Journalist
Abraham Kwak
ellenshs@ajunews.com
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OPINION: When a Chat App starts making decisions for you Not long ago, choosing a restaurant in Seoul required some effort. You searched on Naver. You skimmed blog reviews. You checked ratings on Kakao Map. You compared prices. You asked friends on KakaoTalk. Sometimes, you still had to make a phone call. Soon, it may take one sentence. “Find me a quiet wine bar in Gangnam.” Within seconds, a list appears on the screen. Photos, location, price range and user ratings are displayed. For restaurants linked to KakaoTalk’s reservation system, a “Book Now” button follows immediately. One tap, and the table is secured. No browser. No switching apps. No comparison sites. Everything happens inside a chat window. This is powered by Kakao’s new “Kanana in KakaoTalk” service, which integrates generative AI with Kakao Map, Kakao Pay and Kakao Booking. Users can search, compare, reserve and pay without leaving the messenger app. Somewhere between typing and tapping, the decision disappears. Korea did not drift into this future. It rushed toward it. For decades, the country treated connectivity as basic infrastructure. High-speed internet, universal smartphones and mobile payments spread faster than in most advanced economies. Artificial intelligence is simply the next layer. By 2025, more than 20 million Koreans were using generative AI services every month. Many paid for premium subscriptions. Many used AI tools daily at work and at home — for writing, research, translation and scheduling. In Korea, AI is no longer a novelty. It is becoming part of everyday utilities, like messaging or banking. You notice it only when it fails. What makes this moment different is not speed. It is delegation. In the early days of the internet, information became abundant, but judgment still belonged to users. People compared sources, checked credibility and made their own choices. AI compresses that process. It summarizes reviews. Ranks options. Suggests “best” choices. And now, through agent-style services, it completes transactions. It does not just recommend a restaurant. It books it. It does not just compare prices. It pays for you. Convenience turns into commitment. This shift is spreading across professional life. Law firms use AI to draft contracts and summarize rulings. Banks rely on algorithms for investment memos and risk analysis. Hospitals use AI tools for image reading and literature searches. Marketing teams generate copy and campaign plans automatically. At first, this feels efficient. Reports appear in minutes. Presentations are produced instantly. Productivity rises. Then a subtle change occurs. Employees stop writing first drafts. They edit machine drafts. They stop framing problems from scratch. They begin from what the AI suggests. The system’s first answer becomes the default. Businesses are adapting quickly. A new industry is emerging around a simple question: How do you appear in AI answers? Companies now analyze how often their brands are mentioned in ChatGPT, Gemini or Perplexity responses. Marketing strategies are shifting from search engine optimization to “answer optimization.” The old goal was to rank high on Google. The new goal is to be cited by chatbots. Visibility is no longer earned only from readers. It is negotiated with algorithms. For ordinary users, the consequences are less visible. Consider navigation apps. When GPS first appeared, it eliminated wrong turns. Over time, many people lost the ability to navigate familiar routes without it. The same pattern is emerging with AI. When every comparison is automated, people stop comparing. When every answer is summarized, people stop reading. When every decision is packaged, people stop questioning. Judgment weakens quietly. This is not mainly about machines becoming smarter. It is about humans becoming more dependent. The danger is not that AI makes errors. It does. The danger is that users accept them without scrutiny. Societies usually adapt to new technologies in two stages. First, they celebrate efficiency. Later, they confront dependence. Korea is entering the second stage. The question is no longer whether AI works. It clearly does. The question is whether people still understand the systems they rely on — and whether they are prepared to challenge them. That requires habits - clearly labeling AI-generated work, verifying sources and data, keeping final responsibility with humans. Teaching students to question AI outputs, not just use them. These are not technical issues. They are social and civic ones. Artificial intelligence accelerates everything. It shortens the distance between intention and action. But speed without direction leads nowhere — faster. Today, millions of Koreans move from message to purchase, from question to decision, without pausing. It feels like progress. In many ways, it is. But progress that replaces thinking with convenience comes at a cost. In the age of AI agents, the most important skill may not be prompting or coding. It may be the simple habit of thinking — before tapping “Confirm.” *The author is the managing editor of AJP 2026-02-18 11:36:16 -
A long ride back to Seoul as holiday winds down SEOUL, February 17 (AJP) -Heavy traffic clogged major highways across South Korea on Tuesday as millions of holiday travelers began returning to Seoul as the long Lunar New Year holiday ends on Wednesday. According to the Korea Expressway Corp., travel times to Seoul as of noon had lengthened sharply, with trips from Busan taking up to 10 hours, Ulsan 9 hours and 40 minutes, Daegu 9 hours, Mokpo 9 hours and 20 minutes, Gwangju 8 hours and 50 minutes, and Daejeon 4 hours and 40 minutes. Return trips were running two to three hours longer than estimates made earlier in the morning. Southbound traffic from Seoul was comparatively lighter but still slowed, with travel times of about 7 hours to Busan, 6 hours and 40 minutes to Ulsan, 6 hours to Daegu, 4 hours and 40 minutes to Mokpo, 4 hours and 30 minutes to Gwangju, 3 hours and 10 minutes to Gangneung, and 3 hours and 10 minutes to Daejeon. Major bottlenecks were reported on the Gyeongbu Expressway toward Seoul, including sections near Yangsan Junction, Geumho Junction, Daejeon–Jukam Service Area, Cheongju, and Cheonan–Anseong, where traffic moved at a crawl. Congestion was also seen in the Busan-bound lanes near Singal Junction, Manghyang Service Area, and parts of Daejeon. On the Seohaean Expressway, slowdowns were reported in multiple stretches toward both Seoul and Mokpo, while the Jungbu Naeryuk Expressway also experienced heavy congestion on northbound sections. The expressway operator forecast that about 6.15 million vehicles would be on the roads nationwide on Tuesday, more than 1 million higher than the previous day. An estimated 470,000 vehicles were expected to travel from regional areas to the capital region, while about 440,000 were heading in the opposite direction. Traffic congestion on return routes was projected to peak between 3 p.m. and 4 p.m. and ease gradually from around 3 a.m. to 4 a.m. the following day. Outbound traffic was expected to be heaviest between 1 p.m. and 2 p.m., with conditions improving after 8 p.m. 2026-02-17 14:04:50 -
Hedge funds pile into Asia as memory boom powers Korean rally SEOUL, February 17 (AJP) -Global funds are ramping up bets on Asian equities, led by tech-heavy South Korea and Japan, as a historic shortage in memory chips fuels one of the strongest regional rallies in decades. According to a client note from Goldman Sachs, hedge funds bought a record amount of Asian stocks in the week to Friday, targeting both developed and emerging markets. Inflows were concentrated in Korea, Taiwan and China, while India saw modest selling. Exposure to Asian equities reached its highest level since at least 2016. The surge came despite renewed global volatility driven by concerns over massive investment in artificial intelligence and its impact on corporate earnings. While major world indices fell sharply on Friday, Asian markets remained resilient. Japan’s Nikkei and Taiwan’s benchmark index each gained about 5 percent last week, while South Korea’s KOSPI jumped more than 8 percent. The S&P 500 was down 0.19% so far this year, while the Nasdaq has fallen 2.77%, according to data from the Financial Supervisory Service (FSS). The KOSPI has emerged as one of the world’s strongest-performing equity markets in 2026. The benchmark is up 30.68 percent year to date, far outpacing the Nikkei 225's 13.12 percent, Taiwan’s 16.03 percent, and the MSCI Emerging Markets Index's 11.83 percent. The KOSPI has more than doubled since the end of 2024, driven largely by surging semiconductor stocks. Samsung Electronics and SK hynix have rallied about 51 percent and 35 percent, respectively, this year as they are expected to continue with red-hot earning streak fueled by AI boon. Compared with the beginning of 2025, SK hynix's stock is 5 times more expensive and Samsung Electronics' more than tripled. Once-in-Four-Decades Memory Shortage A key driver behind Korea’s rally is what semiconductor research firm SemiAnalysis describes as a “once-in-four-decades” memory shortage. In a recent report, SemiAnalysis said memory prices are doubling again and that the current supercycle is larger and longer than previous booms, driven by structural supply constraints and explosive AI-related demand. Unlike past cycles, today’s memory industry is no longer able to expand supply rapidly. Physical limits have slowed DRAM scaling, making further cost reductions increasingly difficult and expensive. At the same time, building new fabs requires multi-billion-dollar investments and multi-year timelines. As a result, bit output per wafer is no longer rising fast enough to offset demand growth. Supply growth is being constrained not only by capital discipline, but by physics and process complexity, the report said. As each new generation of accelerators requires substantially more DRAM and high-bandwidth memory, creating a persistent supply-demand mismatch that is expected to last through at least 2027, it predicted. Samsung Electronics and SK hynix together control much of the global supplies of DRAM and high-bandwidth memory powering AI accelerators and hyperscale data centers. SK hynix leads the market for high-bandwidth memory used in AI accelerators, while Samsung remains a key supplier of advanced DRAM nodes. Overall, overseas investors have sold a net 13.5 trillion won worth of KOSPI shares so far this year and 10.0 trillion won in February alone, according to FSS data. Still, multinational investment banks are bullish on further gains. Goldman Sachs raised the KOSPI target to 6,400, or 20 percent upside. 2026-02-17 13:10:55 -
Kbank up for retail subscription Fri ahead of March 5 IPO, 30% discounted vs online peer SEOUL, February 17 (AJP) -Kbank, South Korea’s first online-only lender, will open retail subscriptions from Friday to Monday ahead of its March 5 debut on the main board, seeking to capitalize on a strong rally in the KOSPI with a relatively conservative valuation as the first Korean IPO for 2026. The lender has set its offering price at 8,300 won ($5.75), the bottom of its indicative range of 8,300 to 9,500 won, following institutional bookbuilding earlier this month. Kbank will begin trading on March 5 in its third attempt to go public, after withdrawing previous listings in 2022 and 2024 over valuation concerns. Institutional demand forecasting was conducted from Feb. 4 to 10, drawing participation from 2,007 investors and posting a competition ratio of 198.5 to 1. Total orders reached about 58 trillion won. Despite the strong headline demand, many institutions reportedly bid at or below the lower end of the range. Based on the final price, the total offering size stands at about 498 billion won, with post-listing market capitalization estimated at roughly 3.37 trillion won. At the offer price, Kbank is valued at around 1.38 times price-to-book (PBR), positioning it at a discount to both its online peer and major traditional lenders. Rival KakaoBank closed last trading session on Friday at 27,400 won, trading at a PBR of 1.94. Meanwhile, banking sector heavyweight KB Financial Group ended at 167,900 won with a PBR of 1.02. The valuation gap suggests potential room for rerating if Kbank narrows the spread with KakaoBank by demonstrating sustained earnings growth and improved business diversification. “Kbank’s pricing is not excessive in a rising banking sector,” said a Seoul-based IPO analyst. “But the market is still demanding a risk premium.” Overhang and Lock-up Concerns A key investor downside is the scale of potential selling pressure after listing. About 35.34 percent of outstanding shares, worth roughly 1.1 trillion won at the offer price, will be freely tradable on debut. Nearly half of the offering consists of shares sold by existing investors, reflecting strong exit demand. In addition, only 12.4 percent of participating institutions agreed to lock-up periods, raising the likelihood of near-term supply pressure. Kbank’s earnings structure is another focal point for investors. As of end-2025, about 30 percent of its fee income was generated through partnerships linked to Upbit, South Korea’s largest digital asset platform. The partnership agreement is set to expire in October 2026, making renewal negotiations a major earnings variable. Founded in 2016, Kbank had 15.53 million customers as of end-2025. It posted net profit of 128.1 billion won in 2024 and 103.4 billion won in the first three quarters of 2025. Management expects the IPO to strengthen capital buffers and expand lending capacity. Once listed, about 725 billion won from past capital injections will be newly recognized in equity calculations, translating into close to 1 trillion won in effective capital expansion. This is expected to support more than 10 trillion won in additional loan capacity. Growth priorities include loans to self-employed workers and small and medium-sized enterprises, expansion of Banking-as-a-Service (BaaS) partnerships, and development of digital asset-related services, including stablecoin-linked payment and remittance infrastructure. “We appreciate investors who share our long-term vision,” said Chief Executive Officer Choi Woo-hyung. “After listing, we will continue to grow alongside customers and shareholders while delivering differentiated value.” Retail subscriptions will be conducted on Feb. 20 and 23 for up to 30 percent of the total offering, or about 18 million shares. Investors can participate through lead managers NH Investment & Securities and Samsung Securities, as well as co-underwriter Shinhan Securities. 2026-02-17 09:48:57 -
Koreans begin early home-bound rush ahead of Lunar New Year holiday SEOUL, February 13 (AJP) -South Koreans began heading home in large numbers on Friday, getting an early start on travel ahead of the Lunar New Year holiday, which this year forms a five-day break including the weekend. Train stations, bus terminals and airports across the country grew steadily busier from the morning, as travelers carrying gift boxes, luggage and large suitcases made their way to hometowns for the nation’s most important traditional holiday. At Seoul Station, crowds filled KTX platforms as passengers queued for high-speed trains bound for major cities such as Daejeon, Gwangju, Daegu and Busan. Many long-distance tickets for Friday morning departures were already sold out. In Suwon Station, commuters and families lined up early with bundles of gifts and oversized carriers, while Daejeon Complex Terminal saw a growing flow of travelers gathering with packages and travel bags, creating a festive atmosphere. At Incheon’s intercity bus terminal, passengers waited for departures while drinking coffee or having quick meals, their faces showing anticipation. Gwangju Songjeong KTX Station also saw heavy traffic, with most morning trains from Seoul sold out. On one platform, a woman in her 60s rushed forward to embrace her granddaughter as train doors opened, drawing smiles from nearby travelers. Similar scenes unfolded nationwide. In Cheongju, families hurried through terminals holding children’s hands, while in Ulsan and Daegu, parents waited to welcome returning sons and daughters. Busan Station was crowded with homebound travelers, return visitors and soldiers on holiday leave. The Lunar New Year, or Seollal, is traditionally a time for families to reunite, honor ancestors and share meals. Many Koreans travel long distances to their ancestral homes to perform ancestral rites, exchange greetings and spend time with relatives. The annual homecoming, known as gwiseong, remains one of the largest seasonal migrations in the country, even as younger generations increasingly combine family visits with leisure travel. “I was worried about getting a ticket, but leaving a day early helped,” said Kim Seung-hee, 42, who was traveling to Gwangju. “I’m excited to eat homemade food with my family.” Markets were also busy, as shoppers prepared for holiday rituals and family gatherings. At traditional markets in Daejeon, customers bought fish, fruit and ceremonial food ingredients, while bargaining over rising prices. Major airports saw heavy traffic as travelers mixed homecoming trips with vacations. At Incheon International Airport, long lines formed at check-in counters, while Gimhae and Jeju airports were crowded with both family visitors and tourists. Jeju Island was expected to receive about 43,000 visitors on Friday, according to the local tourism association. Some ferry services in the West Sea faced temporary delays due to morning fog, though most routes in southern coastal areas operated normally. Highway traffic remained manageable in the morning, similar to a typical Friday. Korea Expressway Corp. estimated total vehicle volume at about 5.54 million nationwide for the day. Traffic toward provincial areas was expected to peak between 5 p.m. and 6 p.m., easing after 10 p.m., while congestion toward Seoul was forecast to clear later in the evening. “With the relatively short holiday, more people are leaving earlier than usual,” an expressway official said. “We expect congestion to build sooner in the afternoon.” As the holiday approaches, transportation hubs are expected to grow even busier over the weekend, marking the full start of the annual Lunar New Year homecoming tradition. 2026-02-13 13:11:13 -
Seoul bourse ranks 8th in global market cap rank, up 2 notches from Dec SEOUL, February 08 (AJP) - South Korea’s stock market has climbed to eighth place globally by valuation upon sustaining double-digit gains into the new year on the back of strong momentum in semiconductor and tech shares. According to the Korea Exchange, the combined market capitalization of the KOSPI, KOSDAQ and KONEX stood at 4,799.36 trillion won ($3.6 trillion) at Friday’s close, slightly edging Taiwan’s total of 4,798.68 trillion won as well as Germany. The World Federation of Exchanges rank placed South Korea at the 10th worldwide as of December last year, trailing the United States, China, the European Union, Japan, Hong Kong, India, Canada, Taiwan and Germany. The Seoul bourse moved up by two notches on frenzied buying in chip stocks upon record earnings confirming a semiconductor supercycle. The benchmark KOSPI, hosting memory giants Samsung Electronics and SK hynix has surged about 21 percent as of Friday, marking the strongest performance among major global indices. The tech-heavy KOSDAQ has gained nearly 17 percent, ranking third worldwide in year-to-date returns. Germany’s DAX index and Taiwan’s weighted index so far in the year gained 0.94 percent and 9.73 percent, respectively. Despite last week's correction, analysts are still buoyant about upward momentum. NH Investment & Securities perceives the KOSPI has yet to reach the peak of its current cycle, raising its 12-month target to 7,300 from 5,500. JPMorgan also raised target to 7,500 from 6,000. 2026-02-08 18:50:53 -
LGES buys battery JV in Canada as Ottawa weighs industrial offsets in submarine bid SEOUL, February 08 (AJP) -LG Energy Solution (LGES) has agreed to acquire its partner’s entire stake in a major Canadian battery plant for a symbolic $100, underscoring how slowing electric vehicle demand, shifting industrial policy and geopolitics are reshaping North America’s manufacturing landscape. In a regulatory filing on Friday, the South Korean battery maker said it would purchase the 49 percent stake held by Stellantis in their joint venture, NextStar Energy Inc., ending the partnership formed in 2022 to build Canada’s first large-scale EV battery plant in Windsor, Ontario. Stellantis however will remain as a customer. Under the agreement, LGES will take full ownership of the venture by June 30, 2026, acquiring shares for $100 that Stellantis had originally bought for $980 million. LG has committed $1.46 billion to the project and said its investment will continue as planned. The price reflects the deteriorating outlook for EV demand in North America, where automakers have scaled back expansion plans amid weaker sales and the rollback of U.S. consumer tax incentives. LGES said the ownership change would allow it to realign the facility toward a broader customer base, including energy storage systems (ESS), as automakers cut battery orders. Company officials in Seoul said the move reflects a strategic shift away from reliance on a single carmaker and toward fast-growing demand from data centers and renewable energy projects. One production line at the Windsor plant has already been converted for ESS manufacturing, with LG targeting utilization of more than 70 percent by year-end. The facility’s full capacity stands at about 49.5 gigawatt-hours annually. The pivot follows the cancellation of a $6.5 billion EV-related supply deal with Ford Motor late last year and mirrors similar conversions at LGES’ U.S. plants in Michigan. The restructuring comes as Canada intensifies efforts to protect its auto sector and attract non-U.S. investment, amid trade tensions with Washington and uncertainty over the future of North American supply chains. Prime Minister Mark Carney’s government has rolled out incentives tied to domestic production and revived EV purchase subsidies to stabilize the industry after major cutbacks by automakers. Last year, U.S. President Donald Trump imposed 25 percent tariffs on Canadian vehicles and parts, dealing a major blow to exports and accelerating streamlining of Canadian operations by carmakers including Stellantis which has moved production of its Jeep Compass model from Ontario to Illinois. Canadian officials now say the ability of foreign partners to deliver broader industrial benefits — beyond a single project — is becoming central to Ottawa’s investment strategy. The battery plant deal is also being watched closely in Seoul and Berlin, as Canada evaluates bids for its multibillion-dollar Canadian Patrol Submarine Project (CPSP). Stephen Fuhr, Canada’s special envoy for defense procurement, said during a recent visit to South Korea that automotive and advanced manufacturing cooperation would weigh heavily in the final decision. “If there are areas where we can cooperate in sectors like automobiles, we are looking to pursue broader partnerships that go beyond defense,” Fuhr said after touring facilities operated by Hanwha Ocean. Analysts observe LGES' deeper commitment to Canadian manufacturing may strengthen South Korea’s case by reinforcing long-term industrial ties at a time when Ottawa is seeking to reduce dependence on U.S.-based supply chains. For LGES, full control of NextStar offers operational freedom and access to generous Canadian production subsidies. For Ottawa, it preserves a flagship manufacturing asset while reinforcing its pitch for foreign partners willing to invest across multiple sectors. 2026-02-08 08:02:18 -
Korean crypto exchange Bithumb's bitcoin flop draws regulatory scrutiny SEOUL, February 07 (AJP) -South Korea’s financial authorities moved swiftly Saturday after a major operational error at crypto exchange Bithumb led to the mistaken distribution of hundreds of thousands of bitcoins, triggering market volatility and raising fresh concerns over risk management in the digital asset sector. The Financial Services Commission (FSC) convened an emergency meeting at the Government Complex Seoul, chaired by Vice Chairman Kwon Dae-young, with officials from the Financial Supervisory Service (FSS), the Korea Financial Intelligence Unit (FIU) and industry representatives. Bithumb Chief Executive Lee Jae-won attended the session. Kwon said the incident exposed the vulnerabilities and risks inherent in virtual assets, calling for a rigorous assessment of user losses and close monitoring of Bithumb’s compensation efforts. Regulators also formed an emergency task force with the FIU, FSS and the Digital Asset Exchange Alliance, or DAXA, to oversee follow-up measures. The task force will conduct on-site inspections at Bithumb and extend reviews to other exchanges, examining asset custody practices and internal control systems. Any illegal activity uncovered during the process will prompt immediate formal investigations, authorities said. Officials are also considering upgrades to monitoring systems to allow real-time oversight of exchanges’ asset holdings. The FSC said it would link the response to ongoing efforts to draft the second phase of Korea’s virtual asset legislation, including proposals to mandate regular third-party audits of crypto holdings and impose strict liability on exchanges for customer losses caused by system failures. Earlier in the day, the FSS dispatched an inspection team to Bithumb’s headquarters to examine the cause of the accident, user protection measures and the feasibility of recovering misallocated assets. According to industry sources, the incident occurred during a promotional “random box” event on Friday evening, when a staff member mistakenly entered “BTC” instead of “Korean won” as the payment unit. As a result, rewards totaling 620,000 won intended for 249 users were erroneously paid out as 620,000 bitcoins. The exchange said it immediately suspended transactions and withdrawals on affected accounts at around 7:40 p.m. and began recovery efforts. Bithumb reported that it had recovered 618,212 bitcoins and reclaimed about 93 percent of the remaining coins sold by users, leaving roughly 125 bitcoins unrecovered. The sudden inflow of coins led some users to sell aggressively, briefly dragging down the bitcoin price on the platform. Compensation and reforms Bithumb estimates customer losses linked to the incident at around 1 billion won ($750,000). In a statement, CEO Lee acknowledged that panic selling during the price dip had caused unfavorable trades for some users. The company said it will compensate affected investors by refunding their full trading losses plus an additional 10 percent. Users who sold bitcoin at depressed prices between 7:30 p.m. and 7:45 p.m. will receive automatic payouts within a week after data verification. All customers logged into the platform during the incident will also receive 20,000 won in compensation. In addition, Bithumb plans to waive trading fees across all markets for one week following a separate announcement. To strengthen safeguards, the exchange said it will establish a 100 billion won customer protection fund and implement a series of reforms, including enhanced asset verification systems, reinforced multi-level approval procedures, improved AI-based abnormal transaction detection, and regular external audits. “I sincerely apologize and take full responsibility,” Lee said. “We will do everything necessary to ensure that no customer suffers losses.” Financial authorities said the case underscores the need for stricter oversight as crypto assets become more embedded in the financial system. The FSS will continue to examine whether Bithumb’s response adequately protected users and whether a full recovery of the misallocated bitcoins is feasible. The incident is likely to accelerate regulatory efforts to tighten controls on exchanges and reinforce accountability, as policymakers seek to prevent similar disruptions in the fast-growing digital asset market. 2026-02-07 19:28:02 -
OPINION: Seoul bourse in precarious rally South Korea’s stock market, for now, remains an impressive outlier. While major U.S. and European indices have struggled to sustain momentum, the KOSPI closed at 5,089.1 on Feb. 6, up more than 20 percent from the end of last year. The technology-heavy KOSDAQ has risen nearly 17 percent over the same period. Few advanced markets can match that performance. Yet strong numbers can obscure weak structures. This week, the KOSPI fell to around 4,949, surged to 5,371, and retreated again toward the low 5,000s within days. A swing of more than 420 points — roughly 8.5 percent — in such a short period is not the hallmark of a confident, institutionally anchored bull market. It is the signature of a market increasingly driven by sentiment, momentum, and leverage. Foreign investors appear to have drawn similar conclusions. Since the start of the year, overseas investors have sold a net 17.6 trillion won of Korean equities while continuing to accumulate bonds. This is not capital flight. It is portfolio triage — a calculated reduction in equity risk in favor of safer instruments. Hedging activity reinforces the message. Stock lending balances have climbed to a record 140.8 trillion won, reflecting rising demand for protection against a downturn. In effect, investors are buying into the rally with one hand and insuring against its collapse with the other. More revealing, however, is what Korean investors themselves are doing. In 2025, residents invested roughly $140 billion in overseas securities. Foreign investment in Korean securities amounted to barely $53 billion. Outflows were nearly three times larger than inflows. In equities alone, Korean investors sent about $118 billion abroad, while foreigners invested just over $40 billion at home. This is not a cyclical fluctuation. It is a structural reallocation of capital. Korean investors, from pension funds to private individuals, are steadily diversifying away from domestic assets. They are voting, with their money, for deeper and more liquid foreign markets. Global investors, meanwhile, are becoming more selective about Korea. The consequence is that the burden of sustaining domestic share prices has shifted decisively toward retail investors — and toward leverage. Margin debt remains near 25 trillion won, with unsettled credit balances around 1 trillion won. Borrowed money has become a central driver of trading activity. Much of the market’s recent strength rests on “debt-financed optimism,” a notoriously unstable foundation. History suggests that such structures tend to magnify both euphoria and panic. They perform well in rising markets and unravel quickly when confidence falters. Pressure is also building in the currency market. Despite posting a record current account surplus in 2025, Korea’s foreign exchange reserves fell by more than $4 billion over the year and declined further in December and January as authorities intervened to support the won. The exchange rate approached 1,470 per dollar in early February. The government’s $3 billion issuance of foreign exchange stabilization bonds — its largest since the global financial crisis — was a reminder that currency management has become a permanent policy concern rather than an occasional emergency. In plain terms, Korea is earning dollars but failing to retain them. Rising interest rates compound the problem. Three-year government bond yields have moved above 3.2 percent, while AA-rated corporate bonds approach 3.8 percent. Higher funding costs are squeezing companies already coping with weak currency and rising import prices. Without sustained earnings growth, current valuations will become increasingly difficult to defend. Taken together, these trends paint a sobering picture. Foreign investors are reducing equity exposure. Domestic capital is flowing abroad. Retail participation is heavily leveraged. Public authorities are devoting growing resources to currency stabilization. Volatility is rising. None of this implies imminent collapse. Korea remains a technologically advanced, export-competitive economy with strong industrial foundations. Semiconductors are recovering. Investment in artificial intelligence is expanding. Corporate governance has improved. But financial markets do not thrive on growth alone. They require confidence, capital retention, and institutional depth. Those conditions are eroding. When overseas investment outflows consistently exceed inflows by wide margins, and when equity gains depend heavily on borrowed money, sustainability becomes questionable. Markets can ignore such imbalances for long periods — until they cannot. The recent 8.5 percent weekly swing should therefore be interpreted less as a routine correction than as an early warning. Korea’s rally continues. For now. But it rests on increasingly narrow and fragile foundations. *The author is the managing editor of AJP 2026-02-07 11:31:23 -
White House has no specific timeline on hiking tariffs on Korean exports SEOUL, February 06 (AJP) -The White House said Thursday that there is no clear timeline for U.S. President Donald Trump’s threatened tariff hike on South Korean goods, underscoring continued uncertainty over the future of the bilateral talks despite a flurry of visits by senior Seoul officials. White House Press Secretary Karoline Leavitt in a press briefing on Thursday said that she could not specify when Washington would raise “reciprocal” and sector-specific tariffs from 15 percent to 25 percent, as Trump warned last week. “I don’t have a timeline,” Leavitt said, adding that the White House trade team would provide updates “swiftly and promptly.” Trump last Monday warned he could restore higher tariffs on Korean autos, lumber, pharmaceuticals and other products, citing delays in South Korea’s legislative process to implement a bilateral investment agreement. Under the deal signed last November, Seoul pledged about $350 billion in U.S.-bound investments in exchange for reduced tariffs. But nearly three months later, related legislation remains stalled in the National Assembly. In a Truth Social post, Trump said the tariff hike was justified because “the Korean Legislature hasn’t enacted our Historic Trade Agreement.” Despite a series of urgent diplomatic missions, Seoul has so far failed to secure assurances despite back-to-back visits to Washington. Foreign Minister Cho Hyun raised the issue with U.S. Secretary of State Marco Rubio, while Trade Minister Yeo Han-koo and Industry Minister Kim Jung-kwan separately held talks in Washington. None produced firm commitments. At the heart of the dispute is Korea’s failure to pass a special investment bill needed to institutionalize its pledges under the agreement. Ruling and opposition parties have traded blame while delaying legislation critical to economic interests, undermining Seoul’s credibility in Washington. In contrast, Japan has moved quickly to announce large-scale U.S. investment plans under similar pressure. This political paralysis has given Washington added leverage and reinforced perceptions that Korea’s commitments lack urgency. Still, some suspect the Trump administration’s renewed tariff threat appears have driven in part by domestic political calculations, with midterm elections approaching and foreign investment touted as proof of economic strength. Returning from Washington on Thursday, Trade Minister Yeo said Seoul would continue intensive consultations to prevent immediate tariff implementation. “What matters is whether there will be a grace period after publication,” Yeo told reporters at Incheon International Airport. “There is still time for consultations.” He said the government is making “good-faith efforts” to implement the agreement and called formal tariff procedures “unnecessary.” Yeo welcomed the National Assembly’s decision to form a bipartisan committee to advance the investment bill, calling it “definitely helpful” in easing tensions. During his trip, Yeo met with U.S. Trade Representative officials and lawmakers to reaffirm Korea’s legislative commitment and address non-tariff issues, including digital regulations. 2026-02-06 07:54:52