Journalist
Kim Yeon-je
duswogmlwo77@ajupress.com
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Seoul embarks on massive cleanup of penny stocks while market is hot SEOUL, Feb 12 (AJP) - Hoping to keep alive the sizzling momentum in the Korean stock market, now ranked among the world’s top 10 by valuation, Seoul has toughened rules to clean out zombie stock names. According to a new set of delisting requirements unveiled Thursday by the Financial Services Commission (FSC), members of the KOSPI will face stronger market capitalization and financial health standards, similar to those applied to the smaller KOSDAQ. As of September 2024, “zombie companies” accounted for nearly a quarter of KOSDAQ listings and around 10 percent of the KOSPI. Financial authorities estimate that the ratio of marginal firms across both markets remains at similar levels today. Zombie companies, also known as marginal firms, refer to businesses unable to cover even their interest expenses with operating profits, often falling into capital erosion. Previously, the FSC considered delisting only firms that were in a state of capital erosion at the end of a fiscal year. Under the new rules, however, companies that fall into capital erosion even on a semiannual basis will immediately face delisting procedures. The message is clear: firms that cannot — or will not — rapidly restore their financial standing will no longer be allowed to linger in the capital market. The deadline for meeting minimum market capitalization requirements has also been sharply brought forward. Originally, listed firms were required to reach a market capitalization of 15 billion won ($10.4 million) by January this year, 20 billion won by January 2027, and 300 billion won by January 2028. Under the revised plan, firms must reach 20 billion won by July this year and 300 billion won by January 2027. Furthermore, share prices must be maintained at 1,000 won or higher. “In the U.S. Nasdaq, being a ‘penny stock’ is grounds for delisting,” FSC Vice Chairman Lee Eog-won said during a regional meeting in Gwangju the previous day. “We intend to introduce similar provisions here.” The threshold for delisting due to disclosure violations has also been lowered from 15 penalty points to 10. Disclosure violations are typically categorized into failure to disclose, changes in disclosure, and reversals of disclosure, with penalties ranging from 1 to 10 points depending on severity. This means a single major violation could now trigger immediate delisting proceedings. A notable example is Kumyang, a KOSPI-listed firm that was handed 10 penalty points for allegedly inflating performance figures for a mine in Mongolia. While Kumyang accumulated a total of 17 points annually in that instance, under the new rules such a firm would enter delisting review immediately upon reaching the 10-point mark. The review period itself has been shortened from 18 months to one year. To prevent firms from using injunction lawsuits to stall proceedings, the FSC plans to coordinate closely with relevant courts. The regulator has also launched an “Intensive Delisting Management Task Force,” led by the vice chairman of the KOSDAQ Market Division, which will operate for the next 17 months until July next year. The FSC estimates that up to 220 companies could be delisted this year under the new regulations, far exceeding the original estimate of 50. Among them, 160 firms are classified as penny stocks trading below 1,000 won, representing 9 percent of all KOSDAQ-listed companies. “For the past 20 years, the KOSDAQ market has maintained a structure of ‘many births and few deaths,’ with 1,353 entries and only 415 exits,” the FSC said. “While the number of listed firms grew eightfold, total market capitalization increased only 1.6 times.” After surpassing the 1,000 mark during the dot-com bubble on Sept. 14, 2000, the KOSDAQ remained trapped between 600 and 900 for more than 25 years before recently breaking above 1,000 again. The FSC plans to apply the same strengthened standards to the benchmark KOSPI market. On Thursday, the KOSDAQ closed at 1,125.99, up 1 percent. The modest gain contrasted with the KOSPI, which surged 3.13 percent to a record high of 5,522.27. While the KOSPI climbed 4.2 percent between Feb. 9 and Feb. 12, the KOSDAQ remained virtually flat, edging up just 0.14 percent. 2026-02-12 16:34:26 -
Korean won recovery capped by capital outflows despite weaker dollar SEOUL, Feb 12 (AJP) -Despite a broad retreat in the U.S. dollar, the South Korean won has failed to stage a meaningful recovery, frustrating authorities attempting to break what officials increasingly describe as a cycle of “structural undervaluation.” According to data released Thursday by the Bank of Korea, the won-dollar exchange rate stood at 1,459.1 as of Feb. 10, marking a 1.4 percent depreciation from December’s average of 1,439. The decline came even as authorities deployed more than $4.7 billion in foreign exchange reserves over the past two months to stabilize the currency. Market data point to clear signs of intervention. Average daily spot turnover jumped by $3.72 billion — from $13.95 billion in December to $17.67 billion in January — a surge widely attributed to official efforts to defend the won. The won’s weakness stands in sharp contrast to global currency trends. Over the same period, the U.S. Dollar Index (DXY) fell 1.5 percent from 98.3 to 96.8, lifting most major currencies. The Japanese yen strengthened from 156.7 in December to 154.3 as of Feb. 10. The euro and British pound gained 1.5 percent and 1.3 percent, respectively. Among major advanced economies, the won was the only currency to lose grounds. The divergence is even starker against emerging markets. The J.P. Morgan Emerging Market Currency Index rose 2.4 percent, from 46.6 to 47.7. The Brazilian real advanced 5.7 percent, the Mexican peso climbed 4.7 percent and the Russian ruble rose 2.2 percent. Even the Chinese yuan — the only emerging-market currency included in the IMF’s Special Drawing Rights basket — appreciated 1.1 percent despite Beijing’s easing measures. India, the only BRICS member maintaining a weakening trend due to domestic policy easing, saw a modest 0.5 percent depreciation — far smaller than Korea’s decline. Yet underlying indicators suggest no structural shortage of dollars. The three-month swap rate — a key gauge of dollar funding conditions — rose 16 basis points from minus 1.48 percent in December to minus 1.32 percent as of Feb. 10, reflecting a narrowing Korea-U.S. interest rate gap. Currency swap rates climbed from 2.6 percent to 2.84 percent during the same period. The data indicate that the won’s weakness stems more from external sentiment and capital flows than from physical dollar scarcity. External confidence metrics remain stable. The spread on short-term external borrowing narrowed from 13 basis points in December to 11 basis points in January. Korea’s five-year credit default swap premium edged down from 22 basis points to 21 basis points. The Bank of Korea pointed to outbound retail flows as a key driver. Overseas investments by individuals more than tripled from $1.5 billion in December to $4.8 billion in January, the BOK noted, mounting significant upward pressure on the exchange rate. The pressure was partially offset by the National Pension Service, which reduced its overseas investment target for this year from 38.9 percent to 37.2 percent. Despite the continued undervaluation, the Korean won showed signs of recovery, gaining 10 to close at 1,446 per dollar on Feb. 11. As of 2:00 p.m. on Feb. 12, the currency climbed an additional 6 to reach 1,440. This rebound comes as foreign investors scooped up 1.6 trillion won in the KOSPI market, driving capital inflows, while authorities are presumed to be continuing their market interventions. 2026-02-12 14:14:20 -
Job data hints AI stealing entry-level high-skill jobs in Korea SEOUL, Feb. 11 (AJP) – South Korea’s youth employment remains in the doldrums for a second straight year, and fresh losses in science, technology, law and accounting services suggest the country’s rapid embrace of artificial intelligence is steadily worsening job prospects for college graduates. January job data indicate that hiring is slowing just as companies accelerate automation, raising concerns that AI is quietly narrowing access to stable, long-term employment for young workers. According to January job data released Wednesday by the Ministry of Data and Statistics, net payroll growth slowed to 108,000 jobs, the smallest increase in 13 months. The youth employment rate for those aged 15 to 29 fell 1.2 percentage points to 43.6 percent, marking its 21st consecutive month of decline. Weak job creation is hardly new. What stands out is where new losses stemmed from. Employment in professional, scientific and technical services fell by 98,000 in January, a 6.6 percent year-on-year plunge – the steepest decline since the category was created in 2013. The sector includes legal affairs, accounting, consulting, marketing, research and development, and quality control, fields that typically require undergraduate or higher degrees and regarded as resilient to economic downturns and technological disruption. Even in April 2020, when the COVID-19 pandemic wiped out more than 470,000 jobs nationwide, employment in this category rose by 19,000. That buffer is shaken. After rebounding in 2022, growth in the professional sector slowed sharply in 2023 and weakened further in 2024 and 2025. Over the same period, youth employment fell by more than 210,000, reversing the brief post-pandemic recovery. AI hits juniors first Economists increasingly point to AI as the main driver behind the shift. A report by the Bank of Korea released last October found that 208,000 of the 211,000 youth jobs lost over the past three years were in occupations with high exposure to automation. Younger workers are heavily concentrated in routine-intensive tasks such as document review, data processing, basic research, internal reporting and customer support – areas where AI systems are rapidly replacing human labor. “These are precisely the functions companies are automating first,” said a Seoul-based labor economist. “It is the junior layer of professional work that is being hollowed out.” A study by the Thomson Reuters Institute shows that many practitioners in law and accounting expect AI to reduce long-term staffing needs. A November survey by the Organization for Economic Cooperation and Development found that 14 percent of small and medium-sized firms in seven countries, including Korea, now handle marketing, research and public relations internally using AI tools. Global shift reaches Korea Major global firms have already begun adjusting their workforces. International law firm Baker McKenzie has restructured about 10 percent of its back-office staff in parts of Europe, while U.S. software company Salesforce laid off roughly 4,000 customer-support workers last year. In South Korea, strict labor protections have limited large-scale layoffs. Instead, companies are responding by freezing recruitment and trimming entry-level hiring. “We have not hired anyone since early last year,” said an executive at a Seoul-based IT services startup, speaking on condition of anonymity. “Basic work is now handled by AI systems. There is simply less need for junior staff.” Industry insiders say this quiet pullback in hiring is having a bigger long-term impact than visible job cuts, especially for new graduates trying to enter competitive fields. ‘AI-washing’ or structural change? Some analysts caution that AI is sometimes used as a convenient justification for cost-cutting. “Some executives cite AI as a rationale for downsizing that is actually driven by overhiring or margin pressure,” said Fabian Stephany, a researcher affiliated with the Oxford Internet Institute. In such cases, “AI” becomes a branding tool for traditional restructuring, rather than the real cause of job losses. Others argue that a deeper transformation is under way. “This is not simply about fewer jobs,” said Yoon Seok-bin, a professor at Sogang University’s Graduate School of AI and Software. “It is about different jobs. Demand is shifting toward people who can define problems, structure arguments and create value, rather than those who only process information,” he said. 2026-02-11 17:29:48 -
NPS' big bet on US tech stocks pay off, with '25 gains near $30 bn SEOUL, February 11 (AJP) - South Korea’s National Pension Service (NPS) booked nearly $29.4 billion in valuation gains from its U.S. stock portfolio last year from its aggressive bet on Big Tech and artificial intelligence-driven growth despite rising concerns over market froth. The fund - one of the largest institutional players in the world - in its latest 13F filing to the U.S. Securities and Exchange Commission reported that it held stakes in 561 U.S.-listed companies as of Dec. 31, 2025. The market value of its U.S. equity holdings stood at $135.07 billion, up 27.8 percent from a year earlier and marking an increase of $6.29 billion in valuation terms. The number of stocks in the portfolio rose from 552 to 561 over the quarter, while total shares climbed 3.36 percent to 888.4 million. The rally was led by technology heavyweights, particularly those linked to AI infrastructure and platforms. The largest quarterly increase came from Alphabet, the parent of Google. The valuation of the pension fund’s combined Class A and C shares surged from $5.39 billion in September to $7.16 billion at year-end, despite only a modest increase in share count. Holdings in Apple rose 8.45 percent in value to $8.21 billion, while pharmaceutical giant Eli Lilly posted a sharp 42.9 percent jump. Semiconductor maker Micron Technology also stood out, with its valuation nearly doubling to $870 million on strong memory chip demand linked to AI servers. As of end-2025, the largest single holding in the NPS U.S. portfolio was NVIDIA, accounting for 6.9 percent of total assets, or $9.34 billion, followed by Apple (6.1 percent), Microsoft (5.2 percent), and Amazon (3.4 percent). The combined exposure highlights the fund’s continued concentration in U.S. technology and platform leaders that dominate the global AI ecosystem. While maintaining an aggressive stance on Big Tech, the NPS continued selective portfolio adjustments in the fourth quarter. Holdings in Intel fell 2.3 percent, while stakes in Roblox, Nike, and Applied Materials were also reduced. Its holding in Estée Lauder jumped from fewer than 5,000 shares to more than 400,000, while stakes in Reddit, Dollar Tree, and Ulta Beauty increased multiple times. The NPS also initiated new positions in Spotify and space company Rocket lab. 2026-02-11 16:49:42 -
Bank deposits, bond prices ebb as money chases red-hot stocks in Korea SEOUL, February 11 (AJP) - Bank deposits and bond prices fell sharply in January as funds rotated rapidly into equities and money market funds (MMFs), signaling heightened risk appetite amid a blistering stock market rally, central bank data showed Wednesday. According to the Bank of Korea’s January financial market report, bank deposits shrank by 50.8 trillion won ($35 billion) last month, reversing a 7.7 trillion won increase in December. Demand deposits alone dropped 49.7 trillion won, compared with a 39.3 trillion won gain a month earlier. In contrast, asset management firms recorded a strong inflow of 91.9 trillion won, swinging from a 3.9 trillion won outflow in December. MMFs, which allow fast withdrawals, attracted 33.0 trillion won, reversing a 19.7 trillion won outflow the previous month. Stock-type funds saw inflows surge to 37.0 trillion won from 10.0 trillion won in December, while bond-type funds returned to net inflows with a 4.2 trillion won increase after a 6.8 trillion won outflow. Market participants said MMFs are increasingly being used as temporary “parking lots” for stock-bound cash, as investors wait for favorable entry points in a fast-moving market. The shift away from deposits and bonds coincided with a sharp rise in market yields, reflecting falling bond prices. The three-year government bond yield climbed from 2.95 percent at end-December to 3.22 percent as of Feb. 10, up 27 basis points, while the 10-year yield rose 29 basis points from 3.39 percent to 3.68 percent. The stock market has been on a near nonstop record-setting rally since yearend. The benchmark KOSPI has gained 27 percent from end-December, while the KOSDAQ is up 21 percent. Investor funds held at securities firms rose by 18.2 trillion won in January, following a 9.9 trillion won increase in December, reinforcing signs of expanding retail participation in the rally. The central bank said government bond yields rose sharply amid shifting monetary policy expectations and concerns over fiscal expansion, compounded by the migration of funds into equities. Meanwhile, bank household loans fell by 1 trillion won in January, following a 2 trillion won decline in December. 2026-02-11 15:13:51 -
Stocks are hot, but apartments are hotter in South Korea SEOUL, February 10 (AJP) - Stocks are hot in South Korea, but Seoul apartments remain hotter, as data shows profits from record market surge are increasingly being redirected into property purchases. Between July and December last year—after the government unveiled a package of housing market curbs in June—2.09 trillion won ($14.4 billion) was withdrawn from stocks and bonds to finance home purchases, according to data obtained from the Ministry of Land, Infrastructure and Transport by the office of People Power Party lawmaker Kim Jong-yang. The five-month figure exceeded the roughly 2 trillion won recorded for the whole of 2021, underscoring how quickly capital has pivoted back toward real estate. In July, one month into office, Lee Jae Myung publicly warned against housing speculation and ordered tougher measures at a cabinet meeting. The government followed up with high-intensity regulations, including a cap last October limiting mortgage loans to 600 million won for homes priced above 1.5 billion won. Less than a year later, however, the effectiveness of those policies appears limited. Drivers for price hikes remain unchecked The structural bias toward housing—especially in and around Seoul—remains firmly in place. According to the Korea Real Estate Board, apartment prices across all districts in Seoul rose 9 percent over the past year, the sharpest increase since the 23.5 percent surge in 2006 during the Roh Moo-hyun administration. Supply constraints continue to aggravate demand. Seoul’s housing supply ratio has consistently remained below 100 percent, while major development initiatives have faced repeated delays or cancellations. A previous government plan to deliver 2.7 million units by 2027 through private-led projects collapsed amid weak profitability and regulatory hurdles. The current administration announced in January a plan to supply 1.35 million units in the metropolitan area over five years, but formal negotiations have yet to begin. “Although the government has announced supply measures, fear persists that the shortage will not be resolved,” said Seo Jin-hyung, a professor at Kwangwoon University’s Department of Real Estate Law. Liquidity fuels the market Economists point to excess liquidity as a decisive trigger behind the renewed price surge. According to the Bank of Korea, broad money supply (M2), including securities such as stocks and ETFs, rose 8.4 percent year-on-year in November. Even excluding securities, money supply growth stood at 4.8 percent—well above levels seen in Japan and the United States. “When liquidity rises rapidly, inflation and real estate prices inevitably follow,” said Kwon Dae-jung, a chair professor at Hansung University’s Department of Economics and Real Estate. “Excess liquidity cannot be ignored in discussions about housing.” Stocks cannot replace homes As capital continues to flow into property, skepticism is growing over the notion that equities can serve as a viable alternative to real estate. Many analysts argue that securities often function as stepping stones—rather than substitutes—for buying tangible assets. “There are many ways to make money besides stocks, but one cannot live without a house,” said Woo Seok-jin, an economics professor at Myongji University. “Because housing and stocks are fundamentally different, the substitution effect will be limited.” Another real estate expert, speaking on condition of anonymity, was more blunt. “Stocks and property cannot exist in a purely substitutable relationship,” the expert said. “Unless the government tackles the issue through orthodox means—expanding supply and adjusting taxes—housing prices will not stabilize.” For broader Koreans, stocks remain a tool for accumulation and home in Seoul the ultimate destination, he added. 2026-02-10 17:37:17 -
FSS probes Bithumb following "ghost coin" scandal SEOUL, Feb 10 (AJP) -The Bithumb mispayment case is emerging as a major test for South Korea’s virtual asset regulatory system, as financial authorities move to use the findings to shape tougher oversight and future legislation. The Financial Supervisory Service (FSS) said Tuesday that it is focusing on whether Bithumb’s internal control systems complied with the Act on the Protection of Virtual Asset Users, particularly rules requiring exchanges to hold virtual assets in amounts equivalent to customer deposits. Regulators are also examining how a single employee’s input was able to trigger large-scale ledger distortions and whether real-time monitoring systems were operating properly. Authorities are reviewing Bithumb’s reconciliation procedures, including how frequently the exchange compared its internal accounting records with actual wallet balances. Bithumb has confirmed that it conducted reconciliation once a day, completing checks on the afternoon of the following trading day. This contrasts with rival Upbit, which operates an automated system that verifies reserves and ledger balances at five-minute intervals. Officials are also investigating how quickly the mispayment was detected. According to industry sources, the error was identified within about 20 minutes after a staff member reviewed a test account that had been included among event recipients. The FSS said the inspection results would be reflected in discussions on the second phase of virtual asset legislation, with a focus on preventing the recurrence of so-called “ghost coin” incidents. FSS Governor Lee Chan-jin has said that resolving such issues is essential for the virtual asset market to gain institutional credibility. Lawmakers and regulators are also reviewing governance standards at crypto exchanges. Some officials said the case has added momentum to proposals to cap major shareholders’ ownership stakes at 15 to 20 percent to strengthen internal oversight. The FSS is expected to continue intensive inspections this week and may extend the probe if necessary. Depending on the outcome, Bithumb could face administrative sanctions, including fines and possible disadvantages in future business license renewals. Bithumb responded that it is strengthening internal controls and reviewing its operating systems, regardless of the investigation outcome. The exchange said it has launched an internal audit to identify the root cause of the error and assess weaknesses in its accounting and approval processes. It is also conducting a comprehensive review of its ledger management and reconciliation systems. Bithumb said it is reinforcing safeguards to prevent a recurrence, including tightening access controls, strengthening multi-step verification procedures for asset transfers, and expanding automated monitoring systems that compare internal records with actual wallet balances. The company said it is also reviewing its reconciliation schedule, which currently involves comparing ledger entries and on-chain balances once a day. Officials indicated that the frequency and scope of these checks may be expanded, following criticism that the system was insufficient to detect abnormal transactions in real time. Regarding customer protection, Bithumb said it has taken steps to secure affected assets and prevent unauthorized withdrawals linked to the mispayment. The company said it is reviewing compensation and recovery measures in line with regulatory guidance. The incident occurred during a routine event payout at Bithumb last Friday, when an intended reward of 2,000 won ($1.20) per user was mistakenly entered as 2,000 bitcoins. As a result, about 620,000 bitcoins were credited to 249 customer accounts. Bithumb said it intervened within minutes after detecting the error. However, during the brief window before the system was frozen, about 1,788 bitcoins were sold on the market, triggering sharp volatility and pushing prices down by as much as 17 percent at one point. Prices have since stabilized, but the exchange said it has recovered only 99.7 percent of the misallocated assets, with about 125 bitcoins still unretrieved. The episode bared a yawning discrepancy between Bithumb’s internal accounting records and its actual asset holdings. The exchange did not possess the 620,000 bitcoins that were credited to customer accounts. According to its disclosures, Bithumb’s total bitcoin reserves are estimated at around 43,000 coins, with only about 175 bitcoins owned directly by the company, excluding customer deposits. This means the platform temporarily recorded balances far exceeding its actual holdings, creating so-called “ghost coins” within its internal ledger. 2026-02-10 13:16:04 -
Bithumb scandal sparks deep skepticism over Korea's crypto exchange systems SEOUL, Feb 09 (AJP) - A “fat finger” blunder at Bithumb, South Korea’s second-largest cryptocurrency exchange, has become a windfall for a few and a nightmare for many, involving more than $40 billion in erroneous transactions and raising fresh concerns over the safety of crypto trading in Korea. At around 7 p.m. KST last Friday, a staff member attempted to distribute 620,000 won in prize money but mistakenly transferred 620,000 won worth of Bitcoin instead—each unit valued at about 100 million won at the time. At the time of the incident, Bithumb reportedly held about 40,000 Bitcoins. Yet the erroneous payout amounted to nearly 15 times that figure. The exchange said it had recovered more than 99 percent of the wrongly distributed assets, but about 125 Bitcoins—worth roughly 13 billion won—remain unreturned. As volumes several dozen times larger than actual market capitalization were deposited into accounts, some investors panicked. This triggered a flash crash, sending Bitcoin prices plunging from around 100 million won to 80 million won and causing significant losses for many traders. Korean investors are familiar with such “fat finger” incidents. In 2018, Samsung Securities mistakenly issued “ghost stocks” worth 112 trillion won after entering share quantities instead of cash dividends. The Bithumb case has revived memories of that episode. Weak safeguards despite massive volumes The scandal has reignited criticism over the lack of preventive mechanisms in South Korea’s crypto market, which ranks among the world’s largest by trading volume. Although the Act on the Protection of Virtual Asset Users has been in force since July 2024, its provisions are seen as falling short of safeguards in major overseas markets. The incident stemmed from the absence of internal systems to block abnormal transactions at the platform level. Once the erroneous data was entered, it translated directly into actual transfers. In Japan, a 2025 amendment to the Payment Services Act allows withdrawals to be immediately blocked when irregular activity is detected, supported by approval processes using cold wallets. While Korean rules require at least 80 percent of assets to be stored in cold wallets, they impose few concrete restrictions on withdrawal procedures, complicating recovery efforts. In the European Union, detailed ledger and disclosure requirements allow regulators to access full records of balances, transaction purposes and histories, making it difficult for exchanges to record volumes far exceeding their holdings. Fears of manipulation mount Some experts view the incident as evidence that the risks of “naked short selling” in crypto markets have been underestimated. “During the Samsung Securities fat finger incident, there were overwhelming suspicions that the firm traded non-existent shares to intentionally manipulate stock prices,” said Seok Byoung-hoon, an economics professor at Ewha Womans University. “I believe this case will be remembered as a representative example showing that naked short selling is indeed possible in the crypto world.” Korean investors are particularly sensitive to such practices. In May 2024, the Financial Supervisory Service identified about 150 billion won in illegal short selling by seven investment banks, including HSBC Hong Kong and BNP Paribas. The findings led to a temporary ban on short selling, which was lifted in March 2025. FSS Governor Lee Chan-jin said Monday that authorities would respond sternly, without specifying details. “The essence of this issue is that erroneous virtual data actually led to real-world transactions,” he said. 2026-02-09 17:59:38 -
Seoul sells $3 bn in USD bonds, largest sovereign offering since global financial crisis SEOUL, February 06 (AJP) - South Korea on Thursday sold $3 billion in U.S. dollar-denominated bonds in its largest single sovereign offering since the aftermath of global financial crisis, building up the ammunition to defend the local currency while the debt environment remains favorable. According to the Ministry of Economy and Finance on Friday, the government issued $3 billion in foreign exchange stabilization bonds in two tranches: $1 billion in three-year notes and $2 billion in five-year bonds. The three-year papers were priced at 3.683 percent, or nine basis points above comparable U.S. Treasuries, while the five-year notes carried a yield of 3.915 percent, or 12 basis points over benchmark Treasuries. The deal marks the largest sovereign dollar bond issuance since April 2009, when Seoul raised $3 billion in the aftermath of the global financial crisis. Foreign exchange stabilization bond issuance has historically increased during periods of won weakness. The latest offering reflects the government’s increasingly firm stance on defending the currency. As of Friday, the won closed at 1,469.5 per dollar, surpassing its monthly average, under pressure from a strong greenback and persistent foreign capital outflows. The issuance is also aimed at replenishing foreign currency reserves. South Korea spent a total of $4.75 billion between December 2025 and January 2026 to stabilize the won, an unusually aggressive intervention by global standards. Most major economies typically build reserves toward year-end to meet capital adequacy requirements under the Bank for International Settlements framework. Korea, however, was the only major economy to substantially draw down dollar reserves in December. Reserves Decline Despite Record Surplus The reserve trend has raised concerns among policymakers. The Bank of Korea said Friday that despite recording its largest-ever current account surplus in 2025, foreign exchange reserves fell by $4.44 billion over the year. The central bank also confirmed this week that it had renewed its foreign exchange swap arrangement with the National Pension Service, highlighting ongoing efforts to secure dollar liquidity. Officials said the bond sale was driven in part by growing risks from external shocks, particularly amid prolonged trade tensions with the United States. On Jan. 27, U.S. President Donald Trump announced a 25 percent tariff hike on South Korean automobiles, citing delays in related legislation. The measure took effect this week. The finance ministry said it had “preemptively expanded foreign exchange reserves, which serve as an external safety valve, amid heightened uncertainties such as tariffs,” signaling that trade risks were a key factor behind the issuance. Geopolitical uncertainties were also considered, including instability in Venezuela and Iran and the prolonged war in Ukraine, all of which continue to weigh on global markets. The narrow spreads achieved in the latest sale point to Korea’s improved credit standing. During the 2009 financial crisis, spreads on 10-year Korean sovereign bonds surged to more than 430 basis points. After the 1998 IMF bailout, they exceeded 350 basis points. By contrast, the current spread of around 10 basis points over U.S. Treasuries is comparable to that of top-rated advanced economies and major international institutions. “This demonstrates that the so-called ‘Korea discount’ is steadily disappearing in the global sovereign bond market,” the ministry said. Foreign investor demand for Korean debt has strengthened further ahead of Korea’s scheduled inclusion in the World Government Bond Index between April and November. 2026-02-06 17:27:46 -
Korea's record C/A surplus pales by near-tripling capital outflows SEOUL, Feb. 06 (AJP) -The black figure in South Korea’s current account stretched to a monthly high in December and an annual high for 2025 thanks to red-hot chip sales, but the bulk of the gains went to defending the Korean currency against rapid depreciation and funding outbound investments, data showed. According to data released by the Bank of Korea on Friday, the current account in December recorded a surplus of $18.7 billion, an increase of more than $6 billion from the previous month. This marked the largest monthly surplus on record. For the full year, the surplus reached $123.05 billion, also rewriting the all-time high. Much of the glow fades when the data is set against the financial account, which measures capital flows. The financial account posted net asset increases of $23.77 billion in December, more than doubled from a year earlier, and $119.76 billion for full-year 2025, compared with $96.87 billion in 2024, implying that much more Korean money flowed out than in. The current-account surplus was driven largely by exports, which rose more than 13 percent to $69.54 billion. Chips were the primary earner, with exports expanding 43.1 percent to about $20.92 billion. Information and communication technology devices, including mobile phones, also performed strongly, rising 24 percent to $4.77 billion. Petroleum product exports reached $4.24 billion, up 6 percent from a year earlier, following a four-week improvement in refining margins through late December and a year-end surge in demand. Ships, once a pillar of export growth through October, fell 3 percent to $2.89 billion, marking a second consecutive month of decline. Automobile exports, which exceeded $6 billion in November, slipped back to $5.59 billion. Major automakers such as Hyundai and Kia have entered “contingency plans” as inventories subject to a potential 25 percent tariff under U.S.-Korea trade negotiations hit the market. Steel products also remained sluggish. Although the decline narrowed from November’s 6.3 percent drop, exports still fell 1.7 percent to $4.02 billion. Home appliance exports slid 8.1 percent to $560 million amid competition from cheaper Chinese products. Imports totaled $57.37 billion, up 4.6 percent from a year earlier. The decline in raw material import prices, which hovered around 8 percent in November, slowed sharply to just 1 percent. This reflected the won’s weakness, which averaged 1,467.3 per dollar in December, and rising prices for selected items. While crude oil imports fell 14.4 percent to $5.59 billion and gas dropped 33.4 percent to $2.03 billion, mining imports surged. Mineral imports rose 22.3 percent to $2.55 billion, while other metals, including rare earths, climbed 11.8 percent to $1.55 billion. The largest increase was seen in consumer goods, which jumped 17.9 percent to $9.72 billion. Durable goods, in particular, surged 30.8 percent to $4.37 billion, reflecting soaring prices for smartphones and computers as general-purpose chips were diverted to the AI business-to-business market, along with rising imported car sales. The problem is that much of the money earned has failed to build wealth at home. Investment income reached a record $30.17 billion in 2025, up $1.47 billion from a year earlier. Dividend income accounted for more than two-thirds of the total, at $20.19 billion. But the devil is in the details. In December, outward securities investment by residents rose 17.2 percent to $14.37 billion, with equities accounting for $11.83 billion. In contrast, inward investment by foreigners fell to $5.68 billion from $5.81 billion in November, with just $410 million flowing into stocks and the remainder into bonds. For full-year 2025, outbound securities investment reached $140.3 billion, nearly triple the $52.54 billion invested in local securities by foreigners. Direct investment showed a similar trend. Outward investment rose $6.49 billion, while inward foreign investment increased by only $5.17 billion. The gap, however, narrowed sharply from October, when outbound investment was nearly ten times larger than inbound. For 2025, outbound direct investment reached $41.23 billion, nearly tripling the $15.8 billion invested in Korea by foreign entities. It is little wonder that Korea’s pledge of up to $350 billion — including about $200 billion in cash — to the United States has weighed on the won, despite strong exports and a buoyant stock market. Reserve assets fell $4.44 billion in December, compared with a $1.69 billion increase in November. The country’s foreign exchange reserves fell $2 billion in December and $2.15 billion in January as authorities intervened to support the won and curb import-driven inflation through currency swap arrangements with the National Pension Service. As of 10:15 a.m. Friday, the won was trading at 1,470.2 per dollar, down 1.2 won from the previous close. After stabilizing briefly near the 1,420 level earlier this month, the currency is again facing renewed weakness. 2026-02-06 12:10:58