Q1 GDP Growth Rate at 1.7%.

• This marks the highest growth in five years and six months compared to the previous quarter.
• The Bank of Korea’s February forecast was 0.9%, but the actual figure exceeded expectations.
• Year-on-year growth stands at 3.6%.
• Lee Dong-won (Bank of Korea Director of Economic Statistics) explained, “Exports, led by semiconductors, strongly drove overall growth.” Semiconductor manufacturing accounts for 55% of the GDP increase.
• Related Link.
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What Matters Now.

The War Shock Has Only Just Begun.

• The April consumer sentiment index is 99.2. A reading below 100 means people expect the economy to worsen.
• The consumer price inflation rate is 2.2%. Import prices surged 16.1%.
• Yoo Byung-hee (Director of Economic Policy at the Ministry of Economy and Finance) said, “The Middle East war’s impact was not significant in the first quarter, but it may gradually reflect in prices starting in the second quarter.”
• Interest rates are likely to rise. Kim Jin-wook (Citi Bank economist) said, “The Bank of Korea’s benchmark rate could reach 3.25–3.50% by the second or third quarter of next year.”
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KOSPI 6,557.76.

• It peaked at a record high but closed at 6,475.81.
• Samsung Electronics (220,000) and Naver (122,000) both hit record highs.

SK Hynix’s Dream Profit Margin: 72%.

• For every 10,000 won in sales, 7,200 won remains as profit.
• A dominant performance. Even Nvidia and TSMC, dubbed as having “dream profit margins,” reported operating margins of 68% and 58% respectively.
• SK Hynix’s Q1 operating profit was 3.76 trillion won—up 406% compared to the same quarter last year. Revenue surged 198% to 5.26 trillion won.
• Combined operating profits of Samsung Electronics and SK Hynix nearly reach 50 trillion won.
• Corporate taxes paid by Samsung Electronics and SK Hynix this year are projected to reach 12.4 trillion won—exceeding the 10.1 trillion won supplementary budget.
• The prevailing outlook is that the HBM upswing cycle will last over three years.
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“Shoot and kill.”.

• “Shoot and kill all ships,” ordered Donald Trump (U.S. President).
• A U.S. warship has begun mine-clearing operations.
• The Iranian government claims it has started collecting tolls.
• According to the Financial Times, it takes about eight hours to pass through the Strait of Hormuz—a structure that doesn’t allow for a quick exit.
• Yesterday, all three major U.S. stock indices fell. The S&P 500, Dow, and Nasdaq dropped -0.41%, -0.36%, and -0.89% respectively.
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“Undersea Cables Could Be Cut.”.

• Tasnim News Agency reported that Iran’s Revolutionary Guard warned it could sever cables in the Persian Gulf.
• Amazon, Microsoft, and Google have data centers concentrated in the UAE and Bahrain.
• 97% of global internet traffic is transmitted via undersea cables—damage to even one section could trigger cascading disruptions.
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Israel-Lebanon Ceasefire Extended for Three Weeks.

• Hezbollah (Lebanese armed faction) has yet to state its position.
• Last week, before the ceasefire agreement, deaths in Lebanon and Israel stood at 2,300 and 13 respectively.
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Deep Dive.

Keep Wartime Operational Control Until March 2029.

• Xavier Brunson (U.S. Forces Korea Commander) is suddenly accelerating the timeline.
• Setting January–March 2029 as the deadline means finishing it within Trump’s term, but it is later than the 2028 end-of-year deadline originally requested by the Lee Jae-myung government.
• If it extends to 2029, it may be difficult to complete within the Lee Jae-myung government’s term.
• During the Roh Moo-hyun administration, the transfer was scheduled for April 2012, but the Lee Myung-bak government postponed it to December 2015, and the Park Geun-hye administration delayed it again, attaching conditions such as South Korea’s ability to respond to North Korean missiles.
• The Hankyoreh analyzed, “Rather than specifying a transfer date, this is pressure for South Korea to more actively expand its defense budget and strengthen military readiness to enable the transfer by then.”
• The Hankyoreh argues, “The schedule should be moved up.” The idea is to finish it before Trump leaves office.
• In an editorial, the Dong-A Ilbo pointed out, “Three years is a tight timeframe for concentrated investment, strict verification, and the final decision to catch both self-reliance and alliance.”
• Related Link.
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Jang Dong-hyeok’s Backstage Photo: Not a Deputy Secretary, but a Secretary to the Secretary.

• Jang Dong-hyeok (People Power Party leader) said, “It cannot be disclosed due to diplomatic custom.”
• JTBC confirmed with the U.S. State Department and found it was Gavin Wax (Secretary to the Undersecretary for Public Diplomacy).
• The U.S. State Department explained, “The meeting occurred at the request of the Korean delegation” and “It was an opportunity to reaffirm the U.S. State Department’s commitment to meeting with various stakeholders to promote and represent national interests.”
• Could there be other undersecretaries Jang Dong-hyeok met? JTBC asked again, but received only, “It cannot be disclosed.”
• Nominations are in chaos, approval ratings are plummeting, and he spent ten days abroad—deliberately delaying his schedule at the airport to meet someone who turned out to be a secretary to a deputy secretary, then lied to conceal it.
• Related Link.
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People Power Party Support Drops to 15%.

• Results from the National Barometer Survey (NBS). The Democratic Party stands at 48%, while 28% claim no preferred party.
• In the Daegu-Gyeongbuk region, the Democratic Party received 34%, compared to the People Power Party’s 25%. The unaffiliated voter base reached 35%.
• The survey used mobile phone virtual number interviews, with a 95% confidence level and a margin of error of ±3.1%.
• Jang Dong-hyeok (People Power Party leader) has no intention of resigning. “A disciplineless army cannot win battles,” he said, adding, “Strong measures will be taken for any relevant actions from now on.” He claimed, “High government and ruling party approval ratings are an optical illusion.”
• Chosun Ilbo, which has strongly demanded Jang Dong-hyeok’s resignation, headlined today’s front page, “People Power Party 15% Shock.”
• Related Link.
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Song Young-gil to Yeonsu Gap, Kim Nam-jun to Gyeyang.

• The Democratic Party strategically nominated Kim Nam-jun (former Blue House spokesperson), classified as a close aide to Lee Jae-myung (President), for Incheon Gyeyang.
• Originally, Gyeyang was the district of Song Young-gil (former Democratic Party leader). Lee Jae-myung took it over, and now it’s being handed to Kim Nam-jun, dubbed the “King’s Man.”
• Song Young-gil was strategically nominated for Incheon Yeonsu Gap.
• Relatively, Yeonsu Gap is a battleground, while Gyeyang is considered a stronghold.

Joo Ho-young Out, Lee Jin-suk to the Finish?

• People Power Party candidates for Daegu mayor are Choo Kyung-ho (People Power Party lawmaker) and Yoo Young-ha (People Power Party lawmaker). They will be selected on the 26th.
• Joo Ho-young (People Power Party lawmaker) filed for a provisional disposition after being cut off, and when it was rejected, he appealed—only to be rejected again. Joo has decided not to run, but Lee Jin-suk (former Chair of the Korea Communications Commission), who was also cut off, maintains her stance to run even in a three-way race.
• If a three-way race occurs, the prevailing view is that Kim Boo-kyum (former Prime Minister) has a high chance of winning.
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China Stockpiled Oil in Advance.

• The U.S. Energy Information Administration (EIA) analysis. As of December last year, China’s oil reserves reached 1.39 billion barrels.
• The U.S. holds 410 million barrels, Japan 260 million, and South Korea 79 million.
• Chinese state-owned oil companies were instructed to stockpile emergency oil starting in 2024. According to Axios, China increased its reserves by an average of 1.1 million barrels per day last year.
• Related Link.
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Another Take.

“CU’s Issue Is a Multi-Tiered Employment Structure.”.

• Some media outlets have amplified criticism that the Yellow Envelope Law is “killing people,” and Kim Young-hoon (Minister of Employment and Labor) has stepped in to clarify.
• “The tragedy occurred because the law’s intent was not properly implemented on the ground. The Yellow Envelope Law institutionalizes dialogue. This time, unfortunately, dialogue was rejected, and the situation worsened when the company filed for damages. The union had no choice but to escalate its struggle, and the tragedy unfolded in that process.”
• Even if delivery drivers operate as independent contractors, they are workers if the principal company exerts de facto control. The argument is that delivery drivers have the right to demand negotiations with BGF Retail, the principal company.
• Related Link.

Clash Over Ddanzi Group’s ₩45.5 Billion Revenue.

• Ddanzi Group’s revenue last year was ₩45.5 billion, with an operating profit of ₩6 billion.
• KyeongHyang Shinmun and The Hankyoreh reported ₩77.4 billion and ₩76.1 billion respectively, matching the scale of major daily newspapers. The Segye Ilbo and Kookmin Ilbo reported ₩55.5 billion and ₩52.5 billion respectively.
• Kim Eo-jun (Ddanzi Ilbo owner) said, “We are the world’s first YouTube-based manufacturing company.”
• The JoongAng Ilbo analyzed, “Whenever politics is in turmoil, Democratic Party supporters flock in, leading to increased ad revenue, donations, and purchases from Ddanzi Market.”
• Kim Eo-jun refuted, “The recent profit increase has nothing to do with martial law, the presidential election, or party conventions. Political allies might donate, but they won’t keep buying bad products.”
• Kim Eo-jun added, “We detect malicious attempts to frame us with illegal insider trading or money laundering. We’ve formed a response team of accountants and lawyers, allocating an initial budget of ₩1 billion. We will pursue civil and criminal liability to the end, scrutinizing every word and sentence in the articles.”
• Yeo Sang-guk (JoongAng Ilbo reporter) countered, “A thriving content company is subject to capital market disclosure laws and media scrutiny.” The argument: “We wrote the article using data disclosed to the Financial Supervisory Service—why is this grounds for litigation?”
• Media Today pointed out, “While Kim Eo-jun claims revenue growth is due to product quality, it’s hard to deny that passionate fandom significantly contributed to profits.”
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U.S. Slaps 100% Tariff on Chinese EVs, South Korea Just 8%.

• Chinese electric vehicles captured 33.9% of the global market last year—already surpassing 70% in some regions.
• Hwang In-hyeok (Digital News Director, Maeil Business Newspaper) argued South Korea should raise its EV tariff to 25%—the EU’s rate is 45%.
• “Selective protectionism is unavoidable,” a stance echoing Dani Rodrik’s (Harvard University professor) “shallow globalization” strategy.
• Related Link.
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How Samsung Electronics Will Divide Its ₩300 Trillion Profit.

• Labor unions are demanding 15% of operating profits as performance bonuses—₩45 trillion from ₩300 trillion in profit.
• This is a call for transparency, like SK Hynix. SK Hynix decided to pay 10% of operating profits as performance bonuses, distributing 29.6 times the base salary—₩4.7 trillion, or 10% of ₩47 trillion in operating profit.
• If SK Hynix earns ₩250 trillion in operating profit this year, performance bonuses would increase to ₩25 trillion.
• The Kyunghyang Shinmun pointed out, “Excessive performance bonuses could reduce shareholder returns.” Another critique noted, “Paying performance bonuses and reducing talent outflow ultimately benefits shareholders.”
• The Dong-A Ilbo observed, “Under the union’s demand, employees would receive four times the shareholder dividend in performance bonuses.”
• The Chosun Ilbo warned, “We must not make the mistake of cutting open the goose that lays golden eggs.” This is a call to increase investment amid competition with Chinese rivals.
• The Hankyoreh highlighted, “Subcontractors in the semiconductor supply chain receive nothing.” 21% of Samsung Electronics’ workers and 30% of SK Hynix’ workers are subcontractors.
• Kim Yong-jin (Sogang University professor) emphasized, “Solutions for co-growth with suppliers must be considered.”
• Related Link.
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124 Sunlight Villages This Year Alone.

• There is a strong possibility that consulting firms were hastily involved. The number of Sunlight Villages has surged to 320.
• According to the Green Transition Institute, it is difficult to assess based solely on documents because the evaluation focuses only on resident consent rates.
• The Kyunghyang Shinmun noted, “Cases of community projects failing due to external business interference have been repeated in the past.”
• Yoon Won-seop (Green Transition Institute researcher) pointed out, “Replicating one good model across 2,500 villages nationwide is an entirely different issue” because “each village’s social networks, leadership, conflict structures, and land conditions vary.”
• Related Link.

The Fix.

Time to Strategize an Exit from the Oil Price Cap.

• They also decided to freeze prices for the fourth time.
• Under the gasoline benchmark, the first round was 1,724 won on March 13, the second 1,934 won on March 27, and the third 1,934 won on April 10 (frozen).
• While successful in suppressing prices, criticism arises that the government missed the timing to reduce consumption. There are also claims that the policy encourages energy overconsumption, and that using taxpayer money to subsidize private vehicle users is regressive redistribution.
• The government’s compensation payouts to refiners for losses have exceeded 1 trillion won.
• In an editorial, the Kyunghyang Shinmun noted, “Given the massive budget and unequal distribution issues, delaying a policy shift is untenable.”
• The Hankook Ilbo also warned in an editorial, “If price controls become routine, consumption will rebound to previous levels—and when the time finally comes to remove the cap, the shock will be far greater.” “How long can we rely on painkillers?” they asked.
• Related Link.
• Related Link.

It’s Time to Accept a Rail Fare Hike.

• Park Geun-hye’s plan to boost efficiency by pitting KTX and SRT against each other failed.
• The government aimed to create a German-style holding company with the state as a major shareholder, but in reality, it only spun off SRT by separating profitable routes—creating a structure where competition was impossible from the start.
• Departure stations differed, and there was no price competition. Seats remained perpetually scarce, yet losses persisted.
• Lee Jang-ho (Professor, Korea National University of Transportation) pointed out, “Under ‘Korail’s 400 billion won operating deficit’ structure, improving service is wishful thinking.” The issue is structural, not poor management.
• Rail fares have been frozen for over 15 years since 2011. Even if KTX and SRT integrate, seats will still be insufficient. The shortage will worsen with GTX connections and new KTX lines from Incheon and Suwon.
• Funds must be allocated to infrastructure. Lee Jang-ho noted, “The government should support Korail’s vehicle purchases or reform the penalty system in public enterprise evaluations.”
• Related Link.

ICYMI.

Jeon Han-gil: “5.18 Was Taught Wrongly.”.

• Claimed, “5.18 was an internal rebellion led by Kim Dae-jung (former president) and North Korea,” shaking Sky Daily—yet the paper itself issued an apology last May for the article’s inaccuracies.
• Jeon Han-gil (YouTuber) has also spewed delusional rhetoric, claiming, “The U.S. could intervene to restore Yoon Suk-yeol (former president) to duty.”
• The video has since been deleted.
• Related Link.

Government-Subsidized Youth Future Savings Account: Up to 12% Support.

• It is a 3-year installment savings product with a monthly deposit limit of 500,000 won, divided into three tiers.
• The premium tier offers a 12% government contribution for those earning under 36 million won—either employed at SMEs or self-employed with annual sales under 100 million won—and with median income ≤150%.
• The standard tier provides a 6% government contribution for households earning under 60 million won with annual sales ≤300 million won and median income ≤200%.
• The 60–75 million won tier receives only tax-exempt benefits.
• For the premium tier, depositing 500,000 won monthly for 3 years yields a principal of 18 million won, a 2.16 million won government contribution, 1.81 million won in interest (at 6% rate), totaling 21.97 million won.
• Related Link.

Worth Reading.

If Coupang Had Been a Listed Company, Rocket Delivery Would Have Failed.

• This is the argument of Ahn Dong-hyun (Professor, Seoul National University). Coupang incurred massive losses while securing new investments to build its delivery network. “Had it been a listed company, it would have faced shareholder opposition to capital increases and likely failed,” he said.
• “Would shareholders welcome paid-in capital increases by E-Mart or Lotte Mart? The blocked channel of capital market funding is a serious issue for national competitiveness.”
• Ahn Dong-hyun pointed out, “The Lee Jae-myung government is focused on revitalizing the distribution market, but there’s no clear blueprint for how this connects to the issuance market.”
• Last year, shareholder returns totaled 71 trillion won, while corporate funding via IPOs and paid-in capital increases amounted to only 14 trillion won.
• The average holding period for Korean individual investors is nine days. “Like the real estate market, a innovative approach is needed to differentiate short-term speculators from long-term investors and provide incentives for long-term investment,” he argued.
• Related Link.

Kindergarten Teachers Work an Average of 9.7 Hours Daily.

• Results from a Korea Institute of Child Care and Education survey. Many cannot use annual or monthly leave and are forced to quit after childbirth.
• Nam Ji-won (Gender Desk, Kyunghyang Shinmun) noted, “Care and reproductive labor often rely on ‘women’s devotion.’”
• Kim Myeong-ha (Professor, Ansan University) previously analyzed, “A culture that does not recognize the value of unpaid care work at home has led to treating childcare teachers’ labor as volunteer work rather than a professional field.”
• “Care labor is framed not as a public cost but as a private responsibility, something to be endured if one loves their child.”
• Related Link.

London’s Crackdown on Multi-Homeowners Breaks 10-Year Price Surge.

• Prices have fallen for six consecutive months since last August.
• The UK began tightening regulations on multi-homeowner buy-to-let investments a decade ago. It raised property acquisition taxes, strengthened mortgage rules, and abolished rental income tax deductions. The policy aimed to help first-time buyers climb the property ladder more easily.
• The share of buy-to-let properties dropped from 15.8% in 2015 to 10.8% last year. In London alone, 31% of last year’s housing stock was owned by landlords—meaning many tenants bought the homes they rented.
• Park Yong (The Dong-A Ilbo columnist) assessed, “Cities with high private rental shares by multi-homeowners have shown that sustained regulation and policies encouraging sales can stabilize housing prices.”
• The market remains skeptical. What happens after May 10th, when higher capital gains taxes for multi-homeowners take effect?
• Related Link.