39.9°C, Critical Heat Alert.

• Yesterday’s peak temperature in Gyeongsan, North Gyeongsang Province.
• A double high-pressure system is the cause. High-temperature, high-humidity southerly winds flowed in as the upper-level Tibetan high-pressure and lower-level North Pacific high-pressure systems overlapped.
• Sea surface temperatures are 1 degree Celsius above average.
• Forecasts also suggest the heatwave will persist until September.
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Hormuz Blocked Again.

• Donald Trump (U.S. President) announced the end of the ceasefire, and within a day, Iran’s Revolutionary Guard declared a full blockade of the Strait of Hormuz.
• Hardliners are gaining momentum as the funeral of Ali Khamenei (former Supreme Leader of Iran) concludes.
• Iran has tripled its drone production capacity. Speculation also arises that nuclear facilities may have been restored.

What Matters Now.

SK Hynix’s Nasdaq Debut.

• Trading began last Friday. The IPO is valued at $26.5 billion—surpassing Alibaba’s $25 billion in 2014 as the largest U.S. IPO by a foreign company. It ranks second in U.S. history, behind only SpaceX ($75 billion).
• The stock opened at $149 and rose to $168.50—16% higher than Friday’s closing price in South Korea.
• Orders exceeded 200 billion dollars, over seven times the public offering amount. The ticker is ‘SKHY.’
• Funds raised will be deposited on the 14th. Plans include investing in production facilities.
• Choi Tae-won (SK Group Chairman) told CNBC, “We plan to double production capacity within five years.”
• Outlooks are mixed. KB Securities set a target price of 420,000 won, noting the 12-month forward price-to-earnings ratio is only 4.5x—half that of industry peer Micron Technology.
• Lee Min-hee (BNK Investment & Securities analyst) slashed it to 185,000 won, arguing, “Competitive AI infrastructure investments by hyperscalers are no longer viable.”
• Underwriters Bank of America and JPMorgan Chase alone collected $140 million in fees.
• Related Link.
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Build Factories in the U.S.—Is This Rutnick’s Agenda?

• Howard Rutnick (U.S. Secretary of Commerce) attended the Micron Technology groundbreaking ceremony and said, “We want to bring Samsung Electronics and SK Hynix to the U.S. to build fabs.”
• Earlier this year, Rutnick also stated, “Memory producers should either pay 100% tariffs or manufacture products in the U.S.”
• When asked if SK Group would consider additional U.S. investment, Choi Tae-won (Chairman of SK Group) replied, “Yes,” but added, “Memory fabs require power, clean water, land, skilled labor, and a supporting industrial ecosystem—it’s not easy.”
• The Hankyoreh editorial noted, “The U.S. is generally seen as a limited investment destination due to high labor and construction costs, as well as supply chain shortages.”
• Related Link.
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Memory-Packed Flights to America.

• Air cargo from Asia to North America increased by 20% (as of May, year-on-year). Freight rates rose by 36%.
• According to the Wall Street Journal, cargo planes once filled with Shein and Temu’s low-cost apparel and miscellany boxes are now packed with server racks and semiconductor wafers.
• Chinese e-commerce firms that exported tariff-free were blindsided when Trump ordered tariffs on even low-cost parcels.
• Related Link.

Samsung’s Yongin Cluster: Accelerating by Two Years.

• Land compensation is the key. The goal is to move the timeline from 2031 to 2029—allowing at least two years for equipment installation and yield testing means construction must start by the first half of next year at the latest.
• A Blue House official said, “We understand there are no issues with finalizing compensation within the year.”

Deep Dive.

Not Surplus Tax Revenue, but Additional Tax Revenue.

• Surplus tax revenue refers to tax collected beyond government estimates. Surplus or deficit revenue signals failed forecasting, making it distinct from additional revenue.
• This year, collections exceeded estimates, so “surplus” is technically correct.
• Additional revenue occurs when annual inflows surpass even the expected baseline.
• The Korea Ilbo criticized the term as a “mysterious neologism” and a “maneuver to justify increased government spending.” Surplus revenue is earmarked for local grants or public fund repayments, but additional revenue has no such spending restrictions.
• Related Link.

Scrapped Supplementary Investigation Rights, Even the Democratic Party’s Traffic Control Failed.

• The Judiciary Committee is discussing the bill in a subcommittee.
• The Ministry of Justice pointed out, “There are concerns about delays in investigations, such as ‘case ping-pong,’” and emphasized, “Discussion on practical measures to mitigate side effects is necessary.”
• The Supreme Court also weighed in, stating, “While it’s a matter of legislative policy,” it stressed, “Sufficient supplementary measures must be prepared together.”
• Reducing the supplementary investigation period to one month has also sparked backlash. Yang Hong-seok (lawyer) noted, “Many cases don’t conclude within three months now, so limiting it to one month will inevitably lead to sloppy investigations.” He added, “Incomplete investigations will result in non-prosecutions, and even if prosecuted, acquittals will rise, ultimately harming victims.”
• Hong Ki-won (Democratic Party lawmaker) plans to propose supplementary legislation. “Several lawmakers argued that completely abolishing supplementary investigation rights would cause problems,” he said. The Dong-A Ilbo reported that the co-sponsorship might not reach the required 10 members, as it could become a target for hardline supporters.
• Ko Min-jung (Democratic Party lawmaker) also remarked, “Separating investigation and prosecution is a system designed to prevent wrongful victimization, not a dogma we should cling to.”
• The Korean Bar Association issued a statement, calling supplementary investigation rights “a key check on investigative agencies,” and argued, “Prosecutors should be allowed to conduct direct supplementary investigations, at least for civil cases.”
• Park Seong-hoon (People Power Party spokesperson) condemned, “We strongly denounce the forced passage of the ‘Jang Yun-gi Case Neglect Bill.’”
• In an editorial, Chosun Ilbo criticized, “This opens a more convenient world for legal strongmen.”
• The JoongAng Ilbo’s editorial added, “It seems they’ve lost their way, overly cautious of hardline supporters’ reactions.”
• Related Link.
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“How Many Such Cases Occur Each Year?”.

• Kim Eo-jun (CEO of Ddanzi Ilbo) claimed, “Cases of this magnitude occur several times a year,” adding, “The media is manufacturing public opinion.”
• Choo Mi-ae (Gyeonggi Governor) argued, “This is a matter of conflict-of-interest avoidance obligations, not a separation of investigation and prosecution.”
• Jeong Cheong-rae (former Democratic Party leader) insisted, “The correct solution is to completely abolish investigative authority and supplementary investigation rights without leaving a trace.” He added, “If the Democratic Party fails to reform, it has already lost.”
• Kim Yong-min (Democratic Party lawmaker) noted, “The flow is similar to the abolition of the prosecution’s direct investigative authority four years ago,” pointing out, “All media and pro-prosecution experts emerged to criticize judicial reform, and under pressure, two of the six major crimes were left intact—leading to the aftermath of sedition.”
• Related Link.

Police Raiding Police.

• Gwangju Police Chief is under suspicion of downplaying the investigation into the Jang Yun-gi case. Testimony also emerged that the Gwangsan Police Chief allegedly prevented the application of rape-murder charges—which carry heavier penalties than general murder.
• The police arrested the investigation team leader and raided Gwangju Police Headquarters.
• Lee Chang-hyun (Professor, Hankuk University of Foreign Studies) noted, “If prosecutors can only request supplementary investigations, they’ll have no choice but to rely on the police’s goodwill.”
• Related Link.
• Related Link.

JoongAng Ilbo Begins Workout Process.

• JoongAng Ilbo has entered workout proceedings. With 75% of creditors (by debt amount) in favor, debt collection has been postponed until October 8 for now.
• (Corporate rehabilitation is a court-led process to save ailing companies, while workout is a pre-rehabilitation step where creditors give the company one last chance.)
• As of end-March, JoongAng Ilbo’s debt stood at 486.9 billion won—4.8 times its equity of 102.1 billion won.
• According to the Dong-A Ilbo, creditors demanded the sale of controlling shares as a condition for starting workout. JoongAng Holdings, which owns 64.7% of JoongAng Ilbo, is fully controlled by Hong Jeong-do (Vice Chairman of JoongAng Group) and his family.
• The Chosun Ilbo reported creditors are pushing for drastic restructuring: halting new hires, reducing daily print runs to 500,000 copies, and selling subsidiary stakes, real estate, and factories to raise 66.4 billion won.
• In a statement, JoongAng Ilbo pledged, “We will implement our self-rescue plan without delay” and assured, “Core media operations—newspaper production and digital reporting—will continue normally.”
• If a turnaround plan isn’t finalized or fails during the three-month grace period, creditors can vote to halt the workout process.
• Related Link.
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Blitzkrieg Won’t Cut It.

• Real estate requires not just ‘shut up and build’—timing matters. Park Won-gap (KB Kookmin Bank Senior Research Fellow) noted, “Housing stability is more critical than market stabilization.”
• Choi Kyung-ho (Soochow Housing Research Institute Director) stressed, “Monitoring the 50,000 units already under construction is more urgent than planning 200,000 units a decade from now.”
• Lee Kang-hoon (Participatory Democracy Executive Director) proposed, “Semiconductor tax windfalls should fund public rental housing.”
• A discussion chaired by Lee Jae-myung (President) is scheduled for the 23rd.
• Related Link.

Lee Jae-myung’s Seven Key Issues.

• “Announcing key issues in advance will help the discussion,” he stated. Six of the seven issues relate to property holding taxes.
• What is the appropriate level for property holding taxes?
• Should there be a distinction between primary residential homes and non-residential or multiple properties?
• If so, to what extent?
• Should ultra-luxury primary residences be treated separately?
• What price threshold should trigger additional burdens for high-value homes?
• What is the relationship between holding taxes and transaction taxes?
• How should property holding tax revenue be allocated?
• Related Link.

Will the Long-Term Holding Special Deduction Be Reduced?

• There is a possibility of easing loan restrictions for young people.
• Observers suggest the capital gains tax may reduce the long-term holding special deduction.
• Jeong Su-yeon (Professor, Jeju National University) stated, “If only property holding taxes are increased without easing transaction taxes, it will lead to side effects such as market stagnation and rising jeonse (lump-sum deposit) and monthly rents.”
• The JoongAng Ilbo pointed out, “Under the current system, a person owning a single 3-billion-won property could pay less comprehensive real estate tax than someone owning three 1-billion-won properties—a reversal phenomenon.”
• Kim Woo-chul (Professor, University of Seoul) argued, “First, transaction taxes should be reduced, property taxes normalized, the holding tax rate structure simplified, and ultimately, property and comprehensive real estate taxes should be integrated.”
• Related Link.
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Another Take.

Who Benefits from the Preferential Voting System?

• With only a month left until the Democratic Party’s national convention, the rules of the game remain undecided. The candidate registration deadline is the 16th–17th, so a decision must be made by the 15th.
• The preferential voting system involves ranking preferences in voting; if no candidate secures a majority, the lowest-ranked candidate is eliminated, and their votes are redistributed to the next preferred candidate.
• Jeong Cheong-rae (Democratic Party MP) insists, “This violates the party constitution and regulations.” On Facebook, he posted, “Getting beaten hurts a lot, but I’ll try to endure.”
• Kim Min-seok (former Prime Minister) criticized Jeong harshly, stating, “The party leadership must change this time.”
• Jeong retorted, “Leaving the party during elections, supporting candidates from other parties, and running as an independent—that’s the worst kind of self-serving politics.”
• Related Link.
• Related Link.

“It’s All Kim Yong-beom’s Fault.”.

• Chosun Ilbo is attacking Kim Yong-beom (Blue House Policy Secretary). “There are remarks questioning whether Kim Yong-beom is stepping too far ahead of other state councilors,” it criticized, adding, “As a bureaucrat-turned-policy chief, he should balance the ‘Lee Jae-myung-style economic policies’ to prevent lopsidedness, but instead, he’s accelerating recklessly and fueling market chaos.”
• Many analyses suggest the Samsung Electronics+SK Hynix leveraged ETF was also created under Kim Yong-beom’s directive.
• Regarding Kim’s remark—“Since this is a newly introduced system, I assume any necessary adjustments would be decided at market situation review meetings”—the paper criticized, “It’s as if he’s shifting blame and responsibility to relevant ministries, speaking as though it’s someone else’s problem.”
• The Samsung+SK Hynix leveraged fund grew to 14 trillion won in scale within a month of listing. Critics argue it exacerbates Kospi volatility. Ahn Cheol-soo (People Power Party MP) claimed, “The Kospi has turned into a casino,” and demanded delisting. The Financial Services Commission is reviewing a plan to raise the minimum deposit from 10 million won to 50 million won.
• Related Link.
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Hynix’s Exchange Rate Salvation? Concerns of a ‘Reverse Kimchi Premium’.

• SK Hynix is also being analyzed as a potential savior for the exchange rate. With $26.5 billion expected to be deposited, there are forecasts that it will be converted in $1 billion daily installments. The won-dollar exchange rate falling below 1,500 won is partly a reflection of these supply expectations.
• The $26.5 billion exceeds the $19.9 billion brought in by the 2020 Bank of Korea–Fed currency swap.
• While the prices of Korean-listed shares and Nasdaq ADS (depositary shares) should theoretically converge, foreign investors may continue selling Korean-listed shares to switch to ADS for some time. The term “reverse Kimchi premium” is emerging. The dominant view is that, in the long term, improved investment accessibility could lead to a revaluation of Korean-listed shares.
• Related Link.
• Related Link.

Leveraged ETFs: The Tail Wagging the Dog.

• Samsung Electronics+SK Hynix leveraged ETFs, which double-track the two stocks, sucked in 212 trillion won last month. The scale was so large that rebalancing caused excessive volatility. When indices plummeted, reverse trading occurred, and liquidation volumes dragged down stock prices in a vicious cycle.
• Samsung Electronics and SK Hynix fell 11% and 18% in a week, while their leveraged ETFs crashed 24–26% and 38–39%. This is the negative compounding effect: repeated fluctuations erode leveraged investors’ principal even if the underlying asset remains flat. Higher volatility amplifies losses.
• Nikkei forecasted, “Post-listing, SK Hynix could directly shake U.S. markets.” Korean volatility might spill over to America. While Kospi has been criticized as a casino, Nasdaq could now join the Squid Game.

One Year of the Commercial Act Revision.

• Chosun Ilbo pointed out, “One in five listed companies has reportedly delayed major business decisions such as investments or mergers and acquisitions.”
• Regarding the same Korea Chamber of Commerce and Industry survey, Kyunghyang Shinmun emphasized positive changes, stating, “84.3% of responding companies answered, ‘Our board operations have changed since the Commercial Act revision.’”
• Related Link.
• Related Link.

Will the Three Mega Projects Warm the Cold Shoulder?

• “It’s a synthesis of Park Chung-hee’s challenge, Kim Dae-jung’s foresight in ushering the information age, Roh Moo-hyun’s balanced regional development, and Moon Jae-in’s energy transition—the three mega projects.”
• Kang Hoon-sik (Chief of Staff to the President) said, “We expect the three mega projects to have the effect of warming the cold shoulder.”
• While the statement claims, “We will achieve the best possible outcomes from these investments within the shortest administrative timeframe, within this term,” it notably avoids concrete measures to address polarization. Given widespread concerns that K-shaped growth will accelerate inequality, this response feels out of touch.
• Related Link.

Kim Sung-tae’s North Korea Remittance Case Reversed to Trial Court.

• It is unusual for an appellate court to overturn and remand a first-instance ruling.
• Kim Sung-tae (former Ssangbangwool chairman) was sentenced to 2 years and 6 months in prison in the first trial for allegedly transferring $8 million, including $3 million for Lee Jae-myung’s (then Gyeonggi governor) North Korea visit. The appeal is ongoing.
• Separate from the Foreign Exchange Transactions Act violation charges, a bribery trial is also in progress. The first trial dismissed the indictment citing double jeopardy, while the appellate court ruled it constitutes a substantive concurrent crime.
• The trials of Lee Jae-myung (president) and Lee Hwa-young (former Gyeonggi vice governor for peace) could be affected. Lee Hwa-young is serving a confirmed 7 years and 8 months for Foreign Exchange Transactions Act violations.
• Park Sang-yong (former deputy chief prosecutor at Incheon District Prosecutors’ Office), who investigated the North Korea remittance case, posted on Facebook: “It’s a relief that the trial is proceeding properly.”
• Related Link.

The Fix.

Industrial Accidents Among Delivery Workers Triple.

• Cases rose from 561 in 2021 to 1,516 last year.
• Deaths are also increasing. Officially recognized industrial death cases totaled 55 over five years. This year, seven have occurred through June.
• Related Link.

57% of Working Women Experience Career Interruption.

• It took an average of 7.5 years to re-enter the workforce. Even when rehired, wages are cut to 80% of previous levels.
• Koo Hye-young (Kyunghyang Shinmun columnist) pointed out, “As long as career-holding women must endure childcare isolation to create career gaps, and their monthly pay’s leading digit changes after childbirth, any low-birthrate policy will remain meaningless.”
• Related Link.

ICYMI.

Is Hong Myung-bo a Monster? The Limits of Elite Sports That Can’t Handle Criticism.

• The coach isn’t the only problem—players were also extremely complacent. There are also critiques that the issue shouldn’t be reduced to personal responsibility of Hong Myung-bo (national team coach).
• Kim Se-hoon (Kyunghyang Shinmun sports editor) noted, “After winning the first match against the Czech Republic, players became very complacent and reportedly didn’t train properly,” adding, “Lee Kang-in was surrounded by opponents with the ball, yet none of our players ran to support him.” This isn’t a problem solved by Hong Myung-bo kneeling in apology.
• Kim Hyun-hee (former Jeju SKFC director) emphasized, “Football is a sport of mistakes,” and stressed, “The sport can only grow if there’s an environment where mistakes can be discussed.”
• “If a coach points out their own mistakes, they take it as disrespect. How can tactics be discussed in such an environment? When coaches face criticism, they scurry to agents, journalists, or YouTubers. Fans start attacking the coach. An ‘egotistical alliance’ forms, leading to attempts to fire the coach, and eventually the system collapses.”
• There were also critiques that the problem starts with the youth system. The entrenched power-business nexus between coaches, agents, and parents must be dismantled.
• Related Link.

Do They Do This in the Netherlands, Too?

• “There are cases where model global companies, for some reason only in South Korea, engage in anti-labor and opaque management practices that draw public disapproval.”
• This was Lee Jae-myung’s (former Gyeonggi governor) comment while sharing an article on X that read, “IKEA Korea allegedly pressured an employee who returned from parental leave to resign voluntarily.”
• Related Link.
• Related Link.

Worth Reading.

We Must Precisely Define the Limits of Freedom.

• While “Let’s go to Starbucks” is clearly wrong, Lee Joon-ung (Seoul National University professor) noted, “We must remember that we have never reached a consensus on the limits of this kind of freedom.”
• “Restricting specific speech in the public sphere based on its content actually hinders the policy process where the public agenda is set, alternatives are prepared, and citizens’ consent is sought. The argument that mockery, contempt, hatred, and discrimination should be uniformly regulated cannot itself be a coherent argument and is dangerous because it shrinks the boundaries of rational debate in the public sphere.”
• Related Link.

1.35 Million Units: Even Groundbreaking by 2030 Seems Unattainable.

• Kwon Dae-jung (Hansung University professor) pointed out, “Obsessed with long-term measures, we’re missing short-term solutions that could be implemented immediately.”
• The argument is to increase supply in non-apartment sectors—multi-family housing, row houses, and officetels—and accommodate small-scale landlords.
• “This year, only 17,000 apartment units will be available for move-in in Seoul, dropping to 13,000 next year. Last year, 49,000 newlywed couples were formed in Seoul alone. There’s no immediate housing solution for these couples. Separate short-term housing supply measures are essential.”
• Related Link.

Gender Voting Gaps Are Not a Simple Matter.

• In Germany, too, young women have been observed supporting left-wing parties while men coalesce around the far-right spectrum.
• Hannes Mosler (professor at the University of Duisburg-Essen) noted, “The threat this cleavage poses to democracy is not trivial,” adding, “Once gender becomes one of the strongest predictors of worldview, the very foundation of democracy—compromise—collapses.”
• “If these gaps do not fade with life stages but instead harden as generational imprints, the divide will seep beyond youth to middle-aged voters, becoming a structural constant that fractures the entire electorate, growing uncontrollably in scale.”
• “The real question the gender voting gap raises is not about young voters’ preferences. In a society where gender-divided voters have lost even the language to persuade one another, what will sustain the democracy inherited by the next generation?”
• Related Link.