South Korea Eyes Iran Reconstruction Fund.

• Donald Trump (U.S. President) said, “If Iran complies with the agreement, we will consider a $300 billion reconstruction fund.” He added, “Private companies from Europe, South Korea, Japan, and others are showing interest.”
• The fund could take the form of war reparations. Some interpret this as the U.S. shifting the cost of war damages to other countries.
• Trump repeatedly emphasized that it would not involve government funds.

Hormuz Will Likely No Longer Be Free.

• Iran insists it will start collecting tolls after 60 days.
• Halting nuclear development and limiting ballistic missiles were topics discussed even before the war—nothing has changed.
• The agreement was signed, but its details remain undisclosed. Trump emphasized, “Passage through the Strait of Hormuz is free,” while Iran’s Fars News Agency claims, “The right to collect tolls has been recognized.” The next 60 days will be critical.
• Israel’s withdrawal from Lebanon was also omitted from the MOU.

What Matters Now.

No Return to the Pre-War Era.

• The New York Times’ analysis. While energy-producing nations jockey for dominance, importing countries have begun innovating to reduce energy dependence. The shift toward renewables and nuclear power is likely to accelerate. Solar and wind have already surpassed gas power generation.
• The UAE has left OPEC, and Saudi Arabia has moved closer to Russia. Russia, too, has increased gas exports since the U.S.-Iran war.
• The biggest winner is China. It holds an overwhelming lead in wind turbines, high-voltage cables, transformers, solar panels, and batteries.
• Growth rates are slowing, inflation is rising, and so are interest rates. Indermit Gill (World Bank economist) warned, “The global economy will become more unstable.”
• Related Link.

G7’s Core Agenda: The United States.

• The alliance of the wealthiest nations is shaking badly. The U.S. is no longer an ‘automatic ally.’
• Volodymyr Zelenskyy (Ukrainian President) will also attend.
• The task remains to clean up the problems the U.S. has laid out.
• Related Link.

Trump’s Chicken-Hawk Diplomacy: Will It Fly at the G7?

• Called Emmanuel Macron (French President) “foolish” and suggested, “Macron is being abused by his wife.”
• Referred to Justin Trudeau (Canadian Prime Minister) as “governor” and mocked, “I’ll make Canada America’s 51st state.”
• On Keir Starmer (UK Prime Minister), Trump remarked, “He’ll never be Winston Churchill.” When the UK refused to send troops to Iran, he said, “You don’t need a toy aircraft carrier.”
• Friedrich Merz (German Chancellor) once criticized, “The U.S. entered the war without any strategy.” Trump retorted, “He doesn’t know what he’s talking about” and added, “He should focus on fixing a broken Germany.”
• Giorgia Meloni (Italian Prime Minister) condemned, “Trump’s remarks are unacceptable,” referencing his criticism of Pope Leo XIV. Even Meloni, once relatively close, has distanced herself.
• CNN forecasted, “The atmosphere could get even stormier.”
• Related Link.

“The Public Already Knows Full Well.”.

• “They know whether this is a struggle for truth or a strategic slogan to protect one’s shaky political position. The pure aspirations of the youth must not be consumed as fuel for a specific politician’s survival.”
• These were the words of Oh Se-hoon (Seoul Mayor).
• Jang Dong-hyuk (People Power Party Leader) ultimately attended the ballot-paper protest. Jang stated the party’s intent to file election appeals in nine regions, including Seoul, Daegu, and Gyeongnam, where the People Power Party won.
• While advocating for nationwide re-elections, there are already many differing opinions within the party. Kim Yong-tae (People Power Party lawmaker) said, “Leadership must be replaced.”
• In an editorial, Chosun Ilbo criticized, “The unrealistic demand for re-elections is merely a distortion of public sentiment aimed at diverting attention by stirring controversy.”
• Related Link.
• Related Link.

National Investigation into the Ballot Paper Scandal.

• The investigation will run for 45 days.
• The committee will consist of 18 members—9 from the ruling and 9 from the opposition parties—with the People Power Party holding the special committee chairmanship.

“The Party Belongs to Its Members.”.

• These were the words of Lee Jae-myung (Democratic Party Leader). Unlike President Yoon Suk-yeol’s recent emphasis on the public—“The ruling party’s passion should be directed not at our camp but at all citizens”—Lee stressed party members.
• Speculation arises that Lee, who enjoys strong grassroots support, is signaling his intent to seek re-election as party leader.
• Lee previously implemented a one-member-one-vote system, a mechanism that amplifies the influence of rights-holding members—a structure advantageous to him.
• Kim Min-seok (Prime Minister)’s three-day tour of Jeolla and Gwangju is also interpreted as an official campaign launch. The region accounts for 33% of the Democratic Party’s membership.
• Related Link.

Deep Dive.

“Claude Export Controls Blamed on South Korean Telecom Linked to China.”.

• The Washington Post exclusive did not name the telecom company.
• Coincidentally, Amazon—which warned the White House about Claude’s security risks—and Jeff Bezos (Amazon founder), a major Washington Post shareholder, have fueled speculation about the report’s background.
• If Anthropic’s publicly released Mistral 5 is for experts, Claude 5 is for general use. Concerns arose that lifting safety measures on Claude could enable its misuse as a tool to attack security vulnerabilities. After the White House ordered restrictions on foreign nationals, Anthropic temporarily suspended both services.
• Kim Sung-hoon (Upstage CEO) argued, “As AI becomes a strategic national asset, any country with the technology can cut off supply at will,” and insisted, “The government must increase support for building an AI ecosystem by at least tenfold compared to now.”
• The issue may also surface at the G7 summit in France. Henna Virkkunen (European Commission Technology Director) told the Financial Times, “The U.S. must not impose discriminatory measures against partner countries.”
• Related Link.
• Related Link.
• Related Link.

AI as a National Security Asset.

• While the claim about a South Korean telecom linked to China is likely an excuse, the reality that highly advanced AI poses a serious security threat is undeniable.
• The U.S. Department of Defense’s rejected request for war support from Anthropic in March is also troubling. It is an open secret that Claude has been used in operations such as the attempted arrest of Nicolás Maduro (Venezuelan President) and airstrikes targeting Ali Khamenei (Iran’s Supreme Leader).
• Even if Fable is contained, more powerful AI systems will likely emerge in the near future. While Anthropic is currently ahead, the gap is narrow and its defenses are not impregnable.
• Some argue that Mistral’s security risks have been exaggerated—and that blocking it alone won’t solve the problem.
• Though AI will be tiered between accessible consumer models and elite-restricted Mistral-class systems, concerns persist that safeguards could easily fail.
• The importance of sovereign AI has grown. Developing independent foundation models is critical, but overcoming technological dependency is an even greater challenge.
• Related Link.

Japan Raises Key Rate for First Time in 31 Years.

• 0.25 percentage points to 1%.
• If Japan raises rates, South Korea’s burden eases. The won-dollar exchange rate is likely to fall further.
• The unwinding of yen carry trades could shift global capital flows. When the yen was weak, borrowing in Japan to invest in U.S. stocks was viable—but the cost has now risen.
• Related Link.
• Related Link.

Another Take.

Burning Hot Dongtan, Real Estate Money Moves.

• From January to April this year, 2.4 trillion won of stock and bond sale proceeds flowed into Seoul housing purchases—60% of last year’s 3.9 trillion won. Chosun Ilbo forecasts this will exceed 7 trillion won by year’s end.
• In Dongtan, cases are piling up where buyers paid penalties to break contracts only to relist at 300 million won higher. Prices rose nearly 2% in a week.
• Reports even claim 84㎡ “national standard” apartments have surpassed 2.2 billion won.
• Analysts say the semiconductor-fueled money surge is now fully underway.
• Adjacent areas like Seongnam, Giheung, and Yeongtong—part of the “Samsung+NIKE shuttle+transit zones”—are stirring. Seongnam alone rose 8.6% this year.
• Related Link.

8726.60.

• Stock prices are gaining momentum following the U.S.-Iran ceasefire agreement. After hitting 8933.62 two days ago, a renewed attempt to breach 9000 is highly likely.
• Foreign investors have been net buyers for three consecutive days.
• Yesterday, the S&P 500, Dow, and Nasdaq fell -0.57%, 0.64%, and -1.15% respectively. The Philadelphia Semiconductor Index plummeted 5.7%.

The Fix.

Ulleungdo Squid Catch Drops to 1/100th.

• Only 260 squid were brought to the Ulleungdo Fisheries Cooperative auction site visited by a Hankook Ilbo reporter.
• In 2000, annual squid catch was 11,315 tons—last year it fell to just 141 tons.
• Rising water temperatures and overfishing by Chinese vessels are to blame. Squid thrive at 12–18°C, but Ulleungdo waters now frequently exceed 20°C. Chinese fishing boats, operating under agreements with North Korea, are sweeping up squid north of Ulleungdo.
• Kim Yoon-bae (Director, Korea Institute of Ocean Science & Technology Ulleungdo Research Base) said, “We must simultaneously reduce fishing capacity and actively support remaining vessels.”
• Related Link.

ICYMI.

When to Sell?

• Lee Chae-won (Chairman, Life Asset Management), dubbed Korea’s Warren Buffett (Chairman, Berkshire Hathaway), proposed three timing principles.
• First, when the stock price reaches intrinsic value. If you judge that the price has overshot fundamentals, exit immediately.
• Second, when you’ve made a wrong call. If your investment rationale is undermined, make a decisive move.
• Third, when a better stock appears. If a cheaper one emerges, sell the less cheap one to buy it.
• The best opportunities arise when good companies temporarily become undervalued. “Now is the era of gold rings,” he emphasized, advising that finance, semiconductors, and holding companies are promising.
• Related Link.
• Related Link.

SpaceX IPO Had Three Differences.

• First, it fixed the offering price at $137 from the start. Typically, a range is set and the price is determined by demand and supply on the first trading day—but SpaceX locked it in.
• Second, it released only 5% of shares for trading. With immediate index inclusion and insufficient supply, the flood of orders was an inevitable result.
• Third, it imposed strong lock-up agreements.
• The strategy was to inflate value by setting a high price and restricting supply. Over $250 billion poured in for a $75 billion offering for this reason.
• With a $4.9 billion loss last year, the price-to-earnings ratio (PER) is meaningless. The market cap exceeds 120x last year’s revenue.
• A comparison emerged: it’s like the Girl Scouts making 1,000 boxes of cookies but selling only 50. Prices may rise now, but everything must eventually be sold. The idea is that even if prices are temporarily inflated, they’ll eventually find their true value.
• The business plan targets a $28.5 trillion potential market—$26.5 trillion of which it aims to capture via AI.
• The $135 offering price includes $72.5 in future value. Morgan Stanley estimates this requires 180x revenue growth by 2040—$3.4 trillion in sales and $2.7 trillion in profit to justify the valuation.
• Morningstar analyzed that only a 7% probability “moonshot” scenario could make this stock viable.
• SpaceX surpassed Amazon to rank 5th in market cap ($2.7 trillion) three days after its Nasdaq listing. It briefly overtook Microsoft to reach 4th place.

SpaceX Acquires Cursor.

• It is an autonomous coding agent company. SpaceX agreed to transfer shares in exchange for $60 billion worth of its equity.
• Analysts suggest this will help boost SpaceX’s corporate valuation. SpaceX’s AI model, Grok, has been criticized for lagging significantly in technological capability.
• Related Link.

Worth Reading.

“90% of Youth Frustration Stems from Real Estate.”.

• Adaptive governance is needed to avoid the tragedy of the commons.
• Park Jong-hee (Professor, Seoul National University) pointed out, “The older generation shouldn’t have just dismissed us with, ‘We’re right, so you should just follow.’” The analysis is that “instead of revising systems or discourse, the older generation used black-and-white logic to suppress dissent, fueling anger.”
• Related Link.

“Sedition Settlement” Frame No Longer Works.

• Kang Won-taek (Professor, Seoul National University) analyzed, “The Lee Jae-myung government has become a subject of evaluation.” The assessment is that “the limits of base politics have arrived.”
• The time for “exceptional politics” of settling sedition is passing; as politics returns to “normalcy,” problem-solving capabilities become crucial. Kang Won-taek noted, “Both parties are complacent with the status quo,” adding, “If this trend continues, the Democratic Party may struggle in two years.”
• Related Link.

Lee Jae-myung and Jung Chul-rae: Mirror Images.

• Kang Joon-man (Professor, Jeonbuk National University) analyzed, “The ‘political clash’ between the two heavyweights did not occur due to some grand difference in values or ideology, but because the two are identical, leading to conflict.”
• First, both are unrivaled masters of ‘fandom politics’ in Korea, demanding divisive tactics and ‘black-and-white’ rhetoric that fans crave.
• Second, both have risen to their current positions by clinging to and refining the fandom-politics rhetoric of a decade ago—and both are equally addicted to the inertia of refusing to abandon their proven formula.
• Kang Joon-man pointed out, “It’s regrettable that politicians are not trying to stop this hollow fight but instead joining in.”
• Related Link.

National Wealth Fund? Better to Use It as Planning Office Funds.

• Funds are funds. Just as a chicken becomes chicken meat, when a fund is reflected in the budget, it becomes a fund. The Ministry of Economy and Finance wants to create a national wealth fund, while the Planning and Budget Office wants to establish a future-response fund.
• Lee Sang-min (Research Fellow, Korea Institute of Public Finance) pointed out, “The structure of issuing high-interest government bonds while expecting fund returns is intuitively awkward.”
• The best use would be for infrastructure investment and reducing disparities, and according to Lee Sang-min’s assessment, leftover funds are better managed in fund form. “What is needed now is not the skill to manage money, but the fiscal skill to spend it properly,” he argues.
• Related Link.