Journalist
Seo Hye Seung, Kim Yeon-jae
duswogmlwo77@ajupress.com
-
Korean won at record low signals monetary policy failure SEOUL, December 15 (AJP) - The Korean won hovering near its weakest level on record is set to ripple across the economy, from higher inflation and capital outflows to a deepening discount on Korean assets and companies. The dollar closed Monday in Seoul at 1,472.2 won, down 5.30 won, as the yen strengthened broadly on expectations of a rate hike in Japan later this week. The modest pullback offered only fleeting relief for policymakers. Authorities were alarmed enough to convene an emergency meeting on Sunday, attended by the finance minister, central bank governor, financial regulators and senior officials from the presidential office, welfare ministry and industry ministry, after the dollar approached 1,480 won in over-the-counter trading. Despite the brief rebound, the won’s slide has reached historic proportions. The average dollar-won exchange rate for the year through Dec. 14, 2025, stands at 1,420 won — surpassing the previous record of 1,394.7 set in 1998, when South Korea was under an International Monetary Fund bailout. The longer-term trend is equally troubling. The won has weakened steadily since 2021, initially reflecting ultra-loose global liquidity during the pandemic, followed by aggressive post-pandemic monetary tightening. What stands out now is a clear decoupling. The won is falling sharply against the backdrop of dollar softening and rate cuts in the U.S. So far this month, the won has lost 0.7 percent against the dollar, while most major currencies have gained. Economists increasingly point to excess liquidity as the root cause. Korea’s policy normalization has proceeded more slowly and cautiously than elsewhere, largely out of concern over household debt levels, among the highest in the world. “If I had to summarize the reason for the exchange rate rise in one word, it would be ‘liquidity,’” said Kim Gwang-seok, director of economic research at the Korea Institute for Industrial Economics & Trade. Korea’s broad money supply (M2) grew 8.5 percent year over the year as of September, according to the Bank of Korea. Even excluding exchange-traded funds, growth stood at 6.3 percent — up to three times faster than the United States’ 4.6 percent and Japan’s 1.8 percent. An oversupply of won inevitably erodes its value. “When M2 expands, inflation rises, household debt swells, and exchange-rate instability accelerates as the supply of won increases,” said Moon Hong-cheol, an analyst at DB Securities. The liquidity glut has spilled across borders. Korean nationals’ overseas equity purchases surged to $18 billion in October — six times the $2.93 billion foreign investors put into Korean stocks — according to Bank of Korea data. Flush with cash, Koreans are choosing foreign assets over domestic ones, a telling verdict on confidence in the won. Large-scale capital commitments abroad are also adding pressure. The $350 billion in promised investments in the United States, agreed during bilateral trade negotiations, are widely cited as another structural source of net won outflows. Unlike Japan, which benefits from a standing currency swap line with the U.S., South Korea has limited buffers, relying on foreign-currency bond issuance or returns from overseas assets — constraints that weigh on its dollar liquidity. A weak won quickly feeds into prices. Import costs are rising even as global energy prices fall. South Korea’s import price index rose 2.6 percent on month and 2.2 percent on year in November, the steepest monthly increase since April last year. This came despite Dubai crude averaging $64.47 per barrel, down from $65 in October, underscoring how exchange rates — not commodity prices — are driving inflationary pressure. Beyond households, prolonged currency weakness threatens longer-term damage to Korean Inc. Cross-border mergers and acquisitions reached nearly $3 billion as of September, up 54 percent on year, accounting for 13 percent of the $20.65 billion in foreign direct investment pledged by the third quarter, according to the Ministry of Trade, Industry and Energy. FDI inflows jumped 36.5 percent to $3.07 billion as a won that averaged 4 percent weaker than last year’s level effectively discounted Korean assets. High-profile targets such as Lotte Rental and IGIS Asset Management have drawn aggressive foreign interest — a grim reminder of past episodes when distressed Korean companies were snapped up during IMF crisis in what felt like fire sales. Underlying growth also weighs over the currency prospects. “Semiconductor exports have increased, but the domestic economy has failed to emerge from its slump, and shrinking domestic investment is entrenching a low-growth trajectory,” the Korea International Trade Association said in a report last week, calling for structural reform. “Attempts to manage currency supply and demand without addressing fundamental structural issues will ultimately fall short,” the report warned. 2025-12-15 17:53:58 -
Asian stocks slide on AI bubble fears, Fed uncertainty SEOUL, December 15 (AJP) - Asian equity markets fell broadly on Monday, pressured by growing skepticism over artificial intelligence-driven growth and renewed uncertainty about the future path of U.S. monetary policy. The sell-off reflected concerns that investor enthusiasm for AI-related stocks may be running ahead of fundamentals. Market uncertainty was compounded by reports that the Trump administration is considering Kevin Warsh, viewed as dovish, as the next chair of the U.S. Federal Reserve. The speculation appeared to contradict Fed Chair Jerome Powell’s recent guidance that only one additional rate cut is likely in 2026. In South Korea, the benchmark KOSPI index closed down 1.84 percent at 4,090.59, dragged lower by heavy foreign selling. Overseas investors sold a net 957 billion won ($650 million), while institutions offloaded 478.3 billion won. Retail investors, anticipating a rebound, were net buyers of 1.42 trillion won. Despite the equity sell-off, the Korean won strengthened, gaining 4.3 won to trade at 1,470.8 per dollar as of 4:40 p.m. local time. The yield on the 10-year government bond fell 8.4 basis points to 3.325 percent, reflecting a flight to safety. Large-cap stocks led declines. Samsung Electronics fell 3.76 percent to 104,800 won, while SK hynix dropped 2.98 percent to 554,000 won. Hyundai Motor slid 2.65 percent to 293,500 won, weighed by profit-taking and investor assessments that its autonomous driving technology trails rivals such as Tesla, Zeekr and General Motors. Korea Zinc bucked the broader market, jumping 4.87 percent to 1,592,000 won. Investors viewed Chairman Choi Yun-birm as gaining the upper hand in a management dispute with Young Poong, following reports that the company plans to build a 10 trillion won smelter in the United States and pursue an equity sale to U.S. investors through a third-party share issuance. Biotech stocks also advanced, supported by expectations that U.S. rate cuts will improve sector profitability. Samsung Biologics rose 4.73 percent to 1,772,000 won, while Samsung Episholding surged 7.26 percent to 709,000 won. Gains in biotech lifted the tech-heavy KOSDAQ, which closed 0.16 percent higher at 938.83. Aimed Bio, which has technology contracts with Boehringer Ingelheim and specializes in antibody-drug conjugate cancer treatments, soared 26.12 percent to 70,500 won, marking a record high since its December 4 listing. Elsewhere in Asia, Japan’s Nikkei 225 fell 1.31 percent to 50,168.11. Semiconductor-related stocks were hit hard amid U.S.-led AI skepticism, with Advantest sliding 6.42 percent and Ibiden tumbling 6.78 percent. In contrast, export-oriented stocks benefited from expectations of looser U.S. monetary policy, with Toyota Motor rising 2.76 percent to 3,350 yen. Taiwan’s TAIEX closed 1.17 percent lower at 27,866.94. Taiwan Semiconductor Manufacturing Company fell 2.03 percent to 1,450 Taiwan dollars, while MediaTek gained 1.07 percent on optimism surrounding its new Dimensity chipset and stronger smartphone sales in China. Mainland Chinese markets also declined. The Shanghai Composite Index slipped 0.55 percent to 3,867.92, while technology-heavy benchmarks saw steeper losses. The Shenzhen Component fell 0.87 percent, and Hong Kong’s Hang Seng Index was down 1.36 percent at 25,625 as of late afternoon trading. 2025-12-15 17:19:18 -
Seoul taps sovereign funds to bankroll AI and next-generation tech SEOUL, December 12 (AJP) - South Korea launching three-digit-billion-dollar government-sponsored growth fund investing AI and next-gen technology companies through equity and projecting financing is working on a separate wealth fund to systematically groom non-listed unicorn darlings. During a televised policy briefing to President Lee Jae Myung on Thursday, Deputy Prime Minister and Finance Minister Koo Yun-cheol outlined plans for a fund modeled on Singapore’s Temasek and Australia’s Future Fund. The vehicle, he said, would support large-scale projects in AI and semiconductors and pursue more aggressive equity investments than traditional policy funds. “By benchmarking Singapore’s Temasek, we aim to expand into proactive equity investment,” Koo said, signaling a shift from Korea’s long-standing preference for indirect or credit-based industrial support. In theory, South Korea already has a sovereign wealth fund. The Korea Investment Corporation (KIC), established in 2005 under former President Roh Moo-hyun and modeled on Singapore’s GIC, manages part of the country’s foreign-exchange reserves. Born out of lessons from the 1997 Asian financial crisis, KIC’s mandate has been conservative by design: to safeguard and reinforce foreign-currency assets through overseas investment. Koo’s proposal would mark a clear departure. The envisioned fund would add a domestic investment portfolio, channeling capital directly into Korean AI, chip and next-generation technology companies — a role KIC has never played. Uncertainty over execution Despite the political signaling, the contours of the new fund remain opaque. Its scope, target investments, funding sources and staffing have yet to be clearly defined, and even within the Ministry of Economy and Finance (MOEF), clarity appears limited. “We can only confirm that the New Growth Policy Division is currently responsible for the fund’s composition,” a MOEF official said on condition of anonymity. KIC, for its part, has not been consulted. A KIC official said the institution has received no notice of any expanded mandate or involvement. One idea floated by Koo involves allowing majority shareholders to pay inheritance taxes with listed shares rather than cash. The approach would ease liquidity pressure on business heirs while enabling the state to accumulate and actively manage equity assets. How such shares would be pooled, governed or deployed, however, has yet to be spelled out. Governance remains another unresolved issue. Unlike Saudi Arabia’s Public Investment Fund, where Crown Prince Mohammed bin Salman wields direct authority, or Temasek, which operates under Singapore’s Ministry of Finance with a clear legal and managerial structure, it is still unclear where a Korean sovereign growth fund would sit within the bureaucracy — or how insulated it would be from political cycles. Sustainability is a further concern. Previous administrations launched policy funds that were later dismantled or downsized. The Lee Myung-bak government’s “Resource Diplomacy Fund,” aimed at securing overseas energy and natural resources, was wound down after heavy losses. The Park Geun-hye administration’s “Unification Fund” and the Moon Jae-in government’s “K-New Deal Fund” were likewise shelved as political priorities shifted. The latest proposal also overlaps with initiatives already underway. Earlier Thursday, the Financial Services Commission launched the National Growth Fund, appointing FSC Chairman Lee Eog-weon, Mirae Asset Group Chairman Park Hyun-joo and Celltrion Chairman Seo Jung-jin as co-chairs of its steering committee. Formed hastily in mid-December, the fund is set to reach 150 trillion won ($101.8 billion) over five years, split evenly between government-guaranteed bonds and private capital. Of that total, 30 trillion won is earmarked for AI and 21 trillion won for semiconductors. A deliberation committee is expected to finalize next year’s operational plan later this year. Whether Seoul’s renewed interest in sovereign-style investing results in a durable Temasek-like institution — or becomes another short-lived policy experiment — will hinge on governance, continuity and the government’s ability to clearly define how this new vehicle fits into Korea’s already crowded landscape of growth funds. 2025-12-12 17:33:53 -
Asian markets rally on US optimism; Korean won volatile amid yen carry trade concerns SEOUL, December 12 (AJP) - Asian equity markets rallied across the board on Friday, lifted by optimism from Wall Street after U.S. Federal Reserve Chair Jerome Powell’s hawkish rate cut was interpreted as a signal that the American economy may avoid a recession. Despite the market rebound, currency volatility persisted. The Korean won closed at 1,476.3 per dollar as of 4 p.m., up 3.8 won from the previous session, amid concerns that it could again test the 1,480 level. Fears of a potential unwind of yen carry trades continued to weigh on foreign exchange markets. Government bond yields were mixed. The three-year Korean Treasury yield fell 8 basis points to 3.093 percent following the Fed decision, while the 10-year yield rose 3.1 basis points to 3.409 percent after the government formally announced plans to establish a sovereign wealth fund. South Korea’s benchmark KOSPI gained 1.38 percent to close at 4,167.16. Institutional investors drove the rally, net buying 1.42 trillion won ($962 million). Foreign investors also supported the market with net purchases of 41.3 billion won, while retail investors took profits, selling 1.46 trillion won. Blue-chip stocks advanced broadly. Samsung Electronics rose 1.49 percent to 108,900 won, while SK hynix added 1.06 percent to 571,000 won. Hyundai Motor Group shares also strengthened as investors bet on resilient U.S. economic conditions and consumer demand. Hyundai Motor climbed 2.03 percent to 301,500 won, Hyundai Mobis gained 4.72 percent to 377,500 won, and Hyundai Engineering & Construction posted one of the day’s sharpest gains, jumping 5.98 percent to 78,000 won. Defense stocks traded higher on persistent geopolitical risks and expectations that a weaker won would bolster export competitiveness. Hanwha Aerospace surged 6.31 percent to 961,000 won, Hyundai Rotem rose 4.02 percent to 186,400 won, and LIG Nex1 gained 2.82 percent to 383,000 won. Japan’s Nikkei 225 also advanced, closing 1.37 percent higher at 50,836.55. Export-oriented Japanese stocks were among the strongest performers. Toyota, the market capitalization leader, climbed 4.82 percent to 3,260 yen (20 dollars and 90 cents), while Honda rose 1.78 percent to 1,600 yen. AI power grid-related shares also tracked higher. Tokyo Electric Power Company (TEPCO) gained 5.54 percent to 661 yen, and Hitachi closed 4.24 percent higher at 5,010 yen. Taiwan’s TAIEX posted a more moderate rise, closing 0.62 percent higher at 28,198.02. TSMC gained 0.68 percent to 1,480 Taiwan dollars (47 dollars and 43 cents), while MediaTek rose 0.72 percent to 1,405 Taiwan dollars. Greater China markets also finished higher. The Shanghai Composite Index edged up 0.41 percent to 3,889.35, while the Shenzhen Component rose 0.84 percent to 13,258.33. Hong Kong’s Hang Seng Index, which is sensitive to U.S. market moves, outperformed the region, climbing 1.64 percent to 25,950 as of 4:40 p.m. 2025-12-12 17:05:42 -
Defensive of KRW, Seoul's attention shifts to potential rate hike in Japan after U.S. rate cut SEOUL, December 11 (AJP) - A U.S. rate cut typically delivers immediate relief to Korean financial markets. This time, it barely moved sentiment. Investors quickly pivoted to risks emerging across the Pacific — namely the possibility of a Japanese rate hike that could unleash sweeping reversals of international capital leveraged through decades of zero-interest Japanese funding. As widely expected, the U.S. Federal Reserve delivered a third consecutive rate cut, lowering the federal funds rate to 3.50–3.75 percent and narrowing the gap with Korea’s base rate at 2.50 percent. A smaller interest differential usually encourages capital to remain in Korea. That pattern did not materialize. The dollar jumped 6.70 won to 1,473.30. The KOSPI fell 0.6 percent and the KOSDAQ slipped 0.04 percent on Thursday. The 10-year government bond yield inched up to 3.378 percent from Wednesday's 3.371 percent. BOJ policy and JGB yields fuel unwind fear The yen carry scare has returned. The Bank of Japan is under pressure to move on interest rates as long-term yields — those attached to financial products with maturities of one year or more — rise faster than authorities expected, heightening inflation risk. BOJ Governor Kazuo Ueda acknowledged the shift during a parliamentary budget committee session on Tuesday, reiterating earlier signals pointing toward an eventual rate hike. Japan for decades tolerated a weak yen to boost export competitiveness and fight deflation. The “yen carry trade” — in which global investors borrow cheap yen and invest in higher-yielding assets abroad — was central to this strategy. The trade thrived when Japanese interest rates stayed pinned at zero while U.S. and global rates surged during the tightening cycle. But with Japanese inflation now hitting the 2 percent target and concerns of overshooting rising, the BOJ’s stance is changing. A shift toward Japanese tightening — as the U.S. loosens — raises the risk of a carry trade unwind, which can drain capital from markets heavily reliant on foreign funds. Korea is particularly vulnerable when the won hovers near crisis-level ranges. Deputy chiefs overseeing fiscal, monetary, and financial policy convened an emergency macro-financial meeting Thursday, warning that vulnerabilities in the bond and FX markets could intensify under diverging global monetary conditions. The won fell 3.2 percent against the dollar in November, steeper than the Taiwanese dollar’s 1.9 percent decline and the Japanese yen’s 1.4 percent. Much of the downward pressure stems from a combination of rapid M2 money supply expansion and persistent net outflows stemming from individuals’ and institutions’ high overseas investment appetite. Analysts agree that a carry-trade unwind could accelerate the won’s decline but stop short of calling the situation a crisis. “Unlike last year, when yen futures were net short, this year long positions dominate. The market has already anticipated a BOJ rate hike,” said Cho Yong-gu, researcher at Shinyoung Securities. He added that for the Korean won and bond yields to stabilize, a BOJ rate hike could paradoxically be helpful, as it would calm super long-term JGB yields and prevent broader turmoil in Asian currency markets. Japanese government bond yields have been stoking unwind fears. The 10-year JGB yield has nearly doubled in a year, rising from 1.054 percent on Dec. 9, 2024 to 1.956 percent on Wednesday — surpassing the 1.87 percent level recorded in December 2008. A surge driven partly by heavy Japanese government bond issuance to fund stimulus has amplified inflation concerns, making BOJ tightening more urgent. Experts also bet on BOJ tightening Markets remain divided on the BOJ’s next move, as government and central bank signals continue to diverge. Heo Seong-woo, researcher at Hana Securities, said that expectations of rising inflation and wage growth — pushing the BOJ toward a December rate hike — have contributed to climbing JGB yields. “Core CPI, excluding fresh food, has risen to 3 percent, and super-core CPI, excluding energy, has increased to 3.1 percent. Prices are clearly climbing, and the government bond bid-to-cover ratio was poor compared to last year. The BOJ has no choice but to raise rates.” Yen market positioning also supports the case for tightening. Researcher Cho of Shinyoung noted that the yen’s exchange rate is above 155 per dollar, approaching the 162 level reached in July when the carry trade last unwound. He added that the 160 mark is considered a psychological ceiling in Tokyo markets. “We must remember that July’s unwind occurred during a decoupling — the U.S. Fed was cutting rates while the BOJ was tightening,” Cho said, arguing that another rate hike is “predictable.” 2025-12-11 17:40:17 -
Yen carry trade unwind weighs on Asian stocks despite Fed rate cut SEOUL, December 11 (AJP) - Asian markets slipped or traded flat on Thursday as investors braced for a potential Bank of Japan interest rate hike and a broader unwinding of the yen carry trade. The U.S. Federal Reserve’s earlier rate cut offered limited support, with sentiment pressured further after the Fed signaled a more hawkish policy outlook that tempered hopes for additional easing. The Korean won weakened to 1,472.4 per dollar as of 4:40 p.m., down 5.8 won, amid expectations that capital could shift toward Japan should rates rise there. South Korean government bond yields were mixed. The three-year yield edged up 0.6 basis points to 3.101 percent, while the 10-year yield slipped 0.7 basis points to 3.378 percent, with both remaining above the 3 percent level. The benchmark KOSPI finished 0.59 percent lower at 4,110.62. Institutional investors drove the decline with net sales of 776.6 billion won ($520 million). Foreign investors purchased 347.2 billion won, while retail investors bought 408.8 billion won. Chipmakers led the downturn. SK hynix fell 3.75 percent to 565,000 won, while Samsung Electronics eased 0.65 percent to 107,300 won. Export-oriented names were also dragged lower: Hyundai Motor, typically a beneficiary of a weaker won, closed 2.31 percent down at 295,500 won. The day’s most active theme centered on redevelopment prospects for the Seoul Express Bus Terminal. Shinsegae climbed 4.28 percent to 256,000 won, while Dongyang Express surged 30 percent to 60,900 won and Chunil Express jumped 26.56 percent to 457,500 won. The tech-heavy KOSDAQ ended virtually unchanged at 934.64. Japan’s Nikkei 225 dropped 0.9 percent to 50,148.82 as renewed expectations of a BOJ rate increase pressured exporters and raised speculation that Prime Minister Sanae Takaichi’s stimulus plans may be put on hold. Heavy industry stocks led losses, with Mitsubishi Heavy Industries plunging 4.59 percent to 4,050 yen ($26). Automakers fared better on views they were already undervalued: Toyota dipped 0.19 percent to 3,110 yen and Honda slipped 0.22 percent to 1,572 yen. Semiconductor stocks were mixed. Advantest jumped 4.42 percent to 21,040 yen, while Tokyo Electron fell 1.57 percent to 32,600 yen. Taiwan’s TAIEX retreated 1.32 percent to 28,024.75, dragged down by chipmakers. TSMC lost 2.33 percent to 1,470 Taiwan dollars ($47), and MediaTek tumbled 4.45 percent to 1,395 Taiwan dollars, breaking below the NT$1,400 mark. Mainland Chinese markets also weakened on concerns about yen carry trade unwinding. The Shanghai Composite slipped 0.7 percent to 3,873.32, while the Shenzhen Component dropped 1.27percent to 13,147.39. Hong Kong’s Hang Seng Index was little changed at 25,530. Early gains evaporated on fears of capital outflows, but the index’s U.S. dollar peg and expectations that the Fed’s rate cut would ease valuation pressure helped limit losses. 2025-12-11 17:21:42 -
Korea's job strength mostly led by temp hires in services, youth jobless deepens SEOUL, December 10 (AJP) - South Korea’s labor market continued to show an increasingly asymmetric pattern in November, with headline employment gains masking a deepening slump among young adults and a widening pool of NEET (not in education, employment or training) youth. The number of people on payroll reached 29.05 million, up 225,000 from a year earlier, yet employment among those aged 15 to 29 fell by 177,000 over the same period, according to the Ministry of Data and Statistics on Wednesday. The youth employment rate dropped 1.2 percentage points to 44.3 percent, extending its decline to a 19th consecutive month. Overall, job conditions improved modestly for older cohorts: employment rose 0.2 percentage point to 80.9 percent for those aged 30–39, 1.2 percentage points to 80.7 percent for those 40–49, and 0.5 percentage point to 78 percent for those 50–59. Youth unemployment deteriorated, climbing 0.2 percentage point month-on-month to 5.5 percent, more than double the national jobless rate of 2.2 percent. The divergence from older workers widened, as unemployment continued to fall among those aged 50 and above. The “idled” population — who voluntarily dropped out of the labor force despite being physically able — further underscored the strain on the young. People aged 15–29 accounted for 16.3 percent in the idled group, second to the retired age of 60 and older who made up 45.1 percent. Those who gave up job hunt after futile job search numbered 353,000, up 18,000. Employers cite a prolonged domestic slump across manufacturing, construction, and agriculture. Construction posted the sharpest decline, shedding 131,000 workers from a year ago, reflecting a deep downturn spanning housing, civil engineering, and infrastructure. Manufacturers cut 41,000 jobs — the smallest drop since October 2024 but still indicative of weak industrial momentum. Agriculture, forestry and fisheries lost 132,000 workers, or 8.6 percent, as employers increasingly turn to foreign labor to offset Korea’s high minimum wage. Most of November’s job gains came from the services sector, heavily reliant on temporary and irregular hires. Employment in healthcare and welfare services rose 281,000, or 9.3 percent, buoyed by demographic-driven demand. Jobs in arts, sports, and leisure increased by 61,000, reflecting a rebound in consumer-facing spending even as the broader economy slows. 2025-12-10 14:58:16 -
Asian markets continue to hold breadth until Fed chair speaks SEOUL, December 10 (AJP) - Asian markets moved cautiously on Wednesday as investors held their breadth ahead of the U.S. Federal Open Market Committee decision, due at 6 a.m. Thursday Korean Standard Time, leaving the region in a subdued holding pattern for clues on next year’s rate path. The Korean won was steady at 1,469 per dollar as of 10:50 a.m., with traders perplexed by speculation that the National Pension Service may issue foreign currency–denominated bonds as part of a won–dollar hedging strategy. The KOSPI slipped 0.2 percent to 4,135 in a classic wait-and-see stance ahead of the Fed. Foreign investors were net buyers of 48.8 billion won ($33.2 million), while retail investors sold 46.5 billion won and institutions offloaded 9.2 billion won. SK hynix climbed 2.3 percent to 580,000 won after reports it may pursue an American Depositary Receipt listing using its treasury shares, while Samsung Electronics moved the other way, falling 0.65 percent to 107,700 won as foreign-led profit-taking weighed on the stock. Battery names also rallied. Samsung SDI rose 2.9 percent to 319,000 won after securing a 2 trillion won contract to supply lithium iron phosphate (LFP) batteries for energy storage systems to a U.S. energy infrastructure company. Entertainment stocks saw a rare lift, with HYBE up 5 percent at 306,000 won on expectations of full-group BTS activity in 2026. Hyundai Motor Group shares were mostly weak. Hyundai Motor lost 2.3 percent to 300,000 won, and Hyundai AutoEver slipped 1.3 percent to 297,500 won. The tech-heavy KOSDAQ traded sideways near 932, with retail investors net buying 143 billion won, while foreigners sold 64 billion won and institutions 48 billion won. Japan’s Nikkei 225 was flat at 50,690 as investors likewise avoided directional bets before the FOMC outcome. A rotation into defensive consumer names lifted automakers: Toyota gained 1.8 percent to 3,120 yen ($19.9) on strong North American hybrid sales, while Honda surged 4.3 percent to 1,590 yen. Semiconductor stocks were softer, with Advantest down 0.75 percent at 20,105 yen, Tokyo Electron 0.2 percent lower at 33,520 yen, and Ibiden and Kioxia each down 0.45 percent. Taiwan’s TAIEX edged 0.5 percent higher to 28,315, supported by modest gains in semiconductor bellwethers. TSMC rose 0.7 percent to 1,490 Taiwan dollars ($47.8), while MediaTek advanced 0.7 percent to 1,430 Taiwan dollars. Across the Strait, Chinese equities opened lower after CPI data released just before the bell came in far below expectations, renewing concerns about persistent disinflation. The Shanghai Composite fell 0.55 percent to 3,888, slipping below the 3,900 threshold. The Shenzhen Component dropped 0.75 percent to 13,171, and Hong Kong’s Hang Seng Index declined 0.6 percent to 25,285. 2025-12-10 11:37:33 -
Record M2 fuels weak won structure, binds policy for Seoul authorities SEOUL, December 09 (AJP) - South Korea's broad money supply has ballooned to levels last seen during the pandemic stimulus peak, and the liquidity glut is weighing heavily on the won while narrowing policy maneuvering room for authorities. M2 money supply, which includes bonds, time and savings deposits, and equity-type deposits, grew 8.5 percent to a record 4,430.5 trillion won ($3.01 trillion) as of September, Bank of Korea (BOK) data showed. The growth far outpaces Korea’s sub-1 percent economic growth and is the steepest since November 2021, when fiscal and monetary stimulus was deployed at full scale to fight the pandemic recession. Twin fiscal and monetary easing, asset inflation driven by hectic stock and housing purchases, and a widening current-account surplus all contributed to the extraordinary liquidity build-up. Korea’s current-account surplus from January to October reached 89.58 billion dollars, the highest ever for the period and on track for an annual record of 115 billion dollars. The supplemental spending package approved in June added further liquidity, including 13.9 trillion won in consumption coupons across two rounds, according to the Korea Development Institute. Korea’s M2 also counts Exchange Traded Funds (ETFs), unlike other countries. ETF balances swelled alongside the near 70-percent rally in the KOSPI so far this year. Even excluding ETFs, M2 growth stands at 6.3 percent, still sharply above the U.S.’s 4.6 percent and more than three times Japan’s 1.8 percent. BOK Governor Rhee Chang-yong acknowledged in a November rate briefing that “looking at the money flowing into the stock market, foreign exchange market, and real estate currently, it is true that a lot of liquidity has been released.” The classic rule of thumb is that too much money supply dilutes currency value. Experts argue the imbalance reflects policy failures, as radical stimulus inflated asset prices more than it strengthened the underlying economy. Former Financial Services Commission Chairman Kim Seok-dong pointed to the world’s highest level of household debt as the structural outcome of this misalignment. Without remedying household leverage, which restricts both upward and downward policy flexibility, he said, the weak-won structure cannot be resolved. Household loans reached an all-time high of 1,845 trillion won as of September. The household debt-to-GDP ratio stood at 89.7 percent in the second quarter, the second-highest globally. Mortgage loans accounted for 1,159.6 trillion won, more than 60 percent of total household loans, underscoring persistent demand for housing. The stock boom added to the pressure: margin loan financing jumped to 27 trillion won as of December 5, up 68.5 percent from six months earlier, according to the Korea Financial Investment Association. Analysts warn that the rapid monetary expansion risks stoking inflation and strengthening the debt cycle, further undermining the currency. The won has hovered around 1,470 per dollar for about a month, roughly 8 percent weaker than in June. Prolonged fixation in the upper 1,400 range, or a move toward 1,500, would raise concern for an economy dependent on imported energy and materials. Inflation has remained above 2 percent for three consecutive months, rising 2.4 percent in October from a year earlier. Fuel prices have also jumped. The average gasoline price in Seoul reached 1,807 won per liter on December 7, up more than 80 won from early October, according to KNOC’s Opinet. Under textbook conditions, defending the currency would require raising the policy rate. But the BOK faces a bind: growth is crawling, prices remain elevated, and household leverage makes additional tightening risky. As pressure builds, excess domestic liquidity has begun to escape through foreign exchange markets. Korean nationals’ overseas stock purchases surged to 18 billion dollars in October, more than double September’s 8.5 billion and six times the 2.93 billion dollars foreign investors deployed into Korean stocks. Institutional outflows add structural pressure. The National Pension Service allocates 37.3 percent of its assets to overseas equities and 58 percent when including bonds and alternatives, creating chronic demand for foreign currency. Authorities warn that textbook metrics alone will not calm the market. KB Kookmin Bank economist Lee Min-hyuk noted that Korea’s ratio of short-term foreign debt to foreign reserves is 38.3 percent, far below the 286 percent recorded at the height of the 1997 crisis. But he cautioned that leaving the weak-won structure unattended risks unnecessary FX market spending and, eventually, erosion of foreign confidence. 2025-12-09 14:02:15 -
Asian markets remain reserved in FOMC week SEOUL, December 09 (AJP) - Asian equity markets remained cautious ahead of the Federal Reserve’s Federal Open Market Committee (FOMC) meeting this week, with investors bracing for any signal that may accompany the widely expected interest-rate cut. Despite Seoul’s show of resolve — underscored most recently by a rare meeting between the prime minister and the Bank of Korea governor — the dollar ended its brief decline and turned upward, gaining 1.4 won to 1,470.90 won per dollar. South Korea’s KOSPI is trading 0.6 percent lower at 4,128.6 as of 10 a.m. Foreign investors are selling 183.9 billion won versus retail investors’ net buying of 117.7 billion won and institutional buying of 51.3 billion won. Blue-chip names are under pressure. Samsung Electronics is down 0.65 percent at 108,800 won, a relatively mild decline thanks to rising prices in legacy semiconductors, particularly conventional DRAMs. SK hynix, more exposed to external sentiment given its concentration in high-value chips such as HBM, is trading 2.25 percent lower at 564,000 won. LG Energy Solution, which jumped the previous day after securing a 2 trillion won electric-vehicle battery deal, is 2 percent lower at 442,000 won. Rival Samsung SDI is down 1.59 percent at 309,000 won. Among the day’s gainers is HD Hyundai Heavy Industries, rising 6.45 percent to 579,000 won, buoyed by news of its planned shipyard project in India’s Tamil Nadu region and expectations that it could gain an edge in the Korea Destroyer Next-Generation (KDDX) program. Japan’s Nikkei 225 is little changed at 50,532.07, stabilizing as U.S. semiconductor stocks rose overnight. Nvidia partner Ibiden is 3.4 percent higher at 13,175 yen (84.51 dollars), while Tokyo Electron is up 1.36 percent at 33,700 yen. But the yen carry-trade pressure persists: Mitsubishi Estate is down 2.4 percent at 3,728 yen, and Tokyu Fudosan Holdings is down 2.45 percent at 1,416 yen. Taiwan’s TAIEX is 0.3 percent lower at 28,210. TSMC is down 0.3 percent at 1,490 Taiwan dollars (47.75 dollars) on profit-taking, and MediaTek is 0.35 percent lower at 1,435 Taiwan dollars. On the mainland, the Shanghai Composite Index is steady at 3,920, while the Shenzhen Component is 0.3 percent lower at 13,291. Hong Kong’s Hang Seng Index is trading 0.2 percent lower at 25,702. 2025-12-09 11:32:42