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South Korean investors turn cautious after leveraged ETF frenzy SEOUL, August 5 (AJP) - Just weeks ago, South Korea's stock market looked less like an equity market than a high-stakes casino as some observers put it. Retail investors poured hundreds of trillions of won into newly launched single-stock leveraged exchange-traded funds (ETFs) linked to the country's two major chipmakers Samsung Electronics and SK hynix, fueling one of the sharpest boom-and-bust cycles in the country's stock market history. Circuit breakers were activated on consecutive trading days for the first time, as investors who had borrowed heavily to buy stocks were forced into widespread selling as prices collapsed. Regulators, meanwhile, came under fire for failing to curb the rapid spread of highly speculative products. But the mood has shifted. Both regulators and investors are now navigating a gradual retreat from leverage after one of the most volatile episodes in the country's stock market history. The clearest sign is how quickly leverage itself is disappearing. Trading in 16 leveraged and inverse ETFs linked to Samsung Electronics and SK hynix has collapsed since regulators raised the minimum cash deposit requirement to 30 million won (about US$20,000) on July 31. Turnover fell from roughly 12.4 trillion won on July 30 to about 3 trillion won on the day the rule took effect, before dropping again to around 1.2 trillion won two trading days later — about one-tenth of the level seen before the regulation. Other indicators also point to a broad reduction in risk-taking. According to the Korea Financial Investment Association (KOFIA), outstanding margin loans — money borrowed from brokerages to buy stocks — fell below 30 trillion won at the end of July for the first time in six months. The balance has shrunk by nearly 10 trillion won from its June 24 peak of 38.6 trillion won, meaning more than a quarter of margin financing has disappeared in little over a month. Loans backed by stocks also declined sharply. Outstanding balances fell to about 25.4 trillion won as of July 31, down nearly 3 trillion won from 28.1 trillion won on March 5. The decline was compounded by a wave of forced liquidations after the market's sharp selloff, as investors either repaid debt voluntarily or had their positions liquidated by brokerages after failing to meet margin requirements. Those liquidations totaled 103.8 billion won on July 30 and 122.0 billion won on July 31 following consecutive market-wide circuit breakers. Taken together, the data point to a broad deleveraging across South Korea's retail investment market rather than a retreat confined to leveraged ETFs alone. For regulators, that appears to be the intended outcome. Authorities tightened suitability requirements and tripled the minimum cash deposit for single-stock leveraged ETFs after the products came to dominate ETF trading within weeks of their launch. Officials argued the products had magnified volatility by encouraging short-term speculation around just two companies that dominate the country's equity market. Early data suggest the measures are beginning to have the intended effect. Trading in single-stock leveraged ETFs has fallen sharply while the broader market has remained orderly, indicating that speculative activity has cooled without causing broader market disruption. Investors, meanwhile, also appear to be drawing lessons from one of the most violent corrections in the market's history. The KOSPI has recovered above the 6,300 level after plunging nearly 44 percent from its late-June peak, but margin borrowing and leveraged ETF trading remain well below the levels seen before the selloff. The contrast suggests many retail investors are still reluctant to return to highly leveraged bets. That shift is no longer confined to the domestic market. After buying a net $3.79 billion of the Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL), a leveraged fund designed to deliver three times the daily return of the Philadelphia Semiconductor Index, in July, Korean retail investors turned into net sellers at the start of August. On Aug. 3 alone, they sold a net $664 million — nearly one-fifth of their total July purchases — before returning to modest net buying the following day. The selling did not signal a broader retreat from U.S. equities. Korean investors remained net buyers of U.S. stocks, purchasing a net $278 million in early August, while rotating into semiconductor companies including Micron Technology, Sandisk and SK hynix's U.S.-listed ADR, all of which ranked among their most-bought stocks over the period. The pattern suggests investors are becoming more selective, shifting away from leveraged products while maintaining confidence in the long-term AI investment theme. The retreat from leverage, however, does not mean the underlying risks have disappeared. It is changing who bears them. According to Bloomberg, demand has surged for over-the-counter derivatives known as "crash puts" or "stability notes." The products are designed to protect investment banks against the unlikely but potentially devastating scenario in which a stock loses roughly half of its value in a single trading session. Instead of keeping that risk themselves, banks pay other investors to take it on in exchange for higher returns. Goldman Sachs and BNP Paribas have reportedly marketed such products linked to Samsung Electronics and SK hynix, offering double-digit returns to investors willing to absorb losses if an extreme one-day market collapse occurs. South Korea's experience reflects a broader trend. As leveraged ETFs continue to expand globally, financial institutions are developing increasingly sophisticated ways to redistribute the risks created by those products rather than keeping them on their own balance sheets. The speculative frenzy may be cooling. Whether the risks have been reduced - or simply redistributed - may prove to be the market's next lesson. AJP Takeaways: — South Korea's retail investors have sharply reduced leverage since July 31, 2026, after regulators tripled the minimum cash deposit requirement for single-stock leveraged exchange-traded funds (ETFs) from 10 million won to 30 million won. — Trading in Samsung Electronics and SK hynix leveraged and inverse ETFs has fallen by about 90 percent, with daily turnover dropping from roughly 12.4 trillion won on July 30, 2026, to around 1.2 trillion won two trading days after the new rules took effect. — Margin borrowing has also declined significantly. Outstanding margin loans fell below 30 trillion won at the end of July 2026 for the first time in six months, down nearly 10 trillion won from the June 24, 2026 peak. — Outstanding loans backed by stocks declined to about 25.4 trillion won as of July 31, 2026, indicating that investors are relying less on borrowed money to invest in equities. — According to Bloomberg, investment banks including Goldman Sachs and BNP Paribas have marketed over-the-counter derivatives such as "crash puts" and "stability notes" that transfer extreme market risk to investors willing to accept higher potential returns. 2026-08-05 17:53:47
Korean won emerges as winner in U.S. "prosper-thy-neighbor" yen defense SEOUL, August 05 (AJP) - Currency intervention has long been viewed as a classic beggar-thy-neighbor policy, with governments weakening their currencies at the expense of trading partners. The latest U.S.-Japan operation appears to be doing the opposite, giving the South Korean won an unexpected tailwind alongside the yen. That raises an obvious question: Has Washington suddenly become more generous? Why would an administration that has championed "America First" intervene in a way that also supports South Korea, China and the rest of Asia? U.S. Treasury Secretary Scott Bessent's explanation suggests the answer is no. Supporting the yen is not an act of generosity but one of self-interest. Washington believes a sharply weaker yen would trigger competitive devaluations across Asia, undermine U.S. exporters and ultimately threaten global financial stability. In that sense, helping Japan also helps America. "If the yen were to weaken substantially, then the other currencies would follow it," Bessent told CNBC. "That could trigger competitive devaluations, which is unhealthy." Until June, the yen and won have been trading at multi-decades lows. Washington sees the yen as a regional anchor and believes a sharp depreciation in the Japanese currency could drag down the Korean won, Chinese yuan and other Asian currencies, undermining U.S. exporters while raising the risk of broader financial instability. Bessent went further, arguing that an excessively weak yen had contributed to the 1997-98 Asian financial crisis. "The Asian financial crisis, in my opinion, part of it was triggered by an overly weak yen," he said. "A stable yen is not only important for the U.S., but it's very important for the entire region." In effect, Washington is arguing that supporting one ally's currency is the best way to stabilize Asia's broader foreign-exchange complex. He said intervention buys Japan time to implement policies that can support the currency over the longer term. "We can give market signals, but at the end of the day, it's going to be policy and fundamentals," Bessent said. "The U.S. decided to join because we are very optimistic on their policy path." Asked whether Washington was prepared to intervene again, Bessent replied that the United States would do "whatever it takes" to support Japan "in a way that helps the American economy, the American taxpayer, and stabilizes the global economy." The remarks sit somewhat uneasily with the Trump administration's broader "America First" agenda, which has generally emphasized U.S. interests over regional coordination. Yet in the currency market, Washington appears to have concluded that stabilizing the yen ultimately serves American interests as well. For Seoul, the outcome has been welcome, regardless of Washington's motivation. The dollar-won exchange rate fell 141 won last month, from 1,559 won to 1,418 won, according to KB Kookmin Bank, before trading around 1,423 won on Wednesday afternoon in Seoul. The won, which ended June at 1,549.4 per dollar—nearly 8 percent weaker than six months earlier—had recovered to trade about 0.5 percent stronger for the year as of Aug. 4. The yen, which had fallen 3.47 percent from the end of 2025 to 162.15 per dollar by June 30, recovered following the intervention but remained 0.65 percent weaker than its year-end level at 157.73 as of Aug. 4. South Korean authorities have not confirmed intervention. But Reuters, citing market participants and analysts, reported that South Korea and Japan each bought their own currencies on July 30, when the won strengthened about 2 percent to its strongest level in nine months. Japan returned to the market the following day in a coordinated operation with the United States, with the U.S. Treasury selling euros to purchase yen, although Washington has not disclosed the size of its transaction. KB Kookmin Bank found that a 1 percent decline in the dollar-yen exchange rate has historically been accompanied by an average 0.6 percent decline in dollar-won, based on monthly data between August 2021 and July 2026. The bank said further intervention could trigger additional short-covering in the yen, forcing investors to unwind long dollar-won positions as well. The mechanism reflects the won's role as one of Asia's most liquid proxy currencies. Global investors frequently use the Korean won to express broader views on Asia and China because it trades more freely than many regional currencies. When investors are forced to cover bearish bets against the yen, those position adjustments often spill over into the won as well. Still, analysts caution against attributing the Korean currency's entire appreciation to intervention alone. The latest rally has also been supported by corporate dollar repatriation, broader weakness in the U.S. dollar and lower oil prices, all of which have improved South Korea's external balance. Another factor drawing market attention is Washington's proposal to expand the Federal Reserve's Foreign and International Monetary Authorities Repo Facility, or FIMA. The facility allows foreign central banks to obtain short-term dollar funding against U.S. Treasury holdings instead of selling those securities outright, potentially enabling Japan to finance yen purchases while preserving its roughly $1.14 trillion Treasury portfolio. Bessent has urged the Federal Reserve to consider raising FIMA's $60 billion limit, arguing that the Treasury market has expanded substantially since the program was introduced in 2020. Daleep Singh, chief global economist at PGIM, described a larger facility as positive for Treasury-market stability but "a shock absorber, not a cure," while Evercore ISI warned that any cap could eventually encourage markets to test Washington's commitment. For South Korea, however, FIMA matters less because Seoul is expected to use the facility than because it could spare the won from bearing one-way regional selling pressure without U.S. support for the yen. The Bank of Korea reported Wednesday that foreign exchange reserves rose to $427.95 billion at the end of July, up $590 million from the previous month. The increase reflected foreign-currency stabilization bond issuance, investment income, valuation gains on non-dollar assets and foreign-exchange swaps with the National Pension Service, meaning the figure does not directly measure recent intervention capacity. Market participants nevertheless believe Washington's involvement has materially changed investor psychology. Dominic Bunning, head of G10 foreign-exchange strategy at Nomura, said Japan was no longer confronting markets alone with U.S. backing, while MUFG strategist Lee Hardman said recent rate checks by the New York Fed had heightened expectations of further action. Even so, Bunning cautioned that the current arrangement remained closer to tacit U.S. support than the fully coordinated intervention mounted after Japan's 2011 earthquake. KB Kookmin Bank estimates the dollar-won's fair value at around 1,417 based on the dollar index, the Korea-U.S. interest-rate differential and structural foreign-exchange supply and demand. Position adjustments could temporarily push the exchange rate toward 1,390, the bank said, while stronger-than-expected U.S. economic data and renewed Federal Reserve tightening expectations could instead send it back toward 1,450. Atsushi Takeuchi, a former Bank of Japan official who participated in past interventions, said Washington and Tokyo would probably act again if the yen resumed its slide. But he warned that intervention alone could not deliver lasting appreciation without tighter Japanese monetary policy and reduced expectations for fiscal expansion. Whether this rare "prosper-thy-neighbor" approach marks a lasting shift in regional currency management remains uncertain. A sustained break below 1,400 won per dollar will ultimately depend less on intervention than on stronger Japanese policy fundamentals, continued U.S. backing and healthy dollar inflows into South Korea. AJP Key Takeaways • The U.S.-Japan yen intervention is providing the Korean won with an indirect backstop by reducing depreciation pressure across Asian currencies. • Because the won closely tracks the yen, coordinated support for Japan's currency could keep downward pressure on the dollar-won exchange rate. • A durable move below 1,400 won per dollar, however, will require stronger policy fundamentals rather than intervention alone. 2026-08-05 17:48:56
Police Provide 24-Hour Support to Residents During Major Power Outage A major power outage occurred at the Namak Kyungnam Honorsville Apartments due to a transformer fire, prompting the Muan Police Station to provide steadfast support to residents. This effort has recently come to light, evoking a sense of quiet appreciation.Following the transformer fire that broke out on August 4 at 6:30 p.m., Muan Police Chief Choi Young-soo directed the mobilization of available police forces, including the Security and Safety Division, Traffic Division, Namak District Police Station, and the Regional Information Team, to ensure resident safety and alleviate inconveniences.As the power outage rendered the apartment's broadcasting system inoperable, leaving residents without updates on recovery efforts or evacuation instructions, police urgently deployed two broadcast vehicles to provide real-time announcements.Anticipating prolonged disruptions due to the power and water outages, the police also provided mobile sanitation facilities to minimize residents' discomfort.Officers on the scene responded to residents' inquiries and monitored the safety of vulnerable groups, including the elderly and children, as they moved between the apartment complex and the temporary evacuation site at the Namak Multipurpose Sports Center, remaining on duty late into the night.This response has been recognized as a demonstration of the police's fundamental role in safeguarding residents' safety and daily lives during emergencies, extending beyond mere crime prevention.Chief Choi stated, "In disaster situations, ensuring the safety of residents and alleviating their inconveniences is our top priority. The Muan Police will mobilize all available personnel to stand by residents in any situation. We will continue to work closely with relevant agencies to ensure the community feels secure."One resident who received assistance from the police remarked, "When the power went out suddenly, I felt lost without any information. The police broadcast vehicle was a great help, providing continuous updates. Seeing them set up mobile restrooms made me feel that they truly care for the residents."Another resident added, "In the sweltering heat, it was reassuring to see police officers actively moving around the area, addressing each inconvenience. The police were the first to stand by us in this urgent situation."During this power outage, Muan County, Korea Electric Power Corporation, and the fire authorities, along with the Muan Police Station, established a collaborative response system to minimize resident impact. The police's efforts to support broadcasting and mobile sanitation facilities exemplified their commitment to being present for the community, reinforcing the notion that 'the police are always by the people's side.' 2026-08-05 17:48:10
Clucus and Wiz to Showcase Cloud and AI Security Strategies at ISEC 2026 Clucus announced on August 5 that it will participate as a premier sponsor alongside global cloud and artificial intelligence (AI) security firm Wiz at the 20th International Security Conference (ISEC 2026).ISEC is an information security conference where domestic and international security experts and business representatives share the latest security technologies and industry trends. The event will take place from August 11 at COEX in Seoul.Clucus and Wiz plan to address key security challenges faced by businesses in cloud and AI environments and present practical solutions to tackle these issues.Wiz believes that as global companies rapidly expand their digital environments, the role of security leaders is fundamentally shifting from technical controllers to strategic leaders driving digital trust. At ISEC 2026, they will specifically introduce ways for security organizations to move away from a vulnerability-checking approach and prioritize risks based on business context, thereby accelerating safe business innovation.On August 12, Wiz will deliver a keynote address highlighting the evolving role of security leaders in response to the expansion of digital environments in global companies. They will also discuss how to prioritize security risks based on business context to support safe business innovation.During the event, Clucus and Wiz will operate a joint exhibition booth. The booth will showcase Wiz's cloud and AI security platform and its latest features through mini-sessions and demonstrations. They will also demonstrate how to identify and respond to potential security risks and attack vectors that may arise in real business environments.Both companies will provide in-depth consultations based on the specific cloud environments and security operations of businesses. They plan to propose concrete execution and operational strategies necessary for actual implementation and operation, including cloud security status assessments, multi-cloud security visibility, vulnerability and configuration error management, cloud permissions and data security, and AI workload security.As a premier partner of Wiz, Clucus supports clients throughout the entire process of consulting, implementation, operation, and technical support for Wiz's cloud security solutions, leveraging its specialized personnel and systematic technical support system.Hong Seong-wan, CEO of Clucus, stated, “Wiz's recent multi-agent AI vulnerability research conducted with Google demonstrates how AI is transforming the future of cloud security. The speed at which AI identifies vulnerabilities has already surpassed human response times, and the fact that attackers are using the same tools is at the heart of the issue.”He added, “Clucus will combine its capabilities in diagnosis, design, implementation, operation, and monitoring across the entire spectrum of Wiz's cloud security platform, code, cloud infrastructure, identity, data, AI workloads, and runtime environments. This will enable us to provide full-stack cloud security that connects identified risks to specific actions.”Meanwhile, Clucus started as a managed service provider (MSP) supporting cloud adoption and operations and has recently expanded its business scope to include data, AI, and security. Following its support for Hyundai Motor Group in establishing Wiz-based cloud security visibility this year, it has achieved Wiz's premier partner status. The company is also strengthening its security business, which encompasses everything from cloud infrastructure to AI workloads, and is collaborating with AI-based security monitoring firm Pencer and agent-based AI security company Striker.* This article has been translated by AI. 2026-08-05 17:48:00
Won, Korean bonds rally as Middle East tensions ease SEOUL, August 05 (AJP) - South Korea’s won and government bonds rallied on Wednesday as optimism over a potential U.S.-Iran agreement pushed oil prices lower, easing inflation concerns and drawing investors back into local assets. The won closed the daytime session at 1,424.5 won to the dollar, strengthening by 8.0 won, or 0.56 percent, from Tuesday’s close of 1,432.5. The three-year Korean government bond yield fell 7.1 basis points to 3.669 percent, while the 10-year yield dropped 11.0 basis points to 4.150 percent. Bond prices move inversely to yields. Oil prices declined on signs that Washington and Tehran were moving closer to an agreement that could include reopening the Strait of Hormuz, reducing concerns over energy-driven inflation in oil-dependent South Korea. The retreat in U.S. Treasury yields reinforced the rally in longer-dated Korean debt as traders trimmed expectations for near-term monetary tightening by the Federal Reserve. The gap between the 10- and three-year Korean government bond yields narrowed by 3.9 basis points to 48.1 basis points, producing a bull-flattening move as longer maturities outperformed. The move suggested that expectations of further tightening by the Bank of Korea continued to limit gains at the short end, while longer-dated bonds responded more strongly to falling oil prices and lower global yields. The won also drew support from renewed foreign demand for Korean equities. Offshore investors bought a net 1.45 trillion won ($1.02 billion) of shares on the main KOSPI market, helping the benchmark index close 3.76 percent higher at 6,598.26. Comments from U.S. Treasury Secretary Scott Bessent that the won had displayed excessive volatility also left traders cautious about betting against Asian currencies following an unusual U.S.-Japan intervention to support the yen. The won’s advance was capped by dollar demand from importers and Korean retail investors purchasing overseas equities, preventing the currency from holding gains reached near the low-1,420 range earlier in the session. 2026-08-05 17:47:52
Burger Chains Focus on Breakfast to Attract Morning Customers "Breakfast is served."This phrase, typically seen at local diners, has recently appeared in Burger King's stores and advertisements. Fast-food franchises, which once focused on lunch and dinner customers, are now catering to the breakfast needs of commuters and students. With Burger King expanding its locations and introducing new menu items, the competition for breakfast in the quick-service restaurant (QSR) sector is heating up, challenging McDonald's long-standing dominance with its McMuffin breakfast offerings.According to industry sources, Burger King has recently launched its signature breakfast item, the Croissan'wich, in South Korea for the first time. A blend of croissant and sandwich, the Croissan'wich has been a popular breakfast choice in international markets since its debut in 1983.The new product features a round croissant bun infused with butter flavor and an omelet that has increased in weight from 50 grams to 80 grams. The menu includes three varieties: the Omelet Croissan'wich, the Ham & Cheese Croissan'wich, and the BLT Omelet Croissan'wich. Additionally, the morning lineup has been enhanced with the Beef King Wrap, featuring a grilled beef patty, the Crispy Wrap with a chicken patty, and sides like hash browns and coffee.This is not Burger King's first foray into breakfast. The chain initially introduced breakfast items in 2014 and reintroduced the Omelet-based "King Morning" menu in select locations in 2022. However, the number of stores offering breakfast remained limited to about 10% of its total locations, with only 58 stores participating. Now, the company is ramping up its breakfast strategy by increasing the number of participating locations to 120 and overhauling its menu.In this campaign, Burger King prominently features the slogan "Breakfast is served." The design draws inspiration from local diner signs and menus, aiming to make the global brand's breakfast offerings more relatable to South Korean consumers. The message, "Burger King for breakfast," is presented in a distinctly Korean manner.McDonald's was the first to demonstrate the potential of the breakfast market in South Korea, introducing the McMuffin in 2006. The chain has since expanded its breakfast menu with items like the Egg McMuffin, Bacon Egg McMuffin, Sausage McMuffin, and hash browns, establishing a strong presence in the morning market. Most McDonald's locations open early and serve only breakfast items from 4 a.m. to 10:30 a.m., creating a perception that "breakfast is McDonald's time."While Burger King is targeting the same market, its approach differs significantly. The key distinction is the variety of options available. During McDonald's breakfast hours, customers cannot order regular burgers. In contrast, Burger King offers its morning menu until 11 a.m. while also allowing customers to order regular items like the Whopper. This flexibility caters to consumers who may want a traditional burger in the morning.However, challenges remain. Despite doubling the number of locations offering breakfast, only 21.4% of Burger King's 559 stores currently provide morning options. Although the breakfast menu is available until 11 a.m., the actual operating hours are shorter. Most locations open between 8 a.m. and 10 a.m., limiting the time customers can purchase breakfast items to just 1 to 3 hours.The reason for the burger industry's increasing interest in the breakfast market is its potential for growth. While lunch and dinner are already highly competitive, breakfast still presents opportunities for expansion. By utilizing existing stores and staff, companies can generate additional revenue, and sales of side items like coffee and hash browns can also increase. Many customers purchase both a meal and a beverage, which can boost the average transaction value.An industry insider noted, "In the past, burgers were primarily seen as lunch or dinner options, but as more consumers seek convenient and hearty breakfast meals, QSR companies are actively investing in the breakfast market. In the future, competition for breakfast customers will intensify, not just in terms of menu offerings but also in operating hours, store expansion, and marketing strategies." 2026-08-05 17:40:10
Government's Tax Reform Plan to Prevent Stock Price Manipulation Faces Backlash The government's proposed tax reform plan aimed at preventing stock price manipulation in the context of inheritance and gift tax is facing significant criticism from all stakeholders involved. The ruling party has expressed dissatisfaction, arguing that the scope of the proposal has been drastically reduced compared to the original plan, labeling it as 'ineffective.' Calls for a complete review of the proposal have emerged. Meanwhile, publicly traded companies are raising concerns about excessive regulations that do not take into account industry-specific characteristics and individual company circumstances.Government Proposal Differs Greatly from Ruling Party's Original PlanAccording to the financial investment industry on August 5, the stock price manipulation prevention law was initiated to stop major shareholders from intentionally lowering corporate value to reduce tax burdens ahead of inheritance and gift tax events. The original proposal by Representative Lee So-young of the Democratic Party was introduced in May of last year and had been pending in the National Assembly for nearly three months. Following a directive from President Lee Jae-myung during an economic ministry briefing on July 15 to expedite the legislation, expectations grew that the government's tax reform plan would incorporate relevant elements.The government unveiled its proposal on August 3. However, the scope of the stock price manipulation prevention law has been significantly narrowed compared to Representative Lee's proposal from May. This is due to substantial changes in the method of market valuation.Representative Lee's proposal stipulated that if the market value of a major shareholder's listed stocks fell below 80% of the net asset value (PBR 0.8), the valuation method for unlisted stocks would apply. This was designed to prevent intentional price reductions from further decreasing inheritance and gift tax liabilities.In contrast, the government's proposal targets companies that fall into either of two categories: those in the bottom 25% of industry PBRs over the last 13 quarters (KOSPI) or 10% (KOSDAQ), or those whose stock prices have dropped by more than 30% compared to the average over the past three years due to actions that undermine corporate value, such as dual listings or convertible bond issuances. The National Tax Service's evaluation committee will review these companies for re-evaluation, which will apply a structure based on either 130% of the current valuation or the highest price from the past six and a half years.Ruling Party: 'If Government Plan Stands, No Companies Will Be Regulated'The ruling party and some activist groups are pushing back against the government's proposal, primarily due to the overly narrow scope of its application. They argue that the regulatory framework is too loose and has significant gaps.Under Representative Lee's proposal (PBR below 0.8), it was estimated that around 1,200 to 1,300 listed companies would fall under regulation. In contrast, the government's plan is projected to affect only about 130 companies, including 84 to 87 on the KOSPI and 43 on the KOSDAQ. Attorney Shim Hye-seop pointed out that excluding companies where the major shareholder is a corporation could reduce the actual number of regulated entities to fewer than 100.Criticism has also arisen regarding the evaluation method. Even with re-evaluation, the government's approach essentially adds 30% to the current valuation or applies the average historical stock price. The Corporate Governance Forum noted that the average PBR of companies under the government's criteria is around 0.27 for KOSPI, stating that even with a 30% markup, it would only reach 0.35. This suggests that there is little incentive to normalize stock prices, leading to a calculation that it may be better to maintain lower valuations.Kim Min-guk, CEO of VIP Asset Management, remarked that while temporarily suppressed stock prices can be corrected, companies with long-term suppressed prices also have lower historical averages, indicating a structure that contradicts the goal of preventing stock price manipulation.Businesses Also Express Discontent: 'Industry Characteristics Not Adequately Reflected'Discontent is not limited to the ruling party; companies that would fall under the regulatory framework are also voicing their concerns.The core of their dissatisfaction lies in the belief that the proposal does not adequately reflect industry characteristics. Initially, there were concerns that Representative Lee's proposal applied a uniform PBR of 0.8 regardless of industry, and the government plan similarly fails to account for industry-specific characteristics, applying only quantitative lower ratios.Industries such as semiconductors and biotechnology, where appropriate PBR levels can vary significantly based on industry cycles and growth potential, should not be evaluated using the same criteria as sectors experiencing temporary performance downturns, they argue.There is also significant dissatisfaction regarding the extension of the evaluation period to a maximum of six and a half years. A business representative stated, 'Current inheritance and gift tax assessments are based on market prices over a total of four months, two months before and after the valuation date. Applying prices from several years ago contradicts the principle of market value.' In response to the growing controversy, the Ministry of Finance and Economy issued a clarification, stating, 'Applying net asset value under tax law would require professional evaluations for each transaction, increasing the burden on taxpayers. It is preferable to utilize market prices for listed stocks as much as possible.' They also explained that taxpayers would be given the opportunity to demonstrate that there was no intent to manipulate stock prices during the evaluation committee process, thereby protecting genuinely undervalued companies. 2026-08-05 17:40:00
Government Proposes Tax Reforms to Prevent Stock Price Manipulation The government has introduced tax reform measures aimed at preventing stock price manipulation by major shareholders during corporate succession. However, concerns have been raised that the effectiveness of these reforms in blocking loophole successions may be limited. Critics point out that the absence of a fixed standard based on 80% of net asset value could allow the valuation of long undervalued companies to fall short of their fair market value.On August 5, Lee Hoon-ki, a lawmaker from the Democratic Party, introduced a bill to amend the inheritance and gift tax law, setting a minimum valuation for listed stocks at 80% of net asset value. The government’s proposal is seen as insufficient to adequately prevent tax avoidance through the inheritance and gifting of long undervalued companies, prompting Lee to specify a PBR (Price-to-Book Ratio) of 0.8 as a legal standard.Under the current inheritance and gift tax law, the value of listed stocks is calculated based on the average closing price over two months before and after the valuation date. This structure allows major shareholders to reduce their tax burden by lowering stock prices through actions such as cutting dividends or buying back shares prior to succession.Lee's proposal stipulates that if a stock's price falls below 80% of its net asset value, that figure will be used as the tax basis. This aims to eliminate incentives for tax avoidance through undervaluation.The government’s tax reform plan, announced on August 3, instead identifies companies suspected of stock price manipulation through two criteria. If a company’s PBR falls within the bottom 25% of its industry on the KOSPI or the bottom 10% on the KOSDAQ over the past six years, it is presumed to be engaging in long-term stock price manipulation.Companies with high PBRs that have engaged in actions negatively impacting their value, such as dual listings or issuing convertible bonds, and whose current valuation is more than 30% lower than their market price over the past three years, will also be included. This aims to capture not only low PBR companies but also those whose stock prices have recently declined due to specific actions.Stocks of targeted companies will be revalued based on their prices before the manipulation occurred. For long-term low PBR companies, the valuation will be based on either a 30% premium on the current valuation or the highest average stock price over the past six years and six months. For companies with short-term price declines, the highest average price over the last six months, one year, two years, or three years will be used.However, both methods rely on past stock prices established in the market. If a stock has been undervalued for an extended period, even extending the evaluation period may not yield a fair price based on net asset value.Assuming that past average prices are not significantly higher, raising the valuation of a company with a PBR of 0.2 by 30% would only result in a PBR of 0.26. Compared to the bill’s minimum threshold of 80% of net asset value, the increase in tax enforcement appears limited.The relative evaluation method for selecting companies may also create blind spots. If an entire industry is undervalued, a company with an absolute low PBR may escape the bottom 25% of its industry. Conversely, in industries with generally high valuations, companies without stock price manipulation intentions may find themselves in the lower group.The duration of stock price manipulation and the criteria for actions taken are also contentious issues. If a low PBR status does not persist for six years, a company will not be classified as a long-term stock price manipulator. Actions such as increasing dividends or buying back shares may be difficult to detect compared to explicit actions that harm corporate value, such as dual listings or issuing convertible bonds.To filter out companies with low PBRs due to economic fluctuations or unavoidable circumstances, the government plans to establish a review process through the National Tax Service’s evaluation committee. Even if a company meets the criteria for suspicion, if the taxpayer can prove there was no intent to manipulate stock prices, the average closing price over two months before and after the valuation date will be applied.However, specific review criteria may lead to varying tax outcomes for the same stock price decline, raising concerns about predictability. There may be blind spots in the selection process, and the discretion of tax authorities could expand during the review process.The government argues that applying net asset value would increase the burden on taxpayers due to the complex asset structures of listed companies. A Ministry of Economy and Finance official stated, “We aimed to utilize market-determined prices as much as possible, considering the principles of market value taxation and the costs associated with evaluations, rather than using the supplementary evaluation method for unlisted stocks.”* This article has been translated by AI. 2026-08-05 17:40:00
Kazakhstan opens AI olympiad as digital push accelerates SEOUL, August 05 (AJP) - More than 500 high school students from 106 countries began competing in Astana this week at the world's newest international science olympiad, hosted by a government that has spent the past year signing $10 billion in data center agreements and writing Central Asia's first artificial intelligence law. The third International Olympiad in Artificial Intelligence runs through August 8. The second edition, held in Beijing last year, drew 300 students from 61 countries. The first was staged in Burgas, Bulgaria, in 2024. President Kassym-Jomart Tokayev opened the competition on August 3 and used his remarks to link it to a target he set in his address to the nation last year, converting Kazakhstan into a fully digital state within three years. "We are creating a unified innovation ecosystem in which artificial intelligence serves as an important tool for managing the state, the economy, and business, permeating all spheres of public life," Tokayev said. "But this is only the beginning of all processes." He cited Kazakhstan's ranking of 24th out of 193 countries on the United Nations E-Government Development Index, a biennial assessment of how governments deliver services online. That placement comes from the survey published in 2024, built on data collected in 2022 and 2023, and the next edition has not been released. Kazakhstan also sits in the top 10 of the survey's online services measure, alongside South Korea, Denmark and Estonia. Tokayev declared 2026 the Year of Digitalization and Artificial Intelligence. In September 2025, the government created a Ministry of Artificial Intelligence and Digital Development, pulling AI out of a sub-portfolio and giving it cabinet rank. Two months later, he signed a law on artificial intelligence that took force on January 18, making Kazakhstan the first country in Central Asia with a comprehensive AI statute. It sets obligations for developers, owners and users, and hands the ministry authority over a state-run National AI Platform that routes computing power to approved sectors of the economy. The compute came online first. The Alem.Cloud supercomputer in Astana, commissioned in July 2025, runs on 512 Nvidia H200 graphics processors and ranks 86th on the TOP500 list of the world's most powerful machines. It is the largest in the region, and it trains the country's own large language models in Kazakh and Russian. In June, Kazakhstan signed agreements worth $10 billion with Nvidia and the developer Firebird to build a data center campus near Ekibastuz, targeting a cluster of 100,000 graphics processors. Freedom Holding Corp. has separately agreed to develop a $2 billion sovereign AI hub using Nvidia infrastructure. In January, Kazakhstan joined an OpenAI program that supplies 165,000 free ChatGPT Edu licenses to schoolteachers, university faculty and staff at the Astana Hub technology park. The government has set a goal of training one million people in AI skills over five years, covering students, civil servants and the existing workforce. Tokayev framed the agenda as constitutionally anchored. The country's new constitution took effect on July 1, replacing the 1995 document after a referendum in March, and Tokayev said the development course built on innovation is written into it. Kazakhstan votes on August 23 for the Kurultai, the single-chamber parliament that the constitution created. Speakers at the opening ceremony included Kai-Fu Lee, who runs the venture firm Sinovation Ventures and the model developer 01.AI, and Elena Marinova, who chairs the olympiad's international council. Kaspi.kz co-founder Mikhail Lomtadze and Freedom Holding chief executive Timur Turlov also spoke, as did Bagdat Mussin, who heads the Competitive Programming Federation of Kazakhstan and chairs Kazakhtelecom. Tokayev was walked through the competition structure and the tasks students face, and was shown an autonomous robot in operation. Contestants compete in two areas, building AI models and programming autonomous robots, with medals awarded on individual scores across two days of six-hour sessions. He closed by thanking the teachers who prepare the country's competitors. "Last year, at the Artificial Intelligence Olympiad in Beijing, Kazakhstani schoolchildren won three gold, one silver, and three bronze medals," Tokayev said. "This is an achievement of which our country is rightfully proud, and it once again confirms the enormous intellectual and creative potential of our youth." ---- AJP Takeaways ● Kassym-Jomart Tokayev opened the third International Olympiad in Artificial Intelligence in Astana on August 3, where more than 500 students from 106 countries are competing through August 8. He tied the event to his target of turning Kazakhstan into a fully digital state within three years. ● Nvidia and the developer Firebird signed agreements worth $10 billion with Kazakhstan in June to build a data center campus near Ekibastuz, targeting a cluster of 100,000 graphics processors. That deal, along with the July 2025 launch of the Alem.Cloud supercomputer, did not appear in the presidential press release on the olympiad. ● The Ministry of Artificial Intelligence and Digital Development was created in September 2025, and a law on artificial intelligence took force on January 18, making Kazakhstan the first country in Central Asia with a comprehensive AI statute. ● The United Nations ranked Kazakhstan 24th out of 193 countries on its E-Government Development Index, the figure Tokayev cited in his remarks. That placement comes from the survey published in 2024 and built on data collected in 2022 and 2023. 2026-08-05 17:36:58
President Lee Pledges to Honor Sacrifices of Democracy Activists President Lee Jae-myung stated on August 5 that he will not forget the sacrifices made by those who fought for democracy in South Korea. Speaking at a luncheon marking the 40th anniversary of the National Democratic Families Association (Yugahyeob) at the Blue House, he said, "I will strive to honor your hard work and sacrifices in creating and protecting democracy."During the event held in the Chungmu Hall, President Lee remarked, "Thanks to the fierce struggles of our parents, families, and many who sacrificed, South Korea is regaining and normalizing its democracy." He added, "While the world you desire and the one the victims longed for may not be perfect, I am doing my best to create it. I regret that I have not been able to do enough as intended. I will listen to your concerns and seek ways to help."Jang Nam-soo, president of Yugahyeob, called for the swift enactment of the Democracy Activists' Welfare Law and the awarding of medals to over 100 martyrs who have not yet received honors among the 136 recognized. He noted, "The law for the welfare of democracy activists has been proposed in the National Assembly for over 20 years but has yet to be finalized."Choi Jong-soon, brother of the late martyr Choi Woo-hyuk, expressed concern that key documents related to state violence might be destroyed following the disbandment of the Army's Counterintelligence Command. He urged the release of materials related to the National Intelligence Service, the National Police Agency, and counterintelligence.Many members also requested the prompt establishment of the Democracy Activists' Law, as well as the clarification of the Yongsan tragedy and the withdrawal of state appeals in military death cases.Jeong Jeong-won, mother of martyr Kim Yoon-ki, expressed gratitude, saying, "I learned late that President Lee attended my son's funeral in Seongnam in 1989 and carried his coffin."Listening attentively, President Lee promised, "I will ensure that members of Yugahyeob will not have to wander the streets again, and I will do my utmost to dismantle the tent in front of the National Assembly."Yugahyeob, formed by the families of democracy martyrs who sacrificed their lives fighting against military dictatorship in the 1970s and 1980s, is celebrating its 40th anniversary this year.* This article has been translated by AI. 2026-08-05 17:36:00