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  • Supreme Court Confirms Acquittal of Kim Ye-sung on Embezzlement Charges
    Supreme Court Confirms Acquittal of Kim Ye-sung on Embezzlement Charges Kim Ye-sung, known as the 'housekeeper' of Kim Geon-hee, has been acquitted of embezzlement charges by the Supreme Court.On July 16, the Supreme Court's second division, led by Justice Oh Kyung-mi, finalized the lower court's ruling that found Kim not guilty on some charges and dismissed others related to embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes.This decision means Kim is now free from legal risks nearly 11 months after being arrested at Incheon International Airport on August 12 of last year.Kim was accused of embezzling 2.43 billion won by selling shares of IMS Mobility (formerly Bmycar) held under a proxy company, Inovest Korea, for 4.6 billion won to investors in 2023. It was alleged that he falsely lent 2.43 billion won to Jo Young-tak, the CEO of IMS, as part of this scheme.At the time, Jo was facing a crisis with a fund establishment that was at risk of collapse, and he personally took on debt to prevent it. Investigators found that he later repaid part of the stock sale proceeds through Kim.The special prosecutor's team viewed this transaction as a conspiracy between Kim and Jo to embezzle company funds. Additionally, Kim faced charges for diverting 500 million won through a fraudulent service contract and for using over 900 million won of company funds for personal expenses, including education for his children.However, both the first and second trial courts ruled that there was no intent to illegally gain from the 2.43 billion won embezzlement charge, stating that Jo's assumption of personal debt ultimately benefited the company by securing 4.6 billion won in investments. The second trial court also dismissed the special prosecutor's legal misinterpretation claims, asserting that Kim received the stock sale proceeds under the company's name.Regarding the other personal embezzlement charges, the court dismissed them due to questions about the legality of the investigation, stating that these charges did not fall under the specific investigation targets defined by the Kim Geon-hee Special Investigation Act. The Supreme Court agreed with the lower court's judgment, rejecting the special prosecutor's appeal.Initially, the special prosecutor's team focused on the possibility that Kim Geon-hee's influence played a role in IMS Mobility, which was in a state of capital impairment, securing over 18 billion won in large-scale investments from major corporations. The investigation team labeled the case as the 'housekeeper gate' and concentrated significant resources on it, but with Kim's acquittal, they ultimately failed to uncover the substance of the allegations.* This article has been translated by AI. 2026-07-16 15:16:00
  • Pentagons Jung Wooseok Releases Double Single Talkie
    Pentagon's Jung Wooseok Releases Double Single 'Talkie' 그룹 펜타곤 멤버 정우석이 새 더블 싱글을 발표했다. 정우석은 지난 15일 각종 온라인 음원 사이트를 통해 새 싱글 앨범 ‘토키(TALKIE)’를 발매했다. ‘토키’는 ‘스위트 드림(Sweet Dream)’과 ‘뷰티풀 데이(Beautiful Day)’ 두 곡으로 구성된 더블 싱글이다. 침묵을 지나 자신만의 목소리로 세상을 이야기하기 시작하는 순간을 담은 앨범으로, 과거와 현재를 잇는 하나의 서사를 그린다. 첫 번째 트랙 ‘스위트 드림’은 얼터너티브 록 기반의 서정적인 밴드 사운드가 돋보이는 곡이다. 지나간 시절과 추억을 돌아보는 이야기를 담았다. 두 번째 트랙 ‘뷰티풀 데이’는 청량한 팝 록 기반의 밴드 사운드 위에 자유로운 에너지를 녹여낸 곡이다. 과거의 기억을 품은 채 현재를 살아가는 모습을 그렸다. 두 곡은 서로 다른 정서를 지니면서도 하나의 흐름으로 이어진다. ‘스위트 드림’이 지나온 시간을 돌아보는 시선이라면, ‘뷰티풀 데이’는 그 기억을 받아들이고 새로운 하루로 나아가는 현재를 담아낸다. 정우석은 이번 앨범 전곡 작사·작곡에 참여하며 싱어송라이터로서의 색깔을 드러냈다. 앞서 솔로 작업을 통해 ‘네이비 블루(NAVY BLUE)’, ‘엔젤(Angel)’, ‘엠티 페이퍼(Empty Paper)’, ‘유(YOU)’, ‘유(U)’, ‘로맨스(Romance)’ 등을 선보이며 음악적 영역을 넓혀왔다. 그는 CJ문화재단의 뮤지션 인큐베이팅 프로그램 ‘튠업 아티스트’로 활동하며 음악성과 라이브 역량을 보여줬고, 국내 음악 지원사업과 해외 공연 및 페스티벌에도 참여해왔다. 정우석의 새 싱글 ‘토키’는 각종 온라인 음원 사이트에서 감상할 수 있다.* This article has been translated by AI. 2026-07-16 15:12:00
  • Supreme Court Rules POSCO Must Directly Employ Contract Workers
    Supreme Court Rules POSCO Must Directly Employ Contract Workers The Supreme Court has reaffirmed that POSCO must directly employ its contract workers or recognize their status as employees.On July 16, the Supreme Court's second division, led by Justices Park Young-jae and Eom Sang-pil, upheld a lower court ruling that favored 369 out of 378 workers from subcontractors who filed a lawsuit against POSCO for recognition of their employment status.However, four workers from POSCO M-Tech, who were responsible for packaging cold-rolled products, lost their case because they were not under POSCO's direct supervision. Additionally, the court dismissed the claims of five workers who had exceeded the retirement age, stating they had no standing in the lawsuit.This ruling marks the third decision from the Supreme Court, following similar judgments in July 2022 and April 2023. Notably, it is the first time the court has recognized the employment status of workers from second-tier subcontractors.The lawsuit was initiated by employees working in crane operation, rolling, steelmaking, and maintenance at the Pohang and Gwangyang steelworks between 2018 and 2021. The key issue was whether a substantive employment relationship existed between POSCO and the subcontracted workers. According to labor dispatch laws, if a user company employs dispatched workers for more than two years, it is obligated to hire them directly.Earlier rulings by the first and second courts acknowledged the existence of a dispatch relationship, noting that POSCO evaluated the overall management of subcontractors through key performance indicators (KPIs) and provided detailed work standards, thereby exerting substantial control. The Supreme Court agreed with this assessment.In this ruling, the status of 18 employees from 'Sioem Tech,' a second-tier subcontractor of POSCO Future M, was recognized for the first time, expanding the scope of illegal dispatch recognition.As a result of the ruling, workers who have been employed for more than two years prior to the 2006 amendment of the dispatch law will have their status as POSCO employees recognized immediately, while those who meet the criteria thereafter must be directly hired by POSCO.In response to the ruling, POSCO stated, "We respect the court's decision and will proceed with a phased direct hiring process for the winning workers, considering the need for safety at the steelworks and smooth integration of operations." Recently, POSCO announced plans to directly hire over 7,000 employees from its subcontractors.Conversely, the Metal Workers' Union criticized the company's direct hiring plan, stating it was being pursued unilaterally without consultation with the labor union, and urged the company to engage in dialogue and reach an agreement to avoid creating another discriminatory structure instead of a complete transition to regular employment.* This article has been translated by AI. 2026-07-16 15:08:00
  • TSMC Reports Record Q2 Earnings Driven by Surge in AI Chip Demand
    TSMC Reports Record Q2 Earnings Driven by Surge in AI Chip Demand Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest semiconductor foundry, reported record earnings for the second quarter, fueled by a surge in global demand for artificial intelligence (AI) chips.On July 16, TSMC announced that its consolidated revenue for the second quarter (April to June) reached NT$1.27 trillion (approximately US$42.1 billion), a 36% increase compared to the same period last year. This figure surpassed analysts' expectations of NT$1.26 trillion and marked a 12% rise from the previous quarter.Net profit soared 77.4% year-over-year to NT$706.56 billion, significantly exceeding the forecast of NT$632.64 billion. This also represented a 23.4% increase from the prior quarter, with earnings per share (EPS) at NT$27.25. TSMC has now recorded double-digit profit growth for nine consecutive quarters.In terms of profitability, TSMC's gross margin for the second quarter was 67.7%, with an operating margin of 60.3% and a net profit margin of 55.6%.Breaking down revenue by process technology, the 2-nanometer process accounted for 3% of wafer sales in the second quarter, while the 3-nanometer process contributed 30%, the 5-nanometer process 33%, and the 7-nanometer process 11%. Overall, advanced processes below 7 nanometers represented 77% of total wafer sales for the quarter.TSMC counts major U.S. tech companies like NVIDIA and Apple among its clients and is considered a key beneficiary of the ongoing AI boom. As a result, TSMC's stock has risen approximately 59% this year. 2026-07-16 15:04:00
  • Kim Tae-kyu Proposes Bill for Full Income Tax Exemption for Youth Employed in SMEs
    Kim Tae-kyu Proposes Bill for Full Income Tax Exemption for Youth Employed in SMEs Kim Tae-kyu, a lawmaker from the People Power Party representing Ulsan Nam-gu Gap, introduced a bill on July 16 to increase the income tax exemption rate for young people employed in small and medium-sized enterprises (SMEs) to 100% and extend the sunset clause by three years.Under current law, young workers in SMEs receive a 90% income tax exemption for five years, capped at 2 million won annually, but this applies only to those who are employed by December 31 of this year.Concerns have been raised about the ongoing wage gap between large corporations and SMEs, which has exacerbated recruitment challenges for smaller businesses. Critics argue that the current level of tax relief is insufficient to address this disparity.The proposed amendment aims to raise the income tax exemption for young workers from 90% to 100% and extend the expiration date to December 31, 2029.Kim stated, "This bill is designed to increase the real income of young people, lowering the barriers to employment in SMEs, while also providing these businesses with greater opportunities to secure talent. I will do my utmost to expand tax support so that both young people and SMEs can grow together."* This article has been translated by AI. 2026-07-16 15:04:00
  • Han Kang Reflects on Controversy Surrounding 5·18 Incident
    Han Kang Reflects on Controversy Surrounding 5·18 Incident Han Kang, the author who won the Nobel Prize in Literature in 2024, recently addressed the controversy surrounding the 5·18 Gwangju Uprising incident involving the baseball team from Baejae High School.According to Yonhap News, Han spoke with Korean reporters during a public forum at the 80th Avignon Festival in France on July 15. He emphasized the need to reflect on how society has failed, stating, "How did we end up failing like this?" He urged that society should not merely consume incidents of hate as isolated events but should use them as opportunities for collective reflection.During the forum, Han noted, "My friends who are teachers in the education field are also deeply contemplating this issue," adding that they discuss questions like, "What can we do?" and "How did we end up like this as the older generation?"He stressed that significant events should not be overlooked in shock and surprise, saying, "We must capture the issues that surface and collectively think about how to move forward."Han also remarked, "It is not good for one shock to cover another, and the next shock to overshadow the previous one," emphasizing that social issues should be viewed as communal challenges rather than one-time events.He connected the recent incident to the growing problem of hate around the world, stating, "How we can overcome the issue of hate is an important task for us. It is time for us to think together about how to change direction in this era of hate."Han expressed that recognizing hate as a problem is a positive step, saying, "If we all agree that hate is not natural but an issue, then there is hope in that." This forum marked Han's first public Q&A with Korean media since the Nobel Prize ceremony last December. He shared, "Honestly, it was burdensome, so I withdrew a bit, but now it seems the interest has lessened, and I feel a bit lighter." Later that evening, Han made a surprise appearance at a reading performance of his novel 'Farewell' at the Palais des Papes, a symbolic venue of the Avignon Festival. The performance featured French actress Isabelle Huppert and Korean actress Lee Hye-young reading monologues and dialogues from the work in French and Korean, respectively. Han took the stage at the end to read a passage from the latter part of the novel, which addresses the Jeju 4·3 incident and civilian massacres during and after the Korean War, receiving applause from the audience.Han remarked, "While reading a book is a very personal experience, a performance is a shared experience. It is meaningful in that it allows us to savor the voices, movements, and expressions of the actors together."According to Yonhap, the French audience showed deep interest in the tragedies of modern Korean history and praised the work. The reading performance 'Farewell' is set to meet domestic audiences at the Seoul International Performing Arts Festival (SPAF) in October.* This article has been translated by AI. 2026-07-16 15:00:00
  • Rate gap with US narrows to lowest level as BOK signals more hikes
    Rate gap with US narrows to lowest level as BOK signals more hikes SEOUL, July 16 (AJP) - The gap between South Korea and U.S. interest rates narrowed to 1 percentage point, the smallest since February 2023, after the Bank of Korea (BOK) on Thursday raised its benchmark rate by 0.25 percentage point to 2.75 percent. The central bank also indicated that further rate hikes may be needed to control inflation and manage financial risks. The rate gap could narrow further if the BOK continues tightening while the Federal Reserve holds rates steady, although its governor Shin Hyun-song said future rate decisions would depend on trends in growth, inflation, foreign exchange rates, housing markets, and household debt. The seven-member board unanimously backed the rate hike, while the Fed kept its rate unchanged at 3.50 percent to 3.75 percent. The move narrowed the two countries' interest rate gap to 75 to 100 basis points from 100 to 125 basis points. The maximum gap, measured against the upper end of the U.S. range, is now at its smallest since February 2023. One additional quarter-point rate hike by the BOK, while the Fed remains on hold, would further narrow the gap to between 50 and 75 basis points. Softer-than-expected U.S. consumer and producer inflation data reduced the futures-implied probability of a July Fed increase to 10.2 percent. "We believe further rate hikes are still needed," Shin said, adding that future decisions would be based on inflation, economic growth, and financial stability. The remark indicates that the BOK has not predetermined its future policy path and will continue to assess economic conditions before making further decisions. Shin did not give a direct view on the 3.50 percent terminal-rate scenario. He instead pointed to second-quarter GDP and GDI data due next week, July inflation figures due Aug. 4 and developments in the exchange rate, housing market and household lending as key inputs for future decisions. If the Fed remains on hold, a BOK rate of 3.00 percent would reduce the maximum gap, measured against the upper end of the U.S. range, to 75 basis points, while a rate of 3.25 percent would narrow it to 50 basis points. The differential would fall to 25 basis points at 3.50 percent, although these are mechanical scenarios rather than BOK forecasts. A narrower gap could reduce the relative yield disadvantage of won-denominated bonds and short-term assets, easing one source of pressure on the currency and foreign capital flows. The relationship is not mechanical, however, as the won is also shaped by the global dollar cycle, foreign equity transactions, exports, oil prices and geopolitical risks. "The exchange rate remains at a high level and has fluctuated widely," Shin said, adding that the central bank needed to remain attentive to the related risks. He said the BOK was examining how the narrowing gap and round-the-clock onshore won trading affect offshore non-deliverable forward activity, which has yet to contract noticeably, and plans to publish separate research on the issue. The won weakened to the mid-1,500 range against the dollar on foreign stock outflows and broad dollar strength before recovering to the upper 1,400 range as foreign exchange supply-demand conditions improved. The largest external variable remains the Fed's actual policy path and its effect on the global dollar, with renewed U.S. inflation or oil-price pressure capable of reviving expectations for further tightening. Foreign trading in South Korean equities also directly affects demand for the won, and the BOK cited foreign stock outflows as one of the main factors behind the currency's recent weakness. In the opposite direction, strong semiconductor-led exports and a large current-account surplus could increase foreign-currency supply and ease some pressure on the won. May's balance-of-payments data, however, showed how that support could be offset by financial outflows. Korea posted a current-account surplus of US$38.61 billion, while nonresidents' portfolio investment in Korean securities fell by $24.65 billion, including a $31.05 billion decline in equity investment, partly offset by a $6.4 billion increase in debt investment. South Korean residents also increased their overseas portfolio investment by $6.24 billion. The current and financial accounts do not translate one-for-one into exchange-rate movements, but the figures illustrate how foreign equity selling and residents’ overseas investment can limit the immediate support for the won even when export-related foreign-currency inflows are exceptionally strong. Oil prices and developments in the Middle East are another major variable through their effects on South Korea's import bill and global demand for safe-haven assets. Higher crude prices and a weaker won could lift import prices, strengthening the case for further BOK tightening and indirectly contributing to an additional narrowing of the rate gap. Shin said the currency had stabilized somewhat from several weeks earlier but remained elevated, while import prices were still 20 percent higher than a year earlier. Domestically, semiconductor prices are likely to play a central role in determining the timing and pace of further BOK increases. First-quarter gross domestic product rose 3.8 percent from a year earlier, while gross domestic income surged 13.2 percent, largely reflecting an improvement in South Korea's terms of trade driven by higher chip prices. The BOK sees a risk that gains in corporate earnings, investment, wages and tax revenue could spread to consumption and add demand-side inflation to the remaining cost pressure, while 2026 growth is expected to considerably exceed its May forecast of 2.6 percent. Headline inflation stood at 3.2 percent in June and core inflation at 2.5 percent, while rising home prices in the Seoul metropolitan area and monthly household-loan growth of 8 trillion won to 9 trillion won provide additional arguments for further tightening. Policymakers will review second-quarter GDP and GDI data due next week, followed by July core and living-cost inflation figures on Aug. 4, before deciding the timing and pace of their next moves. The bilateral gap could narrow rapidly if the Fed stays on hold while the BOK continues raising rates, but that would remove only one disadvantage facing won-denominated assets rather than guarantee foreign inflows or sustained currency appreciation. Financial markets showed a limited response to the decision. The won traded slightly firmer at 1,483 per dollar at 2 p.m., while the three-year Korean Treasury bond yield fell 0.4 basis point to 3.862 percent and the 10-year yield edged up 0.2 basis point to 4.329 percent at the morning close, suggesting that the quarter-point increase had been largely priced in. 2026-07-16 14:57:48
  • Bukwang Pharmaceuticals Regadex Achieves Second Place in Liver Disease Combination Drug Prescriptions Within a Year of Launch
    Bukwang Pharmaceutical's Regadex Achieves Second Place in Liver Disease Combination Drug Prescriptions Within a Year of Launch Bukwang Pharmaceutical announced that its product Regadex (active ingredients: ursodeoxycholic acid and diphenyl dimethyl dicarboxylate) has reached second place in the prescription volume for liver disease combination drugs within just one year of its launch.According to the pharmaceutical market research firm UBIST, Regadex recorded a cumulative prescription volume of 6.98 million tablets in the first half of this year. This figure places it second in the liver disease combination drug market for the first half of the year, with a total cumulative prescription volume of 11.76 million tablets since its launch in June of last year.Regadex is Bukwang Pharmaceutical's first combination drug that expands the lineup of its liver disease treatment, Regalon (active ingredient: silymarin). It contains ursodeoxycholic acid (UDCA), known for its anti-inflammatory and antioxidant properties that help improve aspartate aminotransferase (AST) levels, and diphenyl dimethyl dicarboxylate (DDB), which aids in reducing alanine aminotransferase (ALT) levels.Since the launch of Regadex, Bukwang Pharmaceutical has been expanding its strategy of co-prescribing it with Regalon. By prescribing both products together, healthcare providers can combine key ingredients used in liver disease treatment, including silymarin, UDCA, and DDB. Under the current health insurance reimbursement standards, two types of liver disease medications can be covered.Regadex has rapidly expanded its prescription channels since marketing efforts began last year in general hospitals. A representative from Bukwang Pharmaceutical stated, "As a result of our ongoing strategy to suggest Regadex alongside Regalon, we achieved second place in the liver disease combination drug market within just one year of its launch. We aim to strengthen Regadex's competitiveness further to reach the top position in prescription volume by its second anniversary."* This article has been translated by AI. 2026-07-16 14:52:00
  • Trump Discusses Collaboration with Korean Shipbuilders as Hanwha Ocean Accelerates U.S. Navy Engagement
    Trump Discusses Collaboration with Korean Shipbuilders as Hanwha Ocean Accelerates U.S. Navy Engagement Hanwha Ocean is seeking new growth opportunities in the United States. Its collaboration with the U.S. Navy, which began with maintenance, repair, and overhaul (MRO), is increasingly likely to expand from support vessel design to combat ship construction. Recently, the U.S. government has begun to directly assess Hanwha Ocean's destroyer design and construction capabilities.On July 15, President Donald Trump mentioned the potential for collaboration with foreign shipbuilders, including those from South Korea, during the Defense and Innovation Summit held at the U.S. Army War College in Pennsylvania. He also opened the door to the possibility of purchasing some ships built outside the U.S.The U.S. Navy's actions are becoming more concrete. According to the naval news outlet Naval News, the U.S. Department of Defense and Navy have sent requests for information (RFIs) to Hanwha Ocean and HD Hyundai Heavy Industries to assess their destroyer design and construction capabilities and production scale. Hanwha Ocean has also responded to a separate RFI related to medium-sized replenishment ships. While this is not yet at the order stage, it marks the beginning of a detailed examination of the participation of Korean shipbuilders in combat ship projects.Hanwha Ocean entered the U.S. Navy market through ship maintenance. After signing a maintenance support agreement (MSRA) in 2024, it has been awarded a series of MRO contracts for support vessels, gradually expanding the scope of its collaboration.This year, Hanwha has broadened its focus to include ship design. Hanwha Defense USA and the Hanwha Philippine Shipyard are participating in the next-generation logistics support ship (NGLS) project led by U.S. ship design firm Bard Marine, handling market research, conceptual design, and design improvements. Although this is not a construction contract, the role has expanded from maintenance to the design phase.Hanwha is also strengthening its local production base. The company plans to invest $5 billion (approximately 7.4 trillion won) in the Philippine shipyard acquired in 2024. The goal is to add two docks and three berths and to introduce automation and smart shipyard technologies, increasing annual production capacity from fewer than two vessels to a maximum of 20. In the long term, it is also pursuing plans to build warships locally.This strategy aligns with the U.S. shipbuilding revitalization policy. Locally, delays in warship construction due to a shortage of shipyards and skilled labor have made expanding production capacity an urgent issue. In this context, utilizing the technology and production capabilities of allied countries like South Korea is being discussed.Actual work is also increasing. At the summit, a $1.5 billion (approximately 2.2 trillion won) order for Hanwha vessels related to the U.S. Department of Transportation's Maritime Administration (MARAD) National Security Multi-Mission Vessel (NSMV) was announced. While this does not involve U.S. Navy combat ships, Hanwha's local shipbuilding business in the U.S. is transitioning from large-scale investments to actual orders.However, challenges remain before moving to the construction of U.S. Navy combat ships. Current U.S. law imposes restrictions on building warships at foreign shipyards. Even if the Philippine shipyard is utilized, expanding facilities and securing skilled labor will be necessary for constructing large vessels. The possibility of using shipyards from allied countries like South Korea is also being discussed, making future regulatory changes a key factor.* This article has been translated by AI. 2026-07-16 14:48:00
  • Interest Rate Hike: Impact on Savings and Construction Before Home Prices
    Interest Rate Hike: Impact on Savings and Construction Before Home Prices The real estate market is difficult to read, and so is home buying. Today, the Bank of Korea raised the benchmark interest rate from 2.50% to 2.75%, marking a 0.25 percentage point increase—the first hike in three and a half years. When news of an interest rate hike emerges, attention quickly turns to home prices. However, this decision is not solely aimed at the real estate sector. Consumer prices rose to 3.2% in June, and this year's growth rate is expected to exceed the May forecast of 2.6%. Additionally, factors such as exchange rate volatility, rising home prices in the metropolitan area, and increasing household debt have compounded the situation. The Bank of Korea stated in its monetary policy direction that it is necessary to remain vigilant regarding "high exchange rate volatility, the upward trend in metropolitan housing prices, and the expansion of household debt." This raises a key question: How will this rate hike, which considers multiple objectives, affect the housing market? There is a significant gap between market perceptions and the actual outcomes that are likely to unfold. Rising interest rates do not immediately lead to falling home prices The conventional wisdom is straightforward: when interest rates rise, borrowing costs increase, leading to fewer people taking out loans to buy homes, which should lower prices. However, in previous periods of rate hikes, home prices did not immediately decline. Excluding the current hike, the Bank of Korea has raised its key policy rate four times in the past 20 years: from 2005 to 2008, 2010 to 2011, 2017 to 2018, and 2021 to 2023. During the previous three rate hike periods, key home price indicators for the nation or Seoul continued to rise for an extended period. Central banks typically raise rates when the economy and asset prices are overheating. In the early stages of a hike, existing upward momentum is often stronger, and the impact of the rate increase becomes evident only after the cumulative effect builds up. It is possible that home prices would have risen even more sharply had rates not been increased. The most pronounced impact of rate hikes on price declines occurred during the previous hike from 2021 to early 2023. The Bank of Korea raised the benchmark rate by 2.25 percentage points in 2022 alone. As the cumulative impact of the hikes took hold and expectations for price increases diminished, nationwide apartment prices fell by the largest margin since the Asian financial crisis, according to KB Real Estate. The issue is not that interest rates lack power, but rather that the speed and cumulative effect of the increases are crucial. This latest hike is 0.25 percentage points. Areas in Seoul, particularly key districts like Gangnam, are particularly insensitive to such an increase. Apartment prices in these areas have already surpassed levels manageable through mortgage loans, and there are multiple regulations constraining both the borrowing limits for borrowers and the loans banks can provide. As a result, the proportion of self-funding, such as cash or proceeds from stock sales, has increased. An analysis by Kim Jong-yang, a member of the National Assembly from the People Power Party, of data from the Ministry of Land, Infrastructure and Transport revealed that 3.7255 trillion won from stock and bond sales was used for home purchases from January to April this year. Of this amount, 65.5%, or 2.4396 trillion won, was directed to Seoul, with about 1 trillion won concentrated in the three districts of Gangnam. Of course, this buying trend is not entirely unrelated to interest rates. Rates indirectly influence stock and bond prices, deposit interest, and demand for refinancing. However, the current 0.25 percentage point increase is too small to reverse existing expectations for price increases through these channels. That said, the market does not remain unresponsive. When interest rates rise, transactions tend to decrease before prices do, affecting buyers who rely heavily on loans and the outer and mid-priced markets first. Even if asking prices in key areas of Seoul remain stable, transaction volumes and buyer demographics may change. Additionally, there is a supply shortage. The number of new apartment completions in Seoul from January to May this year fell by more than 40% compared to the same period last year. As long as the perception of a shortage of new homes persists, the dampening effect of interest rates will inevitably weaken. Interest rates are already increasing. This does not mean that interest rates have no bearing on home prices. According to an analysis by the Korea Research Institute for Human Settlements based on the Korea Real Estate Agency's apartment sales price index, the contribution of the benchmark interest rate has generally been the largest, accounting for 50% to 60% in all periods. However, this does not imply that interest rates alone determine half of home prices. It means that among various factors analyzed, the influence of interest rates was the strongest. This influence also varies depending on how quickly and to what level rates rise, rather than just a single increase. In South Korea, the transmission speed of housing loan rates is relatively fast. Many loans are variable-rate or hybrid loans that reset after a certain period, so when market rates rise, the burden on borrowers increases relatively quickly. This contrasts with the U.S., where long-term fixed-rate loans are more common, providing a buffer against such changes. While the force that suppresses home prices may be slow, the force that increases interest payments is rapid. The market anticipated this rate hike months in advance, and bank bond and deposit rates had already risen. When the cost of borrowing for banks increases, the benchmark for variable-rate loans, known as COFIX, also rises, leading to higher mortgage rates. In fact, the COFIX for new loans in June was 3.05%, surpassing 3% for the first time in 19 months and rising for three consecutive months since April. The upper limit of fixed-rate mortgage rates at the five major banks has also climbed to around 7%. The burden on variable-rate borrowers will increase further depending on when their loan rates are reset. To quantify this burden, according to data submitted by the Bank of Korea to the National Assembly, if housing-related loan rates rise by 0.25 percentage points, the annual interest burden for all borrowers will increase by approximately 1.8 trillion won. The average burden per borrower will rise from 5.843 million won to 6.139 million won, an increase of about 300,000 won. In the market, some are questioning, "What impact could a 0.25 percentage point increase have?" While home prices may remain stable for now, the impact on borrowers' finances is already significant. The burden also falls on builders. The pressure from rising interest rates does not only affect home buyers; it also impacts builders. This aspect is often overlooked in the market, but its consequences can be long-lasting. Development projects for building homes often rely on loans to cover a significant portion of land and construction costs, known as project financing (PF). The developer initiates the project, while the construction company is tied to it through completion guarantees. When interest rates rise, the cost of borrowed funds increases, disrupting the financial calculations of the project. Moreover, construction costs have also surged. The construction cost index, with 2020 set at 100, rose to the high 130s by May. As both financial costs and material and labor costs increase, projects with lower profitability may not even break ground. In 2023, the Korea Development Institute (KDI) estimated that the reduction in construction starts due to high interest rates could lower growth rates by 0.3 percentage points that year and by 0.4 to 0.5 percentage points the following year. The decline in construction does not only result in losses for construction companies. The issue comes full circle. One of the key reasons supporting home prices in Seoul is the shortage of new homes. However, when interest rates rise, the initiation of new home construction projects is delayed. While this may reduce current demand for home purchases, it could lead to a supply shortage in the coming years. The interest rates aimed at suppressing home prices today could inadvertently contribute to a decrease in the supply of new homes that stabilize prices tomorrow. This burden is felt most acutely in provincial areas. Among the 65,239 unsold units nationwide as of the end of May, 46,638 are located in provincial regions. The situation is even more severe for unsold units after completion, with 83% of the 29,350 units in provincial areas. As unsold units accumulate, developers' cash flow diminishes, leading to delays in construction and new projects. The longer projects are delayed, the more financial costs increase, exacerbating losses. Interest rate hikes add further strain to this vicious cycle. While interest rates apply uniformly across the country, the center of the market frenzy is concentrated in Seoul. In fact, key districts in Seoul are relatively insensitive to interest rates. The shock from rising rates tends to spread first to provincial areas and construction sites. One interest rate cannot control home prices. In summary, this rate hike alone is unlikely to change the trajectory of home prices in Seoul, but it will increase the interest burden on borrowers and make it more difficult to initiate projects in less profitable areas. The benchmark interest rate is a tool that considers inflation, growth, exchange rates, and financial stability. While the rising home prices in the metropolitan area and household debt were reasons for this decision, a single interest rate applied uniformly across the country cannot address the supply shortages and concentration in key areas of Seoul. To change the direction of prices, tax policies, lending regulations, and, most importantly, supply policies for new homes in Seoul must all work in concert. Therefore, today's rate hike should be interpreted as follows: it is premature to expect that this 0.25 percentage point increase will stabilize home prices in Seoul, just as it is hasty to worry that the market will collapse soon. The first areas to examine should be borrowers' finances and construction sites. 2026-07-16 14:28:00