June. Authorities said they will strengthen energy supply management by increasing electricity generation from coal and nuclear plants to offset potential shortages of liquefied natural gas. The government plans to temporarily lift the cap limiting coal-fired power plants to 80 percent of installed capacity and accelerate maintenance work on nuclear reactors currently under repair, with the goal of raising the nuclear power utilization rate from the high-60 percent range to around 80 percent by mid-May. Officials are also reviewing whether to designate the Yeosu petrochemical industrial complex as a special industrial crisis response zone as petrochemical producers face shortages of key raw materials including aluminum, sulfur and naphtha. The relief measures have helped little to alleviate oil prices flirting around $100 per barrel as the market suspects reflecting market concerns that the conflict could lead to prolonged disruption of energy flows through the Strait of Hormuz — one of the world’s most critical oil transit chokepoints. Iran has intensified attacks on commercial vessels in the region and warned it would block oil shipments benefiting the United States and its allies, raising fears that a sustained closure of the waterway could severely disrupt global energy supply. 2026-03-16 11:13:46
  • Korean bond yields soar as if in tightening cycle amid widening Gulf war
    Korean bond yields soar as if in tightening cycle amid widening Gulf war SEOUL, Mar. 13 (AJP) — South Korean government bond yields are climbing sharply as investors demand higher risk premiums amid intensifying conflict in the Middle East and a renewed rise in global interest rates. Yields on sovereign debt have followed a steep upward trajectory since the beginning of the year, reflecting both external shocks and shifting global capital flows. According to the Korea Financial Investment Association (KOFIA) on Friday, the three-year government bond yield rose 6.7 basis points to close at 3.338 percent, while the 10-year yield gained 5.2 basis points to finish at 3.701 percent. The benchmark 10-year yield has breached the 3.7 percent threshold four times this year, including a sharp 12.3 basis point surge on March 9. The pace of the increase has been striking. From the market close on Jan. 2 to the March 9 peak, three-year and 10-year yields rose by 48.5 basis points and 35.3 basis points, respectively — a rapid adjustment even by the standards of recent global tightening cycles. The March 9 jump marked the largest single-day spike since Sept. 26, 2022, when global bond markets were roiled by the United Kingdom’s ill-fated “mini-budget.” At that time, Korean yields surged by 34.9 basis points for the three-year tenor and 22.3 basis points for the 10-year bond in a single session. Market participants say the current move is less about domestic growth optimism and more about rising geopolitical risk and inflation concerns as the Middle East conflict pushes oil prices back toward the $100-per-barrel mark. The yield spread between South Korea and the United States has also narrowed considerably. As of March 9, the gap between the U.S. 10-year Treasury yield, at 4.13 percent, and Korea’s 10-year government bond yield stood at roughly 39.5 basis points. Under normal circumstances, a narrowing differential would lend support to the Korean won by making local assets relatively more attractive. The currency’s continued weakness, however, suggests that investors are demanding additional compensation for risk rather than expressing confidence in the domestic outlook. In other words, the market is repricing geopolitical uncertainty rather than rewarding growth prospects — a dynamic that could accelerate the global shift toward traditional safe-haven assets. Foreign capital flows remain a critical variable. According to the Bank of Korea (BOK), overseas investment in South Korean government bonds recorded seven consecutive months of net inflows through February. But traders say the heightened volatility in yields and the exchange rate this month raises the risk of a reversal. The pressure is compounded by a renewed climb in U.S. Treasury yields. The U.S. 10-year benchmark has recently risen to 4.277 percent, potentially widening the yield gap again and drawing global liquidity back toward dollar assets. Even so, policymakers stress that the current market turbulence bears little resemblance to the systemic stress seen during the 1997 Asian Financial Crisis. Bank of Korea Governor Rhee Chang-yong noted that South Korea’s macroeconomic fundamentals remain significantly stronger today. The country now holds more than $400 billion in foreign exchange reserves, compared with roughly $20 billion at the height of the 1997 crisis, and has since become a net external creditor. “If you are referring to the risk of national sovereign default, I do not agree,” Rhee said during a press briefing on inflation at the Bank of Korea on Dec. 17 last year, dismissing alarmist interpretations of rising yields. Still, with oil prices surging, shipping routes through the Strait of Hormuz under strain and global bond markets resetting higher, Korean debt markets are likely to remain sensitive to external shocks in the weeks ahead. 2026-03-13 17:34:51
  • Koreas M2 rise picks up in Jan as stock invest and dollar savings pile up
    Korea's M2 rise picks up in Jan as stock invest and dollar savings pile up SEOUL, Mar 13 (AJP) —South Korea’s M2 money supply grew at a faster pace in January than previous months on strong stock market and U.S.-dollar-denominated savings on expectations of continued greenback strength. According to a Bank of Korea (BOK) release on Friday, the M2 money supply grew 0.7 percent month-on-month in January to reach 4,108.9 trillion won ($2.83 trillion). Under the previous M2 standard (used prior to November statistics), the figure rose 1.2 percent to 4,521.1 trillion won, indicating an even sharper upward trend. The M2 money supply grew by 4.5 percent throughout 2025 (under the new standard) and 7.4 percent (under the previous standard), a marked acceleration from the 3.3 percent and 5.6 percent growth rates recorded in 2024. Compared to January of last year, M2 increased by 4.6 percent (new) and 8.4 percent (previous). While the growth rate under the new standard—which excludes ETFs and long-term deposits—narrowed by 0.1 percentage points, the previous standard showed an expansion of 0.4 percentage points. The expansion was largely fueled by a stellar performance in the South Korean stock market in January. The benchmark KOSPI surged more than 21 percent in a single month, rising from 4,309.63 on Jan. 2 to close at 5,224.36 on Jan. 30. The tech-heavy KOSDAQ followed suit, jumping over 20 percent to finish the month at 1,149.21. KOSPI was trading down 1.3 percent at 5,510 Friday. After hitting an all-time high of 6,307.27 on Feb. 26, the index suffered a 20 percent plunge in early March, triggered by the Middle East crisis and the blockade of the Strait of Hormuz. Liquidity in other financial institutions, including asset management firms, increased by 15.2 trillion won, reflecting the January market boom. Demand deposits, which typically serve as a cash pool for equity investment, grew by 15.5 trillion won, more than doubling the 7 trillion won increase seen the previous month. The period was also marked by a significant buildup in foreign currency liquidity. Other monetary products, primarily foreign currency deposits with maturities of less than two years, surged by 21 trillion won—double the 10 trillion won increase in the prior month. The won, which stood at 1,445 per dollar on Jan. 2, weakened to 1,453 by Jan. 30, a depreciation of approximately 0.6 percent. Amid the ongoing Hormuz crisis, the currency has since plummeted to the 1,490 level as of 11:15 a.m. Friday. Bond prices also retreated. The yield on the 10-year government bond rose from 3.386 percent on Jan. 2 to close at 3.607 percent on Jan. 30, an increase of 22.1 basis points. While yields briefly dipped in February on safe-haven demand, the Hormuz shock pushed them back up, with the 10-year yield closing at 3.649 percent on Thursday, up 4.1 basis points. 2026-03-13 14:26:52
  • Foreign investors flee Seoul as KRW weakness persists
    Foreign investors flee Seoul as KRW weakness persists SEOUL, Mar. 12 (AJP) — Foreign investors pivoted to a net sell-off in South Korean financial markets between February and March, marking the first net outflow in six months. The South Korean won continued its steady decline, extending a period of weakness that began last month. The value of the won has depreciated by 2 percent since February, falling from a January average of 1,439.5 per dollar to 1,469.2 as of March 10 according to a Bank of Korea (BOK) release on Thursday, marking the second consecutive month of decline, following a 1.4 percent weakening in January. While the won’s fall last month occurred even as the U.S. Dollar Index softened, the current depreciation has been exacerbated by a 1.9 percent surge in the dollar index, fueled by escalating conflict in the Middle East. Among emerging market currencies, the won’s decline was surpassed only by the Russian ruble, which fell 3.7 percent. In stark contrast, the Brazilian real emerged as the top performer, appreciating by 1.9 percent this month following a 5.7 percent surge last month, bolstered by the Brazilian central bank’s fiscal tightening and interest rate hikes. While advanced currencies also weakened—with the euro falling 2 percent, the yen 2.1 percent, and the pound 1.9 percent—the underlying drivers differed significantly from the won. The weakness in these currencies was largely driven by dovish expectations: the yen softened following Prime Minister Sanae Takaichi’s nomination of a dovish policy board member, while the euro fell as CPI dipped below the 2 percent target. The won, however, continued to slide despite the BOK ruling out the possibility of rate cuts. Volatility is also on the rise. The won’s daily fluctuation range expanded from 0.36 percent in December to 0.45 percent in January, reaching 0.58 percent in February. Foreign portfolio investment saw a net outflow of $7.76 billion, the first shift to negative territory since August. This represents the second-largest monthly net outflow on record, eclipsed only by the $8.97 billion flight during the July 2008 financial crisis. Equity markets bore the brunt of the exodus, with $13.5 billion in foreign capital exiting the KOSPI. This surpassed the previous record of $11.04 billion set during the onset of the Covid-19 pandemic in March 2020, marking the largest monthly equity outflow in South Korean history. Conversely, the bond market saw a net inflow of $5.74 billion, as investors engaged in bargain hunting amid falling Korean bond prices. This marks the fourth consecutive month of net inflows into fixed income since October. External borrowing conditions remain relatively stable. The spread on short-term external borrowing held steady at 11 basis points, while the CDS premium stood at 22 basis points, marginally up from 21 basis points last month. However, mid-to-long-term external borrowing spreads edged up from 42 basis points to 46 basis points, reflecting deteriorating external conditions, including the Middle East conflict and the blockade of the Strait of Hormuz. 2026-03-12 13:36:07
  • Leveraged stock bets show signs of peaking even before Gulf crisis rattled Seoul
    Leveraged stock bets show signs of peaking even before Gulf crisis rattled Seoul SEOUL, Mar. 11 (AJP) — South Korea’s red-hot equity rally has drawn a flood of money into stock-linked funds, swelling assets at investment managers, but leveraged investment was already showing signs of topping out even before the Middle East crisis jolted markets. According to data released Wednesday by the Bank of Korea, total deposits at financial institutions reached 93.9 trillion won ($64.05 billion) in February, up 46.4 percent from a year earlier. The surge was particularly pronounced at asset management firms, driven largely by inflows into equity-linked funds, which attracted 34.1 trillion won during the month. Following 37 trillion won in January, the two-month inflow represents a more than tenfold increase compared with the same period in 2025, when equity fund inflows totaled just 7.1 trillion won. The influx came as the benchmark KOSPI surged roughly 50 percent during the first two months of the year, fueled by optimism that South Korea would dominate next-generation memory chips critical for the artificial intelligence boom. What had looked like an unstoppable rally abruptly stalled after U.S.-led strikes on Iran on Feb. 28 and the subsequent blockade of the Strait of Hormuz rattled global markets. The KOSPI, which hit an all-time high of 6,307 on Feb. 26, plunged nearly 20 percent between March 3 and March 4, briefly falling below the 5,100 mark. As of Wednesday, the index had recovered 1.4 percent to 5,609.95, supported by hopes for a ceasefire, discussions among Group of Seven nations on releasing strategic oil reserves and announcements of treasury stock cancellations by conglomerates such as Samsung Electronics and SK Inc. following revisions to the Commercial Act. Even so, the index remains more than 10 percent below its recent peak. Leverage nearing its limits Signs of fatigue had already emerged in credit-driven investment. Money Market Funds, which serve as liquidity pools for stock trading, recorded inflows of 5.5 trillion won in February — far below the 21.7 trillion won seen a year earlier. The slowdown suggests the market was hitting record highs even as momentum behind credit-fueled trading began to fade. Outstanding margin debt reached a record 33.7 trillion won on March 5, before retreating to about 31 trillion won following the sharp market slide. Similarly, unsettled brokerage accounts fell from 2 trillion won on March 6 to 1.3 trillion won by Monday. The pullback partly reflected credit limits being exhausted at major brokerages. Korea Investment & Securities suspended margin purchases and short selling on March 5 after reaching its credit ceiling, with NH Investment & Securities taking similar steps. The scale of leverage has amplified market volatility. Forced liquidations accounted for 6.5 percent of unsettled accounts on March 5, the highest level in 31 months since the market slump in October 2023. “Since credit balances had reached their limit, they became a significant burden on the market,” said Yeom Dong-chan, a researcher at Korea Investment & Securities. Risk aversion hits KRW and bonds Meanwhile, flows into fixed-income products weakened as investors reassessed risks. Bond funds recorded a net outflow of 200 billion won, reflecting heightened volatility in the debt market. Government bond yields have swung sharply. The three-year treasury yield, which had fallen to 2.95 percent in December, climbed to 3.04 percent in February, while the 10-year yield rose from 3.39 percent to 3.45 percent as markets digested signals from the Federal Reserve under Chair Kevin Warsh. Following the Hormuz crisis, yields spiked by more than 10 basis points in early March, briefly inverting the spread on March 9 — a signal that heightened concerns about stagflation. In Wednesday morning trading, the three-year yield slipped 2.7 basis points to 3.256 percent, while the 10-year yield fell 2 basis points to 3.609 percent. Despite the easing, bond prices remain under pressure. Risk aversion also hit the currency. The Korean won, which began the year near 1,440 per dollar, briefly plunged toward 1,500 during overnight trading on March 4. As of 3:30 p.m. Wednesday, the won stood at 1,466 per dollar, down 3 won from the previous day and about 1.6 percent weaker than at the start of the year. 2026-03-11 16:41:21
  • Toss Bank faces FSS investigation after transaction glitch
    Toss Bank faces FSS investigation after transaction glitch SEOUL, March 11 (AJP) — The Financial Supervisory Service (FSS) is set to conduct an on-site inspection of online banking platform Toss Bank on Wednesday. The inspection comes a day after an error in Toss's foreign exchange system that resulted in massive financial losses. At around 7:30 p.m. the previous day, a glitch in its mobile app allowed users to exchange yen at a rate of roughly 470 Korean won per 100 yen. Given that the actual market rate was approximately 934 won, the currency was traded at about half its market value. While Toss Bank immediately suspended transactions upon discovering the error, the glitch reportedly incurred losses of approximately 10 billion won. Some users who had set up automated buy orders found transactions already processed, while others rushed to purchase yen after receiving alerts of the sudden price drop. Transactions resumed at 9:00 p.m. after a suspension of around two hours. The financial watchdog seeks to investigate the cause of the system failure, the total volume of transactions, and the potential impact on users. This is not the first time Toss Bank has mismanaged exchange rate settings. In September 2022, the bank displayed the FX rate at 1,290 per dollar for nearly 30 minutes, despite the actual rate exceeding 1,400 at the time. The incident adds to a string of clerical errors across the financial sector. In February last year, Hana Bank mistakenly posted the Vietnamese dong at one-tenth of its actual value, leading to the cancellation of transactions. In January this year, cryptocurrency exchange Bithumb failed to recover approximately 13 billion won ($9.8 million) worth of assets after a clerical error led to the over-distribution of 620,000 bitcoins. 2026-03-11 10:14:40