War Returns to the Middle East.

• Donald Trump (U.S. President) said, “The MOU (Memorandum of Understanding) seems to be over.” This comes 20 days into the ceasefire negotiations.
• A U.S. merchant ship was attacked, and the U.S. has resumed military strikes against Iran.
• Trump is attending a NATO meeting. After meeting Jens Stoltenberg (NATO Secretary-General), he stated, “We don’t want to engage with them,” prompting a 5%+ surge in Brent crude prices.
• U.S. stock markets saw the Dow Jones and S&P 500 decline, while the Nasdaq rose. Changes: -1.1%, -0.3%, and +0.2%, respectively.
• Related Link.
• Related Link.

South Korea to Provide $100 Million in Aid to Ukraine.

• Lee Jae-myung (President) and Volodymyr Zelenskyy (Ukrainian President) held a meeting.
• The two confirmed the principle of supporting Ukraine’s reconstruction costs without providing lethal weapons.
• The issue of North Korean POWs was also addressed, with a decision to respect the detainees’ free will. There is a possibility they may come to South Korea.

Scrapping Supplementary Investigative Authority, Bill Submitted to Judiciary Committee.

• The Democratic Party plans to process this before its national convention on the 17th of next month.
• Amid ongoing controversy over police evidence concealment, backlash is growing. Hong Ki-won (Democratic Party lawmaker) pointed out, “Completely stripping supplementary investigative authority could disproportionately harm socially vulnerable groups who cannot afford lawyers.”
• Kwak Sang-eon (Democratic Party lawmaker) stated, “I cannot fathom why police’s monopoly on investigations should be considered a safer system than the current one.”
• Kim Nam-hee (Democratic Party lawmaker) also noted, “A system to prevent police from destroying evidence is necessary.”
• Park Eun-jung (Reform Party lawmaker) countered, “The Jang Yun-ki case should not be resolved by granting prosecutors investigative authority.”
• Jeong Seong-ho (Minister of Justice) emphasized, “While scrapping the authority is the government’s basic stance, it’s crucial to establish institutional safeguards ensuring supplementary investigations remain effective and police don’t abuse their power.”
• In an editorial, JoongAng Ilbo criticized, “If the Democratic Party neglects potential victims in its bid for ideological clarity, it will struggle to avoid blame for dereliction of duty.”
• A compromise proposal is also being discussed: allowing supplementary authority even for cases police have forwarded with prosecution recommendations.
• Jeong Cheong-rae (former Democratic Party leader) said, “I hope there will be no further debate over completely abolishing supplementary investigative authority.”
• Related Link.

What Matters Now.

Black Wednesday, Kospi Niramy.

• Samsung Electronics and SK Hynix fell 6.3% and 5.7%, respectively. The Kospi dropped 5.4% to 7,246.8.
• The circuit breaker was triggered for a second consecutive day.
• Morgan Stanley recommended reducing exposure to semiconductor stocks, stating, “The semiconductor-driven rally is ending, and market leadership is gradually broadening.” Concerns also arise: “Is this the peak before a decline?”
• Han Ji-young (Kiwoom Securities analyst) analyzed, “It’s an unusual phenomenon where volatility in Korean semiconductor stocks is directly affecting Japanese and U.S. futures markets.”
• In Japan, the term ‘Kospi Niramy’—meaning ‘watching the Kospi’—has even emerged.
• The Kospi has fallen 23% from its high of 9,385.6 on the 19th of last month. Bloomberg considers a 20%+ drop from a peak as a technical bear market entry.
• Related Link.

Samsung+SK Hynix Leverage ETFs Halved.

• The base assets’ repeated fluctuations create a negative compounding effect, eroding principal.
• Lee Chan-jin (Financial Supervisory Service Governor) warned, “Excessive leveraged investments could severely undermine household financial soundness.” Koo Yoon-cheol (Minister of Economy and Finance) stated, “We are discussing how to address the issue.”
• Kiwoom Securities lowered Samsung Electronics’ target stock price from ₩430,000 to ₩390,000.

Sell SK Hynix ADRs, Buy Korean Shares.

• This was UBS’s advice to investors. While ADRs are stock deposit receipts in name, they can diverge from Korean shares.
• TSMC’s ADR also trades at a 16% premium over its Taiwanese-listed shares.

Exchange Rate Hits 1,498.5 Won.

• SK Hynix’s ADR issuance also had a significant effect. With plans to raise $43 billion, converting dollars to won would lower the exchange rate. Analysis suggests there were many preemptive dollar-selling trades.
• Foreign investor rebalancing has concluded, and conditions for renewed buying have emerged, according to another analysis. On a trading-day basis, net buying resumed after 14 days.

Deep Dive.

Kim Min-seok on News Factory.

• Kim Min-seok (former Prime Minister) appeared on Kim Eo-jun’s News Factory, a program often perceived as sympathetic to Jung Chung-rae (former Democratic Party leader).
• He stated, “I judged that cooperation between the party and government fell short of expectations, and felt compelled to return to the party to restore its proper role as a ruling party.”
• Regarding concerns that “early re-entry, like Lee Nak-yeon (former Prime Minister), could be toxic,” he emphasized, “Now is the time to halt the party’s declining approval ratings.”
• “Over the past year, there was a lack of urgency in swiftly finalizing follow-up measures after Cabinet meetings,” he claimed, “The two engines—the president and the party—must accelerate together.”
• In a venue often seen as Jung Chung-rae’s stronghold, he sharply criticized Jung, calling merger talks with the Cho Kuk Reform Party an “overreach.” “If I were party leader, I wouldn’t have handled it that way,” he said.
• When Kim Eo-jun (Ddanzi Ilbo chief) asked, “Is the Cho Kuk Reform Party a target for merger or alliance?” Kim responded, “That’s for them to decide,” adding, “I’m sorry, but if merged, it would inevitably be an absorption.”

Preference Voting Sparks Pro-Myung vs. Pro-Cheong Rift.

• The Democratic Party’s National Convention Preparatory Committee decided to use a ranked-choice system instead of a runoff for the party leadership election.
• The ranked-choice system allows voters to rank candidates 1-2-3 simultaneously. If no candidate wins a majority in first-choice votes, the lowest-ranked candidate is eliminated, and their second-choice votes are redistributed until a majority emerges.
• The August 17 convention will feature a contest between Kim Min-seok, Jung Chung-rae, Song Young-gil (former Democratic Party leader), and Ko Min-jung (Democratic Party lawmaker).
• Jung Chung-rae initially said, “We respect and accept,” but suddenly backtracked, claiming, “This violates party constitution and regulations.” Kim Min-seok noted, “Once rules are set, they should be respected.”
• Analysis suggests that if Kim Min-seok and Song Young-gil—whose support bases overlap—finish in third place, their redistributed votes could consolidate behind the remaining candidate, favoring the pro-Myung faction.
• Related Link.
• Related Link.

When Semiconductors Boom, Education Gets a Windfall.

• Education grants are projected to exceed ₩80 trillion this year, automatically allocated to local education offices as 20.8% of domestic taxes.
• The Ministry of Economy and Planning and the Ministry of Education held a marathon discussion yesterday.
• Park Hong-geun (Minister of Economy and Planning) argued, “The sharp annual fluctuations in grants have caused stability issues.”
• Cho Kyung-jin (Minister of Education) countered, “The 20.8% is a legally binding safety net society agreed upon to remain unaffected by economic or political shifts. It’s deeply concerning that discussions are framing reduced student numbers as justification for budget cuts.”
• Kim Hak-su (KDI Senior Research Fellow) noted, “It’s like automatically transferring more education funds simply because salaries have risen.”
• Over the past decade, student numbers fell 16%, while teaching and administrative staff increased 13%. Critics also claim grants are being misused as discretionary cash reserves by education superintendents.
• Related Link.
• Related Link.

South Korea’s Defense Industry Windfall? The Party Is Ending.

• Lee Jae-seung (Director of Korea University’s Institute of International Affairs) noted, “We enjoyed a post-Ukraine invasion European windfall, but the party that favored us is ending.”
• Shin Beom-chul (former Vice Minister of National Defense) observed, “All NATO states know how heavily South Korea watches Russia’s reactions.” He added, “The failure to secure Canada’s submarine, Poland’s submarine, and Romania’s armored vehicle deals reflects a reluctance to accept South Korea as a strategic partner.”
• Moon Geun-sik (Hanyang University professor) argued, “The defense industry is no longer about corporate competition—it’s now a contest between nations or alliances.”
• Related Link.

Another Take.

Mok-dong Redevelopment Construction Costs Alone Reach ₩30 Trillion.

• It’s shifting from a speed race to a competition of conditions: high-end brand relocation financial support, fixed construction costs, and even post-sale considerations are under review.
• The project aims to transform 14 complexes—20,000 households—into a mini-new town of 47,000 households.
• For residents, Gangnam is the role model. In Shinbanpo, they offered near-zero-interest financial support and ₩200 million in advance subsidies; in Apgujeong, relocation loans with 150% LTV emerged.
• Mok-dong Complex 6 secured conditions where the contractor bears part of inflation costs, 100% LTV relocation loans, and a four-year deferment of contribution fees.
• Lee Eun-hyeong (Research Fellow at the Korea Construction Policy Research Institute) pointed out, “Costs contractors take on to win bids are likely to return as higher construction costs or additional fees.”
• Related Link.

AI Caught in the Crossfire of the US-China Trade War.

• China’s Ministry of Commerce held closed-door meetings with Alibaba, ByteDance, and Zhipu to discuss restricting overseas access to advanced AI models. Speculation suggests even open-weight models could be blocked.
• Earlier, the US had imposed and later lifted export restrictions on Anthropic’s Claude 5, but a scenario where even paying customers are denied access remains possible.
• According to OpenRouter, Chinese models’ token consumption share surged from 17% in July last year to over 50% in June this year.
• Zhipu’s GLM-5.2 achieved performance near top US models at one-fifth the cost.
• The Boston Consulting Group analyzed, “The US and China are building mutually incompatible, separate technology ecosystems.”
• Lim Kyoung-tae (KAIST professor) stated, “South Korea, with AI capabilities ranked third after the US and China, could leverage this position by becoming a support partner in overseas sovereign AI projects—a promising business model.”
• Related Link.
• Related Link.

Marriage Without Love: No Return Path.

• “The era of flattery diplomacy is over.”
• That’s the Wall Street Journal’s analysis. Last January, European leaders gathered to discuss breaking with the U.S.—on the condition they leave phones behind and attend alone, without aides. Criticism of Trump poured out; it was dubbed a “therapy night.”
• Trump is demanding defense spending rise to 5% of GDP. Some speculate that without the U.S., Europe would need to spend over 10% of GDP.
• Mark Rutte (NATO Secretary-General) said, “We have no time to waste.”
• Russia is pouring nearly half its national budget into war machinery, while the U.S. is withdrawing troops.
• Rutte sees his mission as keeping Trump engaged. When messaging Trump, he matches Trump’s style—using exaggerated rhetoric. He advises other leaders to mix in capital letters.
• The idea of a “Europe without the U.S.” was proposed by Mark Carney (Canadian Prime Minister).
• Within two days of taking office, Carney flew to Paris to meet Macron and began rallying European leaders. He proposed, “We must accept the world as it is, not as we wish it to be.”
• Rutte suggested appeasing Trump by increasing defense spending, but Carney insists it won’t work. “The America we knew is not coming back,” he’s persuading other leaders. Pedro Sánchez (Spanish Prime Minister) said, “Carney is saying what we all need to say.”
• France has ordered civil servants to use BiziO instead of Teams or Zoom, and the EU is rushing satellite launches to break free from Starlink. There’s even reluctance to import U.S.-made weapons.
• “There is no return path,” said Emmanuel Macron (French President).
• The Wall Street Journal analyzed that both sides are struggling to sustain a “marriage without love.” For now, Rutte leads the charge, but a quiet divorce is underway.
• Related Link.
• Related Link.

Trump Sucks All the Oxygen Out of the Room.

• That’s the New York Times reporters’ assessment covering the NATO summit.
• Regardless, Trump was the star. He arrived aboard the Air Force One gifted by Qatar.
• Recep Tayyip Erdoğan (Turkish President) personally greeted him on the airport runway—hospitality rivaling that extended to the Pope last year.
• He criticized Denmark, hinting he still hasn’t given up on Greenland, and complained that the UK, France, and Italy didn’t sufficiently support attacking Iran. He even grumbled that Europe was far better 20 years ago.
• He mocked Giorgia Meloni (Italian Prime Minister) on Truth Social, posting her photo with the caption: “RESTRAINING ORDER NEEDED.”
• Everyone watches Trump’s mood. Mark Rutte (NATO Secretary-General) brought the $1 trillion keyword: a plea to accept that defense spending has already increased by that amount, hoping to appease Trump’s demands.
• Related Link.

The Fix.

Mandatory Climate Disclosures from 2028.

• Scope 3—which was the actual contentious issue—will be deferred for three years. Scope 3 requires managing emissions data across the supply chain.
• KOSPI-listed companies with total consolidated assets exceeding ₩10 trillion must disclose climate metrics, including greenhouse gas emissions, in their business reports. This will expand to companies with ₩5 trillion or more in 2029.
• Lee Won-bok (Financial Services Commission Chairman) called it “a more proactive approach than Japan’s” and stated, “It reflects demands from global institutional investors.”
• For the first three years, errors or omissions in disclosures will be exempt from sanctions or penalties, but deliberate greenwashing will face strict accountability.
• The JoongAng Ilbo pointed out, “Concerns are growing as this system adds to management burdens, following the Serious Accident Punishment Act and the Yellow Envelope Law.”
• In an editorial, the Kyunghyang Shinmun argued, “This is an essential task for resolving the Korea discount and ensuring our companies’ survival in global markets. It should not be viewed solely as regulation or cost.”
• Related Link.
• Related Link.

“Can’t We Reduce Monthly Rent?”.

• “Those with money must step forward.” Hard to believe, but this was said at a low birthrate-aging society policy meeting.
• Kim Jin-o (Vice Chairman of the Presidential Committee on Aging Society and Population Policy) remarked, “How long can we solve everything with state funds?” and added, “Companies like Booyoung Group should take the lead, and wealthy individuals must step forward.”

ICYMI.

Good Jobs Are Linked to Mothers’ Education.

• Fathers’ education level made little difference. It is analyzed that it functioned as indirect capital, such as educational environment and information access.
• This is the analysis of the Korean Women’s Development Institute. Six out of ten young people still do not secure a good job (regular position with a monthly salary of over ₩3 million) even ten years after graduation.
• The gender gap is also significant. Over six out of ten men secured a good job within ten years, but the figure was only two out of ten for women.
• Related Link.

Worth Reading.

What, Did Gwangju Do Something Wrong?

• “I was so confused I thought I was the perpetrator, but of course punishment is necessary.” These were IU (singer)’s words in response to criticism that she was too harsh toward malicious commenters.
• Woo Geun-woo (columnist) noted, “The incident involving Baejai High and Starbucks is no different from the absurd situation IU experienced.”
• “The harm to Gwangju High is deemed forgivable, while Baejai High’s actions are minimized to something that can be resolved with an apology—and if not concluded with apology and forgiveness, the victim’s lack of tolerance becomes the issue.”
• “I’m not endorsing hate, but framing opposition to hate as perpetration ultimately legitimizes it. If education isn’t normalized and potential future perpetrators have no reason to abandon the ‘fun’ of regional hate and mockery, what’s the point?”

Why the Empathy for Baejai High?

• Kwon Tae-ho (Hankyoreh Editor) pointed out, “This case is entirely different from mocking an opponent during a game.”
• Phrases like “feature baby” or “wet noodle” have always existed, but they should not be conflated. Chosun Ilbo mixed the issue by saying, “Gangwon is ‘potato,’ Daegu is ‘pork intestines’”—but “let’s go to Starbucks” is not simply a matter of “regional disparagement.”
• “Reflect on your high school days. Students are not ignorant. We never saw the March 1st Movement a century ago, yet we do not disparage ‘Yoo Gwan-sun, the patriot.’ It’s because we think it’s acceptable to disparage Jeolla.”
• “Since so many worry and forgive, the future of Baejai High students will not be crushed. But how long must society tolerate those who, claiming May 18 has become sacrosanct, refuse to seek forgiveness, reflect on their wrongs, or feel the brand of conscience?”
• Related Link.