350 Billion Dollars Over Ten Years?

• Discussions are underway to shift from a lump-sum to a phased investment approach. There is no talk of reducing the amount.
• “There are rumors that a plan to create a won-denominated account for investment is under discussion.”
• Kim Yong-beom (Policy Director at the Presidential Office), currently visiting the U.S., said, “I expect something within ten days” and added, “I’m reading it as a not-bad sign.”
• The key issues are threefold.
• First, while South Korea’s position is to limit direct investment to around 5% and cover the rest through loans and guarantees, this ratio could increase.
• Second, the investment targets cannot be unilaterally decided by the U.S.
• Third, currency swaps are also critical. Scott Bessent (U.S. Treasury Secretary) said, “If I were the Fed Chair, South Korea would already have a currency swap.” If won-denominated investment is feasible, a currency swap might not be necessary.
• Related Link.
• Related Link.

What Matters Now.

SK Chairman Chey Tae-won and No So-young’s Divorce Asset Division Reversed on Remand.

• In the appellate ruling, Chey Tae-won (SK Chairman) was ordered to pay No So-young (Director of Art Center Nabi) 1.3808 trillion won in asset division and 2 billion won in consolation money.
• The Supreme Court ruled that the 34.3 billion won former President Roh Tae-woo handed to Chung Jun-yong (former SK Chairman) in 1991 should not be subject to asset division.
• The Supreme Court deemed Roh Tae-woo’s slush funds as bribes, thus lacking any legal protection.
• While the appellate court recognized the couple’s joint assets as 4.0115 trillion won and determined 35% belonged to No So-young, the remand trial is likely to reduce this share.
• A family court veteran lawyer analyzed, “If the slush fund contributions are excluded, No So-young’s share could drop to around 10%.”
• Related Link.

Roh Tae-woo’s Slush Funds: Additional Investigation Launched.

• Roh Tae-woo was sentenced to 17 years in prison and a 262.9 billion won fine in 1997, which he fully paid in 2013. The 30 billion won from the Chey Tae-won-No So-young trial was not included in this amount.
• Most observers argue that state recovery is unlikely, as the funds predate the implementation of the Act on Regulation of Concealment of Criminal Proceeds. The Democratic Party has proposed an amendment to introduce an independent confiscation system, allowing recovery even if the suspect is deceased.
• The court ruled, “This money appears to be bribes received by Roh Tae-woo during his tenure,” adding, “By transferring these funds to in-laws or children and enforcing silence, the act rendered state tracking and recovery impossible—this is a clear violation of social order, marked by anti-social, unethical, and immoral characteristics.” Park Ju-min (Democratic Party lawmaker) called it “’power-bred property’ piled on the sweat and tears of the people,” insisting, “It must be returned to the national treasury.”
• Related Link.

59 Detained in Cambodian Jail Face Deportation.

• Announced by Cambodian police.
• Some are refusing repatriation. If sent back to South Korea, they will face investigations by prosecutors, police, and the National Intelligence Service.

Warnings Were Not Unheard.

• The U.S. Congressional Economic Security Review Commission reported last July that “Chinese criminal organizations have moved to Cambodia and begun operating ‘Pig Butchering’-style new scams.”
• Taiwan already rescued 144 victims in 2022, and Thailand has saved over 1,000.
• Japan also conducted two rescue operations this year—in May and August—freeing 79 individuals.

Deep Dive.

State Visits by Trump and Xi.

• Donald Trump (U.S. President) will visit South Korea for a one-night, two-day stay from the 29th to the 30th.
• Xi Jinping (Chinese President) will visit South Korea on the 29th or 30th.
• Chosun Ilbo assessed, “The scale of the Gyeongju APEC has expanded.”
• Jensen Huang (NVIDIA CEO) will lead a dedicated session at the AI forum.
• Related Link.

Right-Wing PM + Right-Wing Party = Japan’s Rightward Coalition Government.

• LDP and Japan Innovation Party are likely to form a coalition government. This strategy emerged after Komeito refused to continue its alliance with the LDP.
• Sanae Takai (LDP President) and Fumitake Fujita (Japan Innovation Party Co-Representative) met to discuss coalition terms. While LDP holds 196 seats and Japan Innovation Party 35—falling short of a majority—their combined 231 seats would exceed Komeito’s 24.

“5th in Military Power, Not Having Wartime Operational Control Makes No Sense.”.

• “Must complete FOC validation and move to FMC.”
• An Kyu-baek (Minister of National Defense) reiterated, “We will definitely realize the transfer of wartime operational control.”
• Wartime operational control validation proceeds in three stages: Initial Operational Capability (IOC), Full Operational Capability (FOC), and Full Mission Capability (FMC). The FOC evaluation has been completed, and validation is underway.
• Whether to proceed to FMC will be decided by the South Korean and U.S. presidents. It is said that U.S. troop reduction in Korea has not been discussed.
• Related Link.

Another Take.

“Wartime Operational Control Isn’t Solely at America’s Discretion.”.

• DEFCON (Defense Readiness Condition) “Force List” includes two categories: “automatic” and “requested.”
• Some units are automatically assigned to the Combined Forces Command, while others require South Korean government approval upon the commander’s request. DEFCON activation requires bilateral agreement, and the Combined Forces Command operates under the Military Committee (MC) and Nuclear Consultative and Military Authority (NCMA)—both consensus-based bodies.
• Lee Ki-hong (Senior Reporter, Dong-A Ilbo) emphasized, “Western European nations participate in NATO and delegate command authority to NATO commanders for similar reasons.”
• “Are the UK, France, Germany, and Canada all countries that have abandoned their defense sovereignty?”
• Related Link.

KOSPI Bulls Eye 4,000 Mark.

• Samsung Electronics and SK Hynix have surged 40% and 68% respectively since September. Their market caps grew by 166 trillion won and 134 trillion won respectively.
• The KOSPI index hit 3,748.

Basic Living Costs Rose 4.6% Annually Over Five Years.

• Higher than the overall inflation rate of 2.8% annually.
• Housing costs rose 5.5%, food prices 4.6%, and clothing costs 2.9%.

Cash-Rich Buyers Flock to Gangnam.

• 10.15 measures are expected to freeze the metropolitan real estate market. Paradoxically, Gangnam’s dominance may intensify.
• The day after the 10.15 measures, Han River Belt prices rose. In Nodogang (Nowon, Dobong, and Gangbuk districts), distressed sales flooded the market.
• Balloon effects are emerging in Gyeonggi-do areas like Guri, Anyang’s Manan-gu, and Yongin’s Giheung-gu, which avoided strict regulations.

“Property Taxes Must Be Strengthened.”.

• These are the words of Lee Sang-kyung (Vice Minister of Land, Infrastructure and Transport). When asked, “Aren’t only cash-rich buyers able to purchase homes?” he emphasized, “Strengthening property taxes will naturally reduce demand” and “Tax reforms, including property taxes, must be implemented in some form.”
• He added, “While jeonse (lump-sum deposit) leases may feel burdensome in terms of supply, there is also a growing trend in monthly rentals.”
• Related Link.

The Fix.

Organ Donation Now Permitted for Patients Ceasing Life-Sustaining Treatment.

• Previously, only brain-dead patients were eligible.
• While brain-dead organ donors decreased from 478 in 2020 to 397 last year, the number of transplant candidates rose from 43,182 to 54,789.
• Related Link.

Three Prerequisites for Extending the Retirement Age.

• This is the proposal of Hwang Bo-yeon (Hankyoreh Editorial Writer).
• First, re-employment must become an obligation, not an option.
• Second, labor must lead the reform of wage systems.
• Third, the government’s role must be clearly defined.
• Japan, after introducing mandatory post-retirement employment, covered part of the reduced wages through unemployment insurance.
• Related Link.

CO2 Levels Hit Record High.

• Last year, Earth’s average CO2 concentration reached 423.3 ppm.
• Levels last seen 800,000 years ago. Methane and nitrous oxide concentrations also hit historic peaks.

ICYMI.

Solar Market Doubled, Korean Companies’ Sales Dropped 35%.

• Chinese solar module market share is overwhelmingly dominant. Many cases involve importing Chinese products and simply rebranding them.
• Solar power adoption increased from 12,000 GWh to over 30,000 GWh. Domestic solar module sales fell from 2.3 trillion won in 2019 to 1.9 trillion won in 2023.
• Sung Sang-hoon (The Korea Economic Daily reporter) pointed out, “Mandating a minimum percentage of domestic components or restoring the value chain through technology development and facility investment support is essential.”
• Related Link.

Starbucks Tumblers: 9.48 Million Sold Over Three Years.

• This amounts to 258.7 billion won.
• Only about 5% of Starbucks customers use tumblers for discounts.
• Kim So-hee (Democratic Party lawmaker) criticized, “Tumblers are becoming pretty trash.”
• Government agencies purchased 420,000 tumblers over five years, costing 7.1 billion won.
• A tumbler must be reused over 50 times to have a lower environmental impact than disposable cups.
• Related Link.

Vietnam Tops List of Countries Where South Koreans Go Missing.

• Last year, there were 195 cases. Japan had 146, China 142, and the U.S. 136.
• Kidnappings and detentions were highest in Cambodia, with 221 cases. Vietnam had 16, and China 14.
• Thefts were most frequent in Italy, with 705 cases. Spain had 640, France 387, and the U.S. 160.

Worth Reading.

Is the Message Getting Through?

• Son Byung-ho (The Kukmin Daily columnist) pointed out, “The Democratic Party still looks like an opposition party even after taking power.” Short clips abound, but actual policies remain invisible.
• “One must consider whether presidential directives or messages are being disclosed too frequently or in a micromanaging style, and whether the conspicuous behavior of presidential office members is diverting focus from its core activities and policy priorities.”
• Related Link.

Is the Imperial Chief Justice System Acceptable?

• “The ‘imperial presidency’ is an illusion. The phenomenon of an imperial president is merely recurring.”
• Kim Jong-cheol (Yonsei University professor) sees the real issue as the imperial chief justice.
• The chief justice proposes Supreme Court justices and is constitutionally guaranteed judicial personnel authority and administrative power. Kim noted, “It not only fails to uphold democratic legitimacy in judicial composition but also contradicts the essence of judiciary, which inherently requires rigorous procedure and deliberation.”
• “The result is bureaucratization and centralization of the judiciary, which breeds the risk of judicial manipulation by weaponizing personnel authority and judicial administration.”
• Related Link.

Who Can Declare a Bubble?

• Bubbles are only recognizable after they burst.
• George Soros (Chairman of Soros Fund Management) rejects the concept of value. He argues that equilibrium does not apply to financial markets.
• Charlie Munger (former Vice Chairman of Berkshire Hathaway) approaches 98% of investment decisions with an agnostic attitude. His stance is that there is no need to gamble on the unknowable.
• By metrics alone, the U.S. stock market appears bubbly. The S&P 500’s price-to-earnings ratio (PER) is 24.8x, and its price-to-book ratio (PBR) is 5.4x. The Nasdaq’s ratios are 35.4x and 7.6x, respectively—higher than during the 1929 Great Depression but lower than the 2020 IT bubble.
• Kim Hak-gyun (Head of ShinYoung Securities Research Center) proposed using the “deep correction in the U.S. stock market as a trigger for long-term Treasury yield increases” as a benchmark. Given the recent trend of stabilizing Treasury yields, he suggests it is premature to declare a risk scenario.
• Related Link.