Three Reasons for the Plunge.

• The mood is grim.
• First, US employment data came in strong. With inflation already high, rising employment increases the likelihood of rate hikes. If rates rise? Liquidity dries up.
• Second, Broadcom fanned the flames. Revenue surged, but the forecast fell short of market expectations. Concerns grow that hyperscaler profitability is deteriorating.
• Third, supply-demand dynamics are shaky. SpaceX is nearing its IPO, with Anthropic and OpenAI also in the wings. Combined, their valuations exceed $3 trillion. Even if they underperform target prices, investors will likely sell other holdings to pivot to SpaceX—raising the risk of a sell-off in overvalued stocks. Alphabet and Meta’s planned capital increases add to the pressure. Everyone needs cash, but the market is already saturated with capital.

KOSPI 7,484.

• Both KOSPI and KOSDAQ triggered circuit breakers and sell-side circuit breakers.
• Jensen Huang (NVIDIA CEO) effect was weak. NVIDIA’s stock fell 6% last Friday and dropped again on Monday.
• Foreign selling decreased to 373.9 billion won. Institutions and individuals propped up the market by buying 1.6246 trillion won and 1.7612 trillion won worth of shares, respectively.
• Jeong Da-un (LS Securities analyst) analyzed, “No bottom signal has been detected yet.” Han Dong-hee (SK Securities analyst) advised, “The strong performance of memory semiconductors has not faltered,” adding, “The correction is an opportunity.”
• Related Link.
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Nasdaq Index Rebounds.

• US equities are shaking off panic. The Philadelphia Semiconductor Index rebounded 5.6% yesterday after plunging 10.3% last Friday.
• Yesterday, the S&P 500, Dow, and Nasdaq closed at +0.30%, -0.16%, and +0.86%, respectively.
• Broadcom, which triggered panic selling, rebounded 2.8%, while Micron and Intel surged 9.9% and 11.2%, respectively.
• Israel and Iran paused hostilities after US-mediated intervention by Trump.
• Key variables are Wednesday and Thursday’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports.
• Ben Snyder (Goldman Sachs Head of Investment Strategy) warned, “The recent rally may reflect unsustainable levels of investor euphoria.”
• Related Link.
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What Matters Now.

Keywords from Lee Jae-myung’s First-Year Press Conference.

• Newspapers emphasized different points.
• Kyeonghyang Shinmun, Hangyeoreh, and Kookmin Ilbo highlighted the phrase “a warning from the people” as their lead headline. Lee Jae-myung (President) said, “At minimum, it’s not a success. I realized how fearsome the people can be.”
• Chosun Ilbo and Hankook Ilbo stressed the insistence on pushing forward with the special prosecution to cancel the indictment “according to law and common sense.” “If we’re not to clarify the truth, then what? We can’t just not do it.”
• Segye Ilbo headlined, “Manipulated indictment special prosecution, by the law… if wrong, cancel it.” Seoul Shinmun’s lead headline was also “If wrong, correct it.”

“Property Taxes Are Low.”.

• This was the headline JoongAng Ilbo used for yesterday’s coverage of Lee Jae-myung (President)’s press conference on its front page. Dong-A Ilbo used the same title.
• “When salaries exceed a certain level, nearly half of income goes to taxes—why should real estate investment income be slashed so much?”
• JoongAng Ilbo noted that Lee Jae-myng’s stance has shifted. At his January New Year’s press conference, he had said, “I’d rather not use taxes to control housing prices if possible.”
• Lee stated, “I believe we’ve successfully curbed upward pressure,” adding, “In elections, the positive impact might have outweighed the negative.”
• He also claimed, “If I hadn’t intervened verbally to suppress it, prices would have skyrocketed.” This suggests he believes his strong statements on X (Twitter) were effective.
• In an editorial, Chosun Ilbo warned, “We must not repeat the mistakes of the Roh Moo-hyun and Moon Jae-in administrations.”
• Related Link.
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“Special Prosecution for Manipulated Indictment Cannot Be Avoided.”.

• “Just follow the law and common sense.” After Lee Jae-myung (President) gave the signal, the Democratic Party stepped in.
• A Democratic Party official met by Chosun Ilbo said, “Cancelling the indictment is what our hardline supporters want most” and added, “All candidates will have no choice but to demand it during the party leadership election.”
• Lee Jae-myung said, “There are quite a few things that objectively seem problematic” and added, “It seems like something the National Assembly can decide.”
• The president has already instructed a special prosecution investigation into a trial involving himself. “I could have ordered a large-scale special investigation unit, but I judged that from the perspective of the public or the opposition, a neutral special prosecutor would be better,” he said.
• Park Sung-hoon (People Power Party spokesperson) criticized, “It’s a brazen declaration to the public of an anti-constitutional ambition to use state power to cancel one’s own charges.”

Deep Dive.

Even the Indictment Cancellation Must Be Set Aside.

• Lee Jae-myung (President) repeatedly emphasized, “We must adopt a more humble posture.”
• Kyeonghyang Shinmun advised in an editorial, “If the indictment cancellation issue is approached solely as stated, there should be no problem.”
• Hangyeoreh noted in its editorial, “It is regrettable that no clear stance was taken on whether granting the special prosecution authority to cancel the indictment is appropriate.” While a special prosecution for the manipulated indictment is necessary, “Giving the presidentially appointed special prosecutor the power to cancel an indictment in a presidential case also contradicts principles.”
• Related Link.
• Related Link.

“Youth Who Awakened Our Sovereignty Awareness Deserve Gratitude.”.

• “A dozen or so voters couldn’t cast ballots, and there was perhaps an aspect of thinking it wouldn’t affect the results. I thought it was pathetic but failed to approach it as a structural issue.”
• Lee Jae-myung (President) called the youth rallies protesting the ballot paper shortage “truly precious and admirable,” adding, “I reflected deeply.” He also said, “I am grateful to the young people for prompting fundamental reflection.”
• The final count confirmed 91 polling stations had insufficient ballot papers.

Surplus Tax Revenue Should Fund Growth Engines.

• Lee Jae-myung (President) said, “Using surplus tax revenue to repay debt is foolish.”
• “Like planting trees—even if there’s no harvest in our lifetime, we must cultivate forests for descendants to use in 30, 50, or 100 years.”
• He stressed, “It should be invested in discovering new growth engines like semiconductors.”

Xi’s Visit to North Korea: Denuclearization Unmentioned.

• (“Shi Jinping” is the Korean transliteration of Xi Jinping.) North Korea greeted Xi Jinping (President of the People’s Republic of China) with imperial protocol. The “Korean Peninsula issue”—code for denuclearization—was not mentioned.
• Xi’s remarks, released by Xinhua News Agency, contained only, “Strengthen strategic coordination and cooperation, and firmly safeguard each other’s sovereignty, security, and developmental interests.”
• Speculation arises that China has effectively acquiesced to North Korea’s nuclear possession.
• A banner reading “Long live the friendship and unity between North Korea and China” hung over Kim Il-sung Square.
• Related Link.

Samsung + Nexon to Build Semiconductor Plant in South Jeolla.

• Jangseong County, where the Gwangju Air Base relocation and South Jeolla’s No. 1 data center are being developed, is under consideration.
• Semiconductor production hubs are concentrated in the capital region, while packaging is centered in the Chungcheong region. Speculation arises that a back-end process factory will be built in the Honam region.
• Lee Jae-myung (President) also said at yesterday’s press conference, “Regarding the Honam-Honam issue, we should balance it more toward Honam.”
• Renewable energy procurement is easier than in the capital region, aiding compliance with RE100 conditions. The government is reviewing measures to reduce infrastructure development costs and state property usage fees by up to 100%.

Another Take.

Fastest-Growing Nation? North Korea.

• Satellite images of North Korea, once viral for its “lights out” darkness, now show brightness tripled compared to five years ago.
• North Korea’s 2024 economic growth rate is 3.7%.
• A travel agency employee who recently visited Pyongyang reported that a bill for five people eating naengmyeon, sushi, pizza, and more at a glass-floored skywalk restaurant was $150.
• North Korea has sent over 15,000 soldiers to Russia, with one-third killed or wounded, in exchange for billions in revenue.
• Billions more are believed to have been earned through cryptocurrency exchange attacks.
• Over 10,000 new homes were built in Pyongyang last year.
• North Korea’s smartphone production has reached 500,000 units. The Samhung app allows taxi hailing.
• Related Link.

Salmon Soju Party Perjury Controversy Goes to Citizen Jury Trial.

• It will run for ten days.
• Candidates who admitted to knowing details from YouTube or articles were excluded.
• Prosecutors argue that Lee Hwa-young (former Vice Governor of Gyeonggi Province) committed perjury by testifying at the National Assembly, “I drank alcohol, had salmon bibimbap, and soju was served.”

511 Uncontested Wins: Why Not a Yes-or-No Vote?

• This system declares winners without voting when only one candidate runs or when candidates are fewer than seats available. 14% of all 804 provincial legislators were elected unopposed.
• In regions like Yeongnam and Honam, where one party dominates overwhelmingly, opposing parties often refrain from fielding candidates.
• The Hankyoreh emphasized, “Institutional reforms—such as expanding multi-member districts (3–4 seats), proportional representation, and enabling regional parties—are essential.”

Lee Eun-ju and Jung Cheong-rae.

• Lee Eun-ju (Democratic Party Supreme Council Member) resigned, stating, “I deeply feel the weight of responsibility for the local election results.”
• Though her term had only two months remaining, her move strongly pressures party leader Jung Cheong-rae (Democratic Party), who emphasized election victories.
• Choi Min-hee (Democratic Party lawmaker) criticized, “One only knows the integrity of pines and cypresses when it gets cold,” adding, “This cold weather makes it difficult.”

15.38 Million Won vs. 740,000 Won.

• This is the gap between the top 10% and bottom 10% of income earners as of the first quarter of this year.
• The top bracket saw a 3.8% increase from the previous year, while the bottom bracket fell by 0.9%.
• The decile ratio stands at 20.9 times.
• Lee Jung-hee (Chung-Ang University professor) stated, “While macroeconomic indicators like semiconductor-driven exports are improving, recovery in other industries remains relatively sluggish. Policy responses are needed to narrow income and asset disparities and ensure broader distribution of growth benefits.”
• Related Link.

Without the ‘Polling Flower’.

• Democratic Party support in Seoul dropped by 2.2 percentage points, with Gyeongnam and Busan falling by 1.5 and 0.7 percentage points respectively. This reflects the influence of polls analyzed by Park Jong-hee (Seoul National University professor).
• The ‘polling flower’ is a polling firm created by Kim Eo-jun (CEO of Ddanzi Ilbo). It conducted an overwhelming number of surveys.
• Park Jong-hee warned, “Polls by institutions with exposed political leanings can fall into a double trap.” He explained, “They create a reassuring effect for friendly camps and a mobilizing effect for opposing camps.”
• Park Jong-hee also cautioned, “When politically biased polling firms dominate the market and wield the most influence, trust in polls themselves declines.”
• Related Link.

The Fix.

Campaign Banner Recycling Rate at 48%.

• The 2022 local elections generated 101,813 discarded campaign banners, totaling 15.57 million tons. Only 25% were recycled.
• This year’s discarded banners are expected to exceed that figure.
• Seoul’s recycling rate reached 86%, while the national average stands at 48%. Some argue that reducing banner production should precede recycling efforts.

Headquarters Must Be Where the Factories Are.

• Workers in industrial regions are forced to endure structural ‘wage penalties’ and ‘discrimination.’
• According to Yang Joon-ho (Incheon University professor), over 240,000 people—80% of them youth and teenagers—fled five major industrial cities including Ulsan, Changwon, Pohang, Yeosu, and Geoje over a decade.
• Yang proposed a regional headquarters system as a solution: relocating headquarters to regions would grant up to 12 years of corporate tax reductions.
• Harim, based in Iksan, North Jeolla, grew into a 28th-largest conglomerate.
• Hanwha Aerospace’s operating profit multiplied sevenfold after moving its headquarters to Changwon.
• Yang suggested, “Legislation supporting a dual-headquarters system—where regional branches hold financial and personnel authority—is also necessary.”
• Yang emphasized, “It’s time to move beyond policies that merely pave asphalt over empty industrial complexes and instead realize ‘spatial justice’ by geographically decentralizing power through ‘regional headquarters systems’ and embracing labor value via ‘reduced working hours.’”
• Related Link.

ICYMI.

Yong-jin Jung to Lead E-Mart.

• He had previously served as an unregistered executive at E-Mart.
• Yong-jin Jung (E-Mart Chairman) will join the boards of E-Mart and Shinsegae Property and assume the role of CEO. “We will seek evaluation from the board and shareholders,” he said.

Fire Use Traced Back 1.8 Million Years.

• Research has emerged challenging the long-established theory that fire use began 1.1 million years ago.
• Analysis of fossils from Wonderwerk Cave in South Africa revealed evidence of fire use predating previous findings by 700,000 years.

Siri and Gemini.

• Apple’s voice recognition assistant Siri has met Google’s AI service Gemini.
• The updated Siri can now move between email, messages, photo apps, and more to construct and understand user context. It can now converse and take commands while viewing the smartphone screen.
• Apple and Google have signed a $1 billion Gemini contract. Google can now power Gemini on over 1.5 billion Apple devices.
• Related Link.

Worth Reading.

If This Isn’t a Bubble, What Is?

• “Money is pouring into a highly volatile and risky sector. It’s especially gaining massive popularity among inexperienced investors. A classic bubble phenomenon.”
• These were the words of Ray Dalio (Bridgewater Associates founder).
• Related Link.

No Sense of Crisis.

• Baek Seong-gyu (Chosun Ilbo political editor) assessed Lee Jae-myung (President) as “out of touch with public sentiment” for saying that “real estate policies had a more positive impact on elections.”
• Baek Seong-gyu views the special prosecution to cancel the indictment as the main factor that turned a potential landslide victory for the Democratic Party into a close race. He interpreted Lee Jae-myung’s “we’ll just follow the law” as “a signal that the government’s direction won’t change.”
• Baek Seong-gyu warned, “There is no absolute ring in reality.” “We must escape the arrogance and delusion that we are right and can do anything,” he added.
• Related Link.

Korea’s Politics Governed by a Powerful Restorative Force.

• “The name of that restorative force is the adversarial two-party system.”
• Kim Bu-gyeom (former Prime Minister) lost 12 years ago with 40% and lost again this time with 45%. A 5% advance was not enough to overcome the regressive resilience of Korean politics.
• Park Won-ho (Seoul National University professor) noted, “In a system divided into two major parties, where no room exists for centrist or third alternatives, voters likely found it difficult to sense change and translate that into ballots.” He added, “The most effective strategy for both parties was to rally behind the opposing party or the current or former president and appeal for survival.” His critique: “There was no space for policy.”
• Related Link.

They Must Not Be Lumped as Far-Right.

• Protests at Jamsil over the ballot paper issue maintain distance from politics. They claim it’s a matter of democracy and suffrage, beyond left or right.
• Choi Sung-yong (social researcher) assessed, “They differ from far-right groups who indulge in self-absorption through hate and violence, disregarding others’ views.” His analysis: “A self-awareness of being on a public stage is at play, and once on that stage, hate speech and crude behavior will inevitably diminish.”
• Choi Sung-yong emphasized, “We must respect these ‘first-time citizens’ as equals and solve shared problems together.” The argument: Only by respecting those who distance themselves from the far-right can the real far-right be isolated.
• Related Link.

The Democratic Party Won but Lost.

• In a Hankook Ilbo-Hankook Research survey, 9% responded that the special prosecution controversy influenced their choice of supporting party or candidate—a non-negligible proportion.
• Kim Hee-won (Hankook Ilbo News Standards Director) remarked, “Had they simply accepted criticism, the Democratic Party would have secured a landslide victory,” criticizing them for being “trapped in an echo chamber where only supporters understand each other.”
• While extreme remarks like “We should crush them with tanks” (Choi Wook) or “We need to resort to clubs” (Jeong Joon-hee) are problematic, Kim noted that Lee Jae-myung’s X (Twitter) plea—“Vote to avoid being ruled by the worst lowlifes”—reflects the same underlying sentiment.
• Kim Hee-won stressed, “They must change their attitude of dismissing criticism and contemptuously regarding the opposing camp.”
• Related Link.
• Related Link.