Kim Keon-hee Acquitted of Stock Manipulation, Guilty Only of Necklace.

• Kim Keon-hee (spouse of Yoon Suk-yeol), whom prosecutors once dismissed as “a nobody,” was sentenced to 1 year and 8 months in prison.
• The headline of *The Hankyoreh*’s front-page lead read, “Do you find this convincing?”
• The court ruled, “Although Kim Keon-hee recognized the market manipulation, there was no evidence of collusion with manipulators.” Regarding the Myeong Tae-gyun poll-rigging allegations, it concluded, “There was insufficient proof of criminality.”
• Only the charges of receiving luxury items—such as a Chanel handbag and a Graff necklace from a Unification Church affiliate—were found guilty. The necklace was confiscated, and a fine of 12.82 million KRW was imposed. While the court noted, “She misused her position for personal gain,” the sentence was significantly lighter than the special prosecutor’s request. Only one of the two Chanel bags was acknowledged.
• Judge Woo In-sung (Seoul Central District Court) cited the Latin maxim *In dubio pro reo*, stating, “The principle that ambiguity favors the defendant cannot be applied differently, whether the defendant holds power or has lost it.”
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Can It Be Concluded That They Were Accomplices?

• There are many unconvincing aspects.
• Kim Keon-hee entrusted the accounts, knew that stock manipulation was occurring, and actually profited from it, yet the court did not recognize a conspiratorial relationship.
• In an editorial, *Kyunghyang Shinmun* pointed out, “It is incomprehensible what more evidence could possibly be needed.”
• The Myeong Tae-gyun case is even more baffling. There is evidence that Myeong Tae-gyun manipulated polls and directed the nomination of Kim Young-sun (former People Power Party lawmaker). He received help from Myeong Tae-gyun and intervened in the nomination at Myeong’s request. The court ruled it not guilty, stating, “There is no direct evidence like a contract.”
• A recording surfaced in which Myeong Tae-gyun said, “Kim Young-sun’s nomination was a gift from the First Lady.” In an editorial, *The Hankyoreh* noted, “It can only be seen as a predetermined decision to overlook the facts.”
• The court judged, “Myeong Tae-gyun appears to have a tendency toward exaggeration about his own abilities and is somewhat delusional,” adding, “It is difficult to take Myeong’s statements at face value.”
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Only One Chanel Bag Convicted.

• The bag received in April 2022 was deemed “a ceremonial gift with no evidence of specific requests exchanged.”
• Only the bag received in July 2022 was ruled guilty.

Many Trials Remain.

• The trial for violating the Political Party Act is also ongoing. The charges involve mass enrollment of Unification Church members and receiving compensation in return.
• The suspicions surrounding the presidential residence relocation and the Seoul-Yangpyeong highway case have been transferred to the second special prosecutor.

Kwon Sung-dong Sentenced to Two Years.

• He is charged with receiving 100 million won from Yoon Young-ho (then Unification Church head).
• Kwon Sung-dong (People Power Party lawmaker) was once a key power broker in the Yoon Suk-yeol administration. He facilitated meetings between Yoon Young-ho and Yoon Suk-yeol (then president) and provided other assistance.
• Yoon Young-ho received a sentence of 1 year and 2 months.

“If Only They’d Cut Their Losses Earlier,” Chosun Ilbo Laments.

• It introduced an anonymous People Power Party lawmaker’s opinion: “Defending the suspicions that would eventually be acquitted so stubbornly handed the administration to the opposition.”
• In an editorial, it called the affair “a truly shameful matter” but lamented, “It begs the question: What if the president had accepted the special probe into Kim Keon-hee with magnanimity during his term?”
• Chosun Ilbo frames the case as “nothing major anyway,” but the bigger issue is that the president allegedly pressured prosecutors to bury his wife’s case. The core of the problem must be addressed.
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What Matters Now.

“US Economic Stability,” Key Rate Frozen.

• Donald Trump (US President) demanded rate cuts, but Jerome Powell (Federal Reserve Chair) stood firm. The benchmark rate was held at 3.50–3.75%.
• The Fed judged that inflation risks had not yet vanished.
• Jerome Powell’s term ends on May 15. Even if he steps down as chair, his board term continues until January 31, 2028. Historically, many former chairs have left the board after their term, but speculation grows that Powell might stay to avoid undermining the Fed’s independence.
• Trump is already discussing successors. “I’ll announce the nominee soon,” he said, “and you’ll see rates drop significantly.”
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SK Hynix Posts Record-Breaking Performance.

• SK Hynix recorded sales of 97 trillion won and operating profit of 47 trillion won last year—an operating margin of 49%.
• It surpassed Samsung Electronics’ preliminary operating profit of 44 trillion won. Samsung will announce its full-year results today.
• SK Hynix holds a 57% market share in HBM (high-bandwidth memory), compared to Samsung’s 22%.
• Outlook for this year and next remains strong. Some analysts predict operating profits of over 130 trillion won for Samsung and 110 trillion won for SK Hynix.
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Money Moves into Stocks as Deposits Shrink.

• Demand deposit balances fell by 38.9 trillion won compared to the end of December last year.
• Time deposit balances also decreased by 6.7 trillion won this month, following a 32.7 trillion won drop last month.
• Analysts suggest the direction of market funds is shifting.
• Related Link.

“Korean Market Still Undervalued.”.

• Lee Jae-myung (President) met with foreign investment company representatives and said, “We are in the process of receiving proper evaluation for Korea’s economic fundamentals.”
• The KOSPI index hit 5170.81.
• Yeo Han-koo (Trade Negotiations Chief) stated, “The higher the investment in areas distant from the capital region, the higher the cash subsidy rate will be—increased by at least 10 percentage points.”

Won-Dollar Rate Hits 1,422.5.

• The yen and dollar are both strengthening.
• Trump said, “I fought hard against China and Japan because they always tried to devalue their currencies,” signaling acceptance of a weaker dollar.
• As the strong-dollar trend appears to be breaking, the won-dollar exchange rate is likely to stabilize downward.

Deep Dive.

“A Sugar Tax, Like Tobacco.”.

• It’s Lee Jae-myung’s proposal: create a sugar tax to fund regional and public healthcare. Reducing sugar consumption would also benefit public health.
• Under a bill proposed by Kang Byung-won (then Democratic Party lawmaker) during the 21st National Assembly, taxes could reach up to 28,000 won per 100 liters depending on sugar content—a 110-won levy per liter of cola.
• Critics argue it’s a disguised tax hike. Backlash includes fears of future taxes on salt, chili powder, and more.
• The food industry immediately worries about sales drops, and prices could surge.
• According to the Korean Society of Health Economics, the social cost of excessive sugar consumption reached nearly 16 trillion won in 2021—higher than smoking (11 trillion) and alcohol (15 trillion).
• In the UK, the sugar tax worked. Per *The Guardian*, 65% of soft drinks reduced sugar content to avoid taxation. Over 90% of products now have less than 5% sugar. The UK’s annual sugar tax revenue is 200 million pounds.

“We Will Work with Korea to Find Solutions.”.

• Donald Trump (US President) said this to reporters. It implies that tariffs may not be raised immediately.
• Kim Yong-beom (Blue House Policy Chief) stated, “We believe 100% of US dissatisfaction stems from legislative delays.”
• Jamison Greer (US Trade Representative) complained, “Korea has yet to pass the relevant bill and has only introduced a new law on digital services.” The new law may refer to the revised Information and Communications Network Act.
• Cho Jung-hwan (Minister of Foreign Affairs) said, “We have concluded that it is unrelated to the Coupang or Online Platform Act.”

Is US Investment Subject to Congressional Ratification?

• The government claims that since the agreement is a non-binding memorandum of understanding, it does not require congressional ratification.
• Jeong Tae-ho (Democratic Party lawmaker) pointed out, “The government should allow flexible decision-making when investing in the US, but if it seeks ratification, it would paradoxically create legal binding force.”
• It is also noted that Trump used the term ‘enact’ instead of ‘ratify.’
• Lim Yi-ja (People Power Party lawmaker) stated, “Since it imposes fiscal burdens, the People Power Party’s consistent position is that congressional ratification is mandatory.”

Will Korea’s 25% Tariff Hit the Gazette?

• Newspapers differ in tone: Donga Ilbo forecasts a high likelihood of the US actually pushing for 25%. “If the US demands a commitment on investment timing and scale and no breakthrough is found, tariff hikes could become reality,” it analyzes.
• They criticized the special law but ultimately, it’s about the money.
• Kim Yong-beom (Blue House Policy Chief) stated, “We can’t set aside all matters and send money just because the US raises tariffs.”
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Seoul Apartment Jeonse Prices Plunge 25%.

• Districts with low investment barriers like Seongbuk-gu and Gwanak-gu face severe listing droughts.
• Listings have decreased, and demand has also fallen. The jeonse price ratio for Seoul apartments stands at 50.9%, the lowest level since May 2023.
• The reasons are multifaceted. First, many opted to renew existing contracts rather than seek new jeonse arrangements. Second, semi-lease agreements (banjeonse) are not counted in jeonse statistics. Critics argue that the actual burden of housing costs is far greater.
• Nam Hyuk-woo (Woori Bank researcher) analyzed, “As purchase demand shifts toward rental demand, jeonse prices are likely to follow sales prices this year.”

UN Command Pushes Back Against DMZ Legislation.

• It is a bill stipulating that the South Korean government will exercise authority over access permits to the Demilitarized Zone.
• Proposed by Lee Jae-gang (Democratic Party lawmaker) and others.
• Originally, the DMZ falls under the jurisdiction of the UN Command per the Armistice Agreement. Yesterday, the UN Command gathered reporters and claimed, “It negates all authority of the UN Commanding General.”
• “The Armistice Agreement must be followed until a peace treaty is signed,” they argued.
• Jeong Dong-young (Unification Minister) stated, “Legislation is the authority of the legislature.”
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Another Take.

Kim Min-seok vs. Jeong Cheong-rae: Who Will Be the Senior Mourner?

• Two figures guarding the funeral of Lee Hae-chan (former Prime Minister).
• Kim Min-seok (Prime Minister) and Jeong Cheong-rae (Democratic Party leader), neither of whom belong to Lee Hae-chan’s faction, both seek legitimacy as his political heir.
• Analyses suggest the race for the party leadership has already begun.
• Regarding merger talks with the Cho Kuk Innovation Party, Kim Min-seok obliquely criticized, “There are various disagreements.”
• Related Link.

Heavy Transfer Tax Surcharge Delay Possible.

• Kim Yong-beom (Blue House Policy Chief) said this.
• It was previously announced to end on May 9 with no extension. Yet the timing coincides with just over a month left before local elections. Though avoiding direct mention of the elections, he left room: “Ending it in a month or two wouldn’t undermine the principle.”
• This marks a step back from the earlier stance advising property disposal before May 9.

326 Trillion Won in Play, but Local Governments Left in the Dark: A Closer Look at Municipal Deposit Rates.

• Administrative Safety Ministry disclosed interest rates for local governments nationwide. The data—released five months after President Lee Jae-myung (President) instructed in August last year to investigate and assess whether municipal deposit rates could be made public—reveals stark disparities.
• The average rate for 17 metropolitan governments is 2.61%, while 226 municipal governments average 2.52%. Incheon Seo-gu tops at 4.82%, while Gyeonggi Yeoncheon-gun trails at 1.78%. Compared to commercial banks’ fixed deposit rates of 2.8–3.1%, these are abysmally low.
• NH Bank leads with 166 contracts, followed by Shinhan Bank and Busan Bank (15 each), and Woori Bank (14).
• Rates drop further in rural areas—meaning local governments are forfeiting rightful interest income.
• First, in Seoul, banks fiercely compete for contracts by offering higher rates. The scale of tax funds at stake incentivizes aggressive bids to secure municipal deposits.
• Second, regional branches matter. As urban bank branches shrink, rural areas rely on local banks—especially NH Bank, which dominates in counties.
• Third, structurally, regional banks with high funding costs struggle to raise rates.
• Contributory payments (collaboration funds) are another issue. In 2024, 12 banks paid 648.7 billion won to local governments. Shinhan Bank contributed 234.5 billion won (36.2%), followed by NH Bank (196.5 billion), Woori Bank (60.7 billion), KB Kookmin Bank (59.2 billion), and Busan Bank (30.3 billion).
• Critics argue the focus should shift from contributory payments to competitive interest rates.
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Wirye New City Case: All Acquitted.

• It has been described as a scaled-down version of the Daejang-dong case.
• The court acquitted Yoo Dong-gyu (former head of Seongnam Urban Development Corporation), Nam Wook (Cheonha Dongin shareholder), Jeong Yeong-hak (Cheonha Dongin shareholder), and others.
• Lee Jae-myung (President) was also indicted in this case, but the trial remains suspended.
• Prosecutors argued that Yoo and others handed confidential documents—including feasibility reports—to Nam, enabling his company to secure the project. The court acknowledged the documents were secret but ruled it was difficult to prove they were used for financial gain.

The Fix.

National Health Insurance Turns to Deficit This Year.

• Last year, revenue was 102.9 trillion won, with 102.4 trillion won spent. The surplus narrowed, and this year a deficit begins.
• Last year’s government subsidy was 12.5 trillion won. Accumulated reserves stand at 30.2 trillion won. Those reserves will soon be depleted.
• Related Link.

Citizens Buy Mudeungsan.

• Citizens launched a campaign to own 1 square meter of land. In 1991, 1 square meter cost around 1,000 won.
• Citizens who raised 400 million won established the Mudeungsan Public Foundation and secured 530,000 square meters in Unrim-dong, Yongyeon-dong, and Hwaam-dong. That’s the size of 75 soccer fields.
• There’s praise that citizens also preserved the Pyeongdume Wetlands from development and registered it as a Ramsar Wetland.

Did Last Year’s Births Exceed 250,000?

• December figures are still pending, but recovery to over 250,000 births in four years appears likely.
• Total fertility rate is also expected to surpass 0.8.
• The female population in their 30s has grown, and marriage numbers have increased.

ICYMI.

Denying Four Major Insurances by Disguising Workers as Businesses?

• The Ministry of Employment and Labor exposed fake 3.3% disguised employment workplaces.
• If employees are reported as business income earners rather than workers, the four major insurances need not be paid.
• Overtime and holiday allowances guaranteed by labor laws can also be withheld.
• Some stores even demand a business registration certificate before hiring.
• Kim Young-hoon (Minister of Employment and Labor) stated, “We will conduct nationwide planned inspections to establish fundamental countermeasures.”

Lee Jae-myung’s X Political Efficacy.

• An X (Twitter) post proposing a sugar tax was read by 1 million people within 12 hours.
• X posts have noticeably increased: 44 in December, rising to 53 in January.
• With one minute left before a 9:15 AM tea-time meeting, he shared an article stating, “The name ‘Jeonnam Gwangju Special City’ has been finalized,” adding, “Dialogue, compromise, coexistence—truly befitting the birthplace of democracy.”
• A Blue House official remarked, “It’s about broadly listening to public opinion.”

Cho Doo-soon Jailed for 8 Months After Breaching Residence Restrictions.

• He is a child sex offender who completed a 12-year prison sentence.
• He faces charges of violating an outing restriction order and unauthorized departure.
• The court ordered therapeutic detention, stating, “There is a risk of recidivism if he does not receive treatment.”

Worth Reading.

Like Plucking a Goose’s Feathers?

• It’s a common analogy, but comparing citizens to geese is inappropriate.
• This refers to avoiding taxes on stock transfers or real estate holdings while targeting indirect taxes like a sugar tax.
• Kim Kwang-ho (Kyunghyang Shinmun Columnist) emphasized, “It must go hand-in-hand with a comprehensive tax-increase roadmap, considering public burden, equity, and fiscal needs.”
• “Have we forgotten that taxation is the primary method for wealth redistribution, or are we merely eyeing the easy pickings—the feathers of ordinary citizens?”
• Related Link.

KOSPI 5,000: Should Financial Investment Income Tax Be Considered?

• South Korea is one of the few countries that does not levy income tax on stock investments. While it imposes a 0.2% securities transaction tax, it is levied on transactions, not income.
• The financial investment income tax was designed to apply a 22–27.5% rate to amounts exceeding 50 million won in income from financial investments. Lee So-young (Democratic Party lawmaker), who pushed for the abolition of the financial investment income tax, once said it could be reconsidered if the KOSPI surpasses 4,000.
• In an editorial, The Hankyoreh pointed out, “It is unfair that financial investment income is exempt while taxes are imposed on labor, business, and interest income.”
• It’s not about pouring cold water on the stock market. Some argue that designing the tax to lower rates for long-term investments of over a year could instead help improve market fundamentals.
• Related Link.

Will We Create a Red Flag Act?

• There was a time when horse carriages were protected by limiting the speed of automobiles. A law was made requiring someone to walk ahead of cars waving a red flag, but it failed to save the carriages.
• Kim Jeong-gwan (Minister of Trade, Industry and Energy) told The Korea Times in an interview, “We must not block the major trend of robot adoption.” He argued, “As many new jobs will be created as those that disappear,” and added, “For shrimp to survive a fight with a whale, they must grow in size.”
• Trump praised Kim as a “tough negotiator.” Kim emphasized, “The $200 billion investment will create a major turnaround, like the KORUS FTA.”
• Related Link.

Mathematical Conditions to Avoid the Worst-Case Scenario.

• First, the pace of population decline must slow. Statistics Korea’s future population projections show two scenarios coexisting: 30.17 million people by 2072 and 42.82 million. Which future will we choose?
• Second, while mitigating the shock of population decline, annual working hours per person must be reduced from 1,900 to around 1,300.
• Jeong Seung-il (Policy Committee Member, Welfare State Society) emphasized, “The only solution to this seemingly impossible equation is a dramatic improvement in hourly labor productivity.”
• South Korea’s labor productivity is at 2%, but this must rise to 4.5%. Jeong’s proposals are as follows:
• First, an industrial revolution is needed where physical AI and generative AI replace or augment over half of human labor.
• Second, the flow of finance and investment must shift from financial asset circulation to industrial circulation. This means redirecting trillions of won currently circulating in real estate and financial markets toward productive investment areas.
• Third, the key lies in people. Active seniors must be integrated into the labor market, and female employment rates must increase. A full socialization of childcare is also necessary. “Only by working less can people have and raise children—and raising children secures future labor and consumer markets.”
• “Breaking the myth of real estate invincibility and boldly redirecting capital flows toward productive finance and technological innovation to create ‘peak efficiency’—this is the challenge of AI and industrial innovation. Then, reinvesting the massive wealth accumulated through this into people to build a ‘peak welfare’ system—this is the challenge of social innovation.”
• Related Link.