65-Year-Old Man Hits the Ground.

• Yoon Seok-yeol’s (former President) arrest warrant execution failed again.
• This was stated by his legal team at a press conference in front of Seoul Detention Center. “Yoon Seok-yeol is 65 years old and qualifies as an elderly person. About ten people tried to grab his arms and legs to force him into a vehicle. When he resisted, they attempted to lift the chair he was sitting on. During this, the chair slipped back, and Yoon fell to the ground with a thud. He pleaded, saying his arm felt like it would dislocate, asking them to let go.”
• Yoon’s legal team claims, “He was lifted with the chair and fell, resulting in injury.”
• The special prosecutor emphasized, “The warrant was lawfully issued and executed.”
• The Ministry of Justice countered, “Though he claims shoulder pain from forced movement, no health abnormalities were found.”
• In the end, the special prosecutor halted the warrant execution. They are also considering prosecuting without investigation.
• Related Link.
• Related Link.

How Low Will They Go?

• That’s the headline of a Seoul Shinmun editorial. They called it “character assassination” during the underwear controversy, yet yesterday they revealed the arrest warrant execution themselves.
• Seoul Shinmun pointed out, “If they had complied with the lawful procedures from the start, this kind of disgrace wouldn’t have happened,” adding, “It’s more embarrassing for the citizens watching.”
• The Korea Times stated, “The public’s feelings are utterly devastated,” while The Hankyoreh noted, “It has already surpassed the public’s patience.”
• The Kyunghyang Shinmun emphasized in its editorial, “The law is equal for all,” stressing, “We must no longer tolerate the Yoon Seok-yeol and Kim Keon-hee couple who act above the law.”
• Related Link.
• Related Link.
• Related Link.
• Related Link.

What Matters Now.

Arrest Warrant for Kim Keon-hee.

• Kim Keon-hee denied all charges, making another summons without detention seem pointless.
• The core issue is the bribery allegation. A recorded call with Yoon Young-ho (former Unification Church head) reveals her saying, “It seems like my health is improving just by taking ginseng powder.”
• Records show Jeon Seong-bae (Geonjin Monk) visited Acro Vista (Kim Keon-hee’s residence) around Yoon’s election.
• Progress was made in the Deutsche Motors stock manipulation case. After the first operation, Kim Keon-hee received 47 million won from a key player, who stated, “It was compensation for Kim Keon-hee’s losses.”
• A situation is unfolding where a former presidential couple might be detained simultaneously.
• Related Link.

Special Liberation Day Pardon List Includes Cho Kuk and Jung Kyung-shim.

• Cho Kuk (former leader of the Cho Kuk Innovation Party) and Jung Kyung-shim (former Dongyang University professor) are on the pardon list.
• Choi Kang-wook (former Cho Kuk Innovation Party lawmaker) and Cho Hee-yeon (former Seoul Education Superintendent) are also included.
• The Hankyoreh analyzed, “The inclusion itself is a message.”
• A Democratic Party official said, “From Lee Jae-myung’s (President) perspective, it would have been difficult to ignore the pardon request due to gratitude towards the Cho Kuk Innovation Party for their active support during the last presidential election and the belief that Cho, like himself, is a victim of prosecutorial retaliation.”
• It will be finalized after a cabinet meeting review on the 12th. The Kyunghyang Shinmun analyzed, “Only Lee Jae-myung’s decision remains.”
• The JoongAng Ilbo editorial pointed out, “It cannot avoid criticism as a reward pardon.”
• Song Eon-seok (People Power Party Emergency Committee Chairman) caused controversy by lobbying Kang Hoon-sik (Presidential Chief of Staff) for the pardon of Jeong Chan-min (former Liberty Korea Party lawmaker), Hong Moon-jong (former Saenuri Party lawmaker), and Shim Hak-bong (former Saenuri Party lawmaker), who are also on the list.
• Related Link.
• Related Link.
• Related Link.
• Related Link.

US-Korea Summit Likely on the 25th.

• Korean companies will announce their investment scale in the US on that day.
• Changes to the role of US Forces Korea were not included in the summit agenda.

Deep Dive.

Fake Necklace Bought 15 Years Ago, Released 10 Years Ago.

• The explanation doesn’t add up.
• There was controversy over a necklace worn at the NATO meeting, said to be worth 60 million won, but it was explained as a fake bought 15 years ago. However, it turns out the model was released in 2015.
• Claimed to have been a gift for her mother, but it was found at Kim Geon-hee’s brother-in-law’s house.
• The story kept changing. Initially, it was said to be “borrowed from a friend” and not mentioned as a fake.
• The term “fake” first appeared in a statement submitted to the prosecution in May this year.
• Related Link.

Chanel Shoes Fit at Size 260mm.

• There were suspicions that a bag received from the Unification Church was exchanged for shoes. Kim Keon-hee has relatively large feet. During the search and seizure, it was said that the shoes in question were a European size 39, which supposedly didn’t fit Kim Keon-hee’s feet, but a European size 39 is equivalent to a Korean size 260mm.

U.S. Semiconductor Tariff 100%.

• Companies manufacturing in the U.S. or promising to do so are exempt.
• Korea’s Samsung Electronics has a plant in Texas. Taiwan’s TSMC has a plant in Arizona.
• Yeo Han-koo (Director of Trade Negotiations, Ministry of Trade, Industry and Energy) stated, “Semiconductors will receive most favored nation treatment.” This suggests Korea will also receive a 15% rate, as Europe has already settled at 15%.
• Most favored nation treatment means not receiving less favorable conditions than other countries.
• However, concerns arise due to the lack of a formalized agreement, raising the possibility of a reversal. A trade expert emphasized, “After the Korea-U.S. summit, it’s crucial to ensure consistent messaging.”
• Related Link.
• Related Link.

China Targeted in Semiconductor Tariff War.

• If not South Korea or Taiwan, the target is China.
• The Peterson Institute for International Economics noted, “Most companies will be exempt from this tariff as massive investments in semiconductor production are already underway,” adding that “China’s largest semiconductor contractor, SMIC, or Huawei could be subject to tariffs.”
• Of course, South Korea cannot rest easy yet. Jang Sang-sik (Director of the International Trade and Commerce Institute) stated, “Uncertainty remains until an agreement document is released or an executive order is issued.”
• Related Link.
• Related Link.

People Power Party Leadership Race: Pro-Yoon vs. Anti-Yoon.

• The August 22 convention will see a four-way contest between Kim Moon-soo (former Minister of Employment and Labor), Ahn Cheol-soo (People Power Party member), Jang Dong-hyuk (People Power Party member), and Cho Kyung-tae (People Power Party member).
• Joo Jin-woo (People Power Party member) was eliminated in the first cut-off.
• Anti-Yoon faction members Kim Moon-soo and Jang Dong-hyuk are leading in polls. Kim Moon-soo even stated, “If Yoon Seok-yeol wishes to rejoin, we should naturally accept him.”
• Ahn Cheol-soo criticized, “A former candidate of Korea’s conservative party is bowing to a handful of YouTubers, chanting ‘Yoon Again.'”
• The final round will be decided by 80% party member votes and 20% public opinion polls.
• Related Link.

Another Take.

Seoul Housing Prices Stir Again.

• Have loan restrictions lost their effect? Transactions plummeted, slowing price increases, but momentum is picking up again in August.
• According to the Korea Real Estate Board, Seoul apartment prices rose by 0.14% in the first week of August.

Will the Stock Transfer Tax Return to 5 Billion Won?

• The plan to lower the major shareholder requirement from 5 billion won to 1 billion won faced strong opposition, leading to a potential reversal.
• The Democratic Party is anxious, while the presidential office suggests waiting and watching. Jeong Cheong-rae (Democratic Party Leader) has ordered silence among the lawmakers.
• A Democratic Party official stated, “The general sentiment among lawmakers is that we shouldn’t try to overpower the market.” A senior official from the presidential office remarked, “We don’t see this as a short-term issue.”
• The JoongAng Ilbo analyzed, “There’s a determination not to lose the initiative to public opinion.”
• Related Link.

Japan’s Tariff: 15% Plus Alpha.

• Japan is in an uproar. It was belatedly confirmed that the general tariff is not 15% but an additional 15% on top of existing tariffs.
• The U.S. announced in its official gazette that “only the EU will receive special measures to ease tariff burdens.” Items with tariffs not exceeding 15% will be adjusted to 15%, while those already above 15% will remain unchanged. The special measure for the EU means Japan is excluded.
• The U.S. imposes a 4% tariff on Japanese clothing, which becomes 19% with the additional 15%.
• The Japanese government naturally understood it as rising to 15% like the EU, but the U.S. government’s stance is that it is an additional increase of 15%. Shigeru Ishiba (Prime Minister of Japan) said it was “disappointing.”
• The Nikkei reported that “the Japanese government is ready to request a revision from the U.S.” Reuters reported that “confusion continues.”
• Related Link.
• Related Link.

South Korea: 0+15%.

• Japan has its existing tariff plus 15%, but South Korea, originally at 0%, becomes 0+15%.
• Thanks to the Korea-US FTA.

Is the National Pension the Biggest Obstacle?

• The National Pension is being pointed out as a potential stumbling block for KOSPI reaching 5000. The share of Korean stocks in the National Pension’s portfolio has decreased from 21.2% in 2020 to 11.5% last year. Lee Dae-hyuk (Economics Editor, Hankook Ilbo) noted, “The mechanical asset allocation of the National Pension is cited as a factor preventing it from escaping perpetual undervaluation.” The National Pension plans to invest 728 trillion won out of its 1,366 trillion won fund in stocks by next year. This is an increase of 73 trillion won from this year, with 5 trillion won allocated to Korean stocks. There is talk that “the government is using all policies to boost the stock market, but the National Pension is betting that the Korean stock market will not rise.”
• Related Link.

The Fix.

Can POSCO E&C Lose Its License?

• Only two cases: Sampoong Construction in 1995 and Dong-Ah Construction in 1997. Both held accountable for the Sampoong Department Store collapse and Seongsu Bridge collapse, respectively.
• Hankyoreh pointed out that with POSCO E&C employing around 24,000 people, actually revoking its registration might be burdensome.
• If not a license cancellation, a business suspension could be imposed. HDC Hyundai Development received a 12-month suspension due to the Gwangju I-Park collapse.
• A ban on public bidding is also under consideration. Last year, 11% of POSCO E&C’s revenue came from public bidding projects.

Hyundai Construction Tops Workplace Deaths.

• 17 deaths in 5 years.
• Lotte Construction had 15, Daewoo Construction 14, DL E&C 13, Hyundai Engineering 9.
• GS Construction and HDC Hyundai Development each had 8, Samsung C&T and POSCO E&C each had 5.
• POSCO E&C is under fire, but it’s not just their issue. A major company insider told Chosun Ilbo, “Targeting specific companies with intense criticism has made all companies cautious.”
• Related Link.

Presidential Scolding Isn’t Enough.

• Son Ik-chan (Lawyer at Work and People) stated, “Construction companies causing major accidents can face business suspension or public bidding restrictions, but not deregistration.” The Seongsu Bridge case was not a major accident but shoddy construction.
• Ahn Hong-seop (President of the Korean Construction Safety Association) pointed out, “Improving the environment for safe construction and strengthening penalties for safety deficiencies should go hand in hand, but the current government efforts focus only on the latter.”
• The Kyunghyang Shinmun identified two structural causes for repeated major accidents.
• First, the employment structure centered on non-regular day laborers makes skill acquisition impossible. Last year, 85.4% of construction workers were day laborers.
• Second, the lowest bid system and shortened construction periods are also issues. Even with unreasonable demands, construction companies find it hard to refuse.
• The amendment to the Construction Safety Special Act proposed by Moon Jin-seok (Democratic Party lawmaker) and others includes “imposing up to seven years of imprisonment or a fine of up to 100 million won on the client.” In the case of the POSCO E&C accident, the client, the Ministry of Land, Infrastructure and Transport, cannot be free from responsibility. It must be examined whether the appropriate construction period and costs were calculated.
• Related Link.

ICYMI.

Unauthorized Use of Senior Transit Card Costs 25 Million Won.

• The father’s free transit card was used 470 times, resulting in a charge 30 times the fare plus interest. Caught during CCTV analysis.
• Since 2017, Seoul has detected 32,325 cases of fare evasion.

Foreign Stock Holdings at 922 Trillion Won.

• It increased by 37% from 674 trillion won at the end of last year.
• There are two driving forces. First, the Lee Jae-myung administration’s stock market revitalization, and second, the preference for non-U.S. assets due to the weak dollar.
• Outlooks are mixed. JP Morgan assessed, “The tax reform plan did not meet market expectations.” Citibank predicted, “There is a possibility of further decline.”
• Park Sang-hyun (IM Securities Economist) predicted, “Foreign funds tend to continue in a trend,” adding, “The flow will not change drastically.”
• Related Link.

46% of Consumption Coupons Used in Two Weeks.

• Mostly spent on food. 1.098 trillion won at restaurants, 407.7 billion won on groceries, and 257.9 billion won at convenience stores. That’s 41%, 15%, and 10%, respectively.
• Consumption coupons issued via credit or debit cards total 5.7679 trillion won. Of this, 2.6518 trillion won has been spent.
• Related Link.

Worth Reading.

Will Tax Rollback Stop Here?

• The political burden of tax policy increases in the order of tax cuts → halting tax cuts → rolling back tax cuts → taxing the rich → universal tax increases.
• Moon Jae-in (former President) went as far as taxing the rich.
• Ahn Sun-hee (Hankyoreh Editorial Writer) analyzed, “I hope my intuition is wrong that Lee Jae-myung might find it difficult to go beyond the tax rollback stage.”
• “South Korea’s tax burden rate is 18%, significantly below the OECD average of 25%. To shift from a low-burden, low-welfare structure to at least a mid-burden, mid-welfare structure, a considerable level of tax increase is necessary. Tax increases are a complex equation requiring both philosophy and capability.”
• Related Link.

Delivery Workers Oppose ‘No Delivery Day’.

• Directly hired staff and contracted delivery workers have different views. The day after ‘No Delivery Day,’ the workload for directly hired staff increases significantly.
• Delivery workers argue that their right to work must be guaranteed. They believe “participation in ‘No Delivery Day’ should not become a forced day off.”
• Soohee Yoon (News1 Reporter) emphasized, “Ultimately, a solution must be found that allows workers to rest when they want while ensuring a stable income.” The idea is that a satisfactory measure for all should focus on a proper balance between the right to work and the right to rest, rather than a ‘nominal day off.’
• Related Link.