President’s Party Membership Controversy.

• Lee Jae-myung (President) posted on X: “It’s regrettable that youth candidates are struggling with deposit fees multiplied several times in this party leadership election.” He added, “The party’s finances aren’t in trouble, so why not consider reverting the deposit to previous levels?”
• The party in question is the Democratic Party. Critics flooded in, accusing the president of overstepping by intervening in a specific party’s affairs.
• One comment read: “You seem confused whether you’re president or Democratic Party leader. Park Geun-hye got two years in prison for party interference, and Roh Moo-hyun nearly faced impeachment just for saying, ‘Please look kindly on the Open Uri Party’—even though it wasn’t direct interference. Take heed.”
• Lee shared this comment and countered: “Even presidents have the right to participate like ordinary members in routine party activities.”
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“Not Interfering in Party Affairs.”.

• Cheong Wa Dae issued a press statement: “The president’s X post merely presented a principled opinion on the intent of public election funding and youth political participation.”
• Han Byung-do (Democratic Party floor leader) said, “It’s a basic concern that young politicians should not be hindered by financial burdens.”
• A Democratic Party lawmaker interviewed by Kyunghyang Shinmun remarked, “I thought the president, busy with state affairs, should avoid stirring up unnecessary debates.”
• Related Link.

What Matters Now.

KOSPI 6,516.3.

• It has fallen 28.0% from last month 19th to yesterday—returning to levels seen three months ago.
• Semiconductor sector outlooks have worsened, and the shock of China’s open-source AI, Kimi3, was significant.
• Kim Seok-hwan (Mirae Asset Securities researcher) analyzed, “The market has entered a technical bear phase.”
• “The question in the market has shifted from whether AI demand exists to whether massive AI infrastructure investments can justify future returns,” he added.
• The US stock market also struggled yesterday. The S&P 500, Dow, and Nasdaq indices fell -0.19%, -0.59%, and -0.05%, respectively.
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Bear Market Entry.

• Compared to KOSPI’s all-time high, it has fallen 30.6%, but remains 54.6% higher than year-end 2023 levels.
• Lee Kyung-min (Daishin Securities researcher) stated, “The 12-month forward PER is only 5.81x,” adding, “The market has entered a historic valuation low.”
• In an editorial, JoongAng Ilbo argued, “The government should abandon its all-in policy stance on stock market stimulation.”
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Don’t Invest in Samsung+Kixx ETFs.

• Jae-gyu Bae (CEO of Korea Investment Trust Management) posted and later deleted a Facebook message: “No one could have anticipated such extreme volatility.”
• Leveraged ETFs can double returns in bullish markets but fall into negative compounding traps—eroding principal—when prices swing wildly.
• Seung-jin Shin (Samsung Securities’ head of investment information) cited the market adage: “Bulls make money, bears make money, but pigs (excessive leveragers) get slaughtered.”
• Bloomberg noted, “The most hyped innovation in Korea’s stock market has become a headache for Lee Jae-myung.”
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What China Does Well and What America Does Poorly.

• Silicon Valley’s anxiety stems less from what China excels at than from what America is failing at.
• America excels in three things: First, it builds the most powerful AI systems. Second, it has the most AI data centers. Third, it leads in AI chip development.
• America’s failures are also threefold: First, it spends too much. Second, it prices too high. Third, its government intervenes too aggressively in the market.
• Cade Metz (New York Times columnist) noted, “A ‘good enough’ product can outcompete the ‘best’ if it’s significantly cheaper.”
• Rayan Krishnan (CEO of ValanceAI) remarked, “The most authoritarian government is producing the most egalitarian models, while the government that should be the most democratic is nurturing the most authoritarian enterprises.”
• Moonshot AI’s open-source Kimi3 could be a new game-changer—matching or surpassing top-tier models like Claude or ChatGPT. Shares of Alphabet, Meta, and other AI-related firms have plummeted. Despite distillation controversies, there’s no way to stop it.
• Ion Stoica (UC Berkeley professor) analyzed, “The gap between America’s and China’s top-tier models may have narrowed from 6–9 months to just 2–3 months.”
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Deep Dive.

Filibuster Launched Over Special Prosecutor Extension Bill.

• As the Democratic Party put the special prosecutor bill amendment to a vote, the People Power Party immediately began a filibuster. The bill has already been extended twice.
• A filibuster can be forcibly ended with a two-thirds majority vote after 24 hours.

Filibuster Halt Hinges on New Variable: Cho Kuk Party.

• Park Byung-eon (Cho Kuk Innovation Party spokesperson) said, “It’s somewhat unreasonable to assume the party will automatically cooperate with the Democratic Party as in the past.”
• Ending the filibuster requires 180 seats, but the Democratic Party holds only 161. Without the Cho Kuk Innovation Party’s 12 seats, it’s impossible.
• A key Cho Kuk Innovation Party official met by Chosun Ilbo stated, “We’ll delay the final vote by more than a day to force the Democratic Party to accept our demands.” Chosun Ilbo interpreted this as a declaration: “We won’t play the role of a subservient pro-government party so easily.”
• The Cho Kuk Innovation Party blames the Democratic Party for blocking Cho Kuk (party leader)’s return to Yeouido. Shin Jang-sik (Cho Kuk Innovation Party lawmaker) said, “In the 2028 general election, we’ll field candidates wherever there are people who attacked Moon Jae-in and Cho Kuk with slanderous rhetoric.”
• Related Link.

“Will We Relive the Ming-Qing Wars for the Next Two Years?”.

• The Democratic Party is heating up with its leadership election.
• Kim Min-seok (former Prime Minister) attacked Jeong Cheong-rae (former Democratic Party leader) directly: “A party leader who causes government-party conflict through self-serving politics and factionalism is unacceptable,” adding, “Why does a leader who wielded power through every possible vested interest suddenly act like an underdog?”
• Jeong Cheong-rae countered, “I have never left the Democratic Party since joining it.”
• Ko Min-jung (Democratic Party lawmaker) noted, “A divided politics of finger-pointing—pro-Myung, anti-Myung, pro-Seok, pro-Cheong—cannot open the future.”
• Kim Bo-mi (former Gangjin County Council chair) argued, “The 686 generation should exit gracefully and let the youth lead the Democratic Party.”

Coupang Warehouse Fire Contained After 61 Hours.

• Contained after 61 hours.
• The Incheon logistics center, an 8-story, 300,000-square-meter facility, is the second-largest in Coupang’s network after the Daegu center (330,000 square meters).
• The 2021 Deokpyeong warehouse fire caused ₩340 billion in damage; the Incheon center is more than twice its size.

Another Take.

Trump Is Sinking into a Quagmire.

• He cannot continue the war, nor can he end it.
• Trump’s goals are twofold: first, to reopen the Strait of Hormuz (without tolls), and second, to force Iran to halt its nuclear program. Both aim to restore pre-war conditions—but even these modest objectives now seem nearly impossible.
• As the U.S. depletes its weapons in Iran, China is preparing military action.
• “War with Iran is the biggest crisis the U.S. government faces. But it may also be creating conditions for an even greater crisis,” Gideon Rachman (Financial Times columnist) assessed, “It’s sliding into a quagmire.”
• Erica Solomon (New York Times Iran bureau chief) declared, “The wake-up moment has arrived.” With just three months until the midterm elections, Trump has little time left. Escalating the war here yields nothing.
• Related Link.
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Seoul’s Top 1% Apartments Hit 4.65 Billion Won.

• The average transaction price for the top 1% was 6.31 billion won.
• Gyeonggi Province followed at 1.85 billion, Daegu at 1.58 billion, and Busan at 1.53 billion.
• The top 1% threshold has risen by 1.9 billion won over six years.

Why Was the Meeting on Social Allocation of Excess Profits Canceled?

• An emergency senior secretaries’ meeting was canceled two hours before it was scheduled. Kang Hoon-sik (Chief of Staff to the President) proposed, “Since this is an issue requiring public deliberation, let’s observe discussions between businesses and ministries,” and Lee Jae-myung (President) accepted.
• A Cheong Wa Dae official met by Chosun Ilbo said, “If the Blue House addresses excess profits, every mention could become a guideline.”
• There were also speculations that the cancellation was due to concerns over the KOSPI plunge. A Cheong Wa Dae official stated, “It has nothing to do with the stock market.”
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The Fix.

Long-Term Debt Restructuring Is a Right, Not Populism.

• Kwon Dae-young (Vice Chairman of the Financial Services Commission) said, “Advanced countries do not view debt restructuring or bankruptcy as punishment, but as a legitimate right to escape hardship.”
• In response to criticism that it encourages moral hazard, he countered, “How many people could realistically hide their money, live as credit delinquents, and still be blocked from credit cards, bank accounts, telecom services, and employment?”
• A special provision of the Credit Information Act, allowing access to debtor assets without consent, will take effect in August.
• Related Link.

Bridging the Housing Supply Cliff to Prevent Residential Gaps.

• Housing supply has dropped by nearly 40% over the past three years. In Seoul, it has fallen by more than half.
• Jin Mi-yoon (Myongji University Professor) warned, “Today’s sluggish groundbreakings will return as residential gaps in three or five years.”
• Reduced housing supply shrinks jeonse and monthly rental options for single-person households, youth, and newlyweds, while tripling upward pressure on prices fuels anxiety.
• Jin Mi-yoon emphasized, “What is needed now is not grand supply rhetoric, but resolving bottlenecks that stall groundbreakings, restoring broken supply pipelines, and creating an ecosystem where diverse providers can sustainably deliver housing.”
• Related Link.

ICYMI.

Baekjae High Baseball Team Suspended for One Month.

• Originally suspended for six months over the “Let’s Go to Starbucks” controversy, the penalty was reduced on appeal.
• The team visited Gwangju Il High School to apologize and paid respects at the May 18th Memorial Cemetery.
• Students from Gwangju Il High also requested leniency.

Public Participation Trial Application Rate: 3.6%.

• Judges, prosecutors, and defendants all turn away. Over 18 years, it’s 3.6%—last year, just 0.3%.
• Requirements are strict. Only applicable in criminal conciliation cases if the defendant applies and the court doesn’t exclude it. Many withdraw after applying without full knowledge.
• A Supreme Court Administrative Office study found that handling one public participation trial can increase workload up to eight times compared to regular cases. Kwon Hyuk-geun (Attorney-at-Law) said, “Courts are slow to reflect societal changes” and evaluated it as “a flexible system that compensates for judgments that may diverge from the public’s legal sentiment.”
• Analysis also shows acquittal rates rise in sex crime cases under public participation trials. While the acquittal rate is 3.5% in regular cases, it jumps to 25.5% in public trials. There has also been criticism that public trials lean toward impression-based evaluations.
• Related Link.
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Worth Reading.

Can a Coalition of the Willing Emerge?

• Choi Jae-hyuk (Chosun Ilbo Senior Editor) believes a coalition between Oh Se-hoon (Seoul Mayor), Han Dong-hoon (former People Power Party Leader), and Lee Jun-seok (Reform Party Leader) is still possible.
• “Because the synergy from these three competing yet non-hostile figures could be powerful. They must heed shifts in public sentiment.”

Government Must Be the First Buyer.

• “Growing companies isn’t about subsidies themselves, but the repeatable market formed by that initial investment. Once an initial market exists, companies refine products through customer feedback, attract investment based on sales, and grow on their own.”
• Son Jae-kwon (CEO of The Miilk) argued, “The government must shift from being a ‘money provider’ to a ‘first buyer.’”
• The idea is to set public institution AI procurement targets and become the first customer for domestic startups.
• Related Link.

Climate Taliban? Did Energy and Environment Compromise Convictions?

• Minister of Climate+Energy+Environment Kim Sung-hwan (Minister of Climate+Energy+Environment) has only climate left.
• Before becoming minister, he advocated for nuclear phaseout but reversed course, supporting four new reactors. Han Sam-hee (Chosun Ilbo Columnist) criticized, “This isn’t just a U-turn—it’s a path deviation nearing pro-nuclear.”
• Han also dismissed the 2035 NDC target (53–61% emissions cut) as unrealistic from the start. “Eventually,” he analyzed, “even climate policy will have to adjust to reality.”
• Related Link.

Europe Distancing from the U.S., What Will South Korea Choose?

• NATO seeks to distance itself from the U.S. Mark Carney (Canadian Prime Minister) proposed a middle-power coalition.
• Jeong Ui-gil (Senior Reporter, The Hankyoreh) suggested, “Two approaches must be pursued in parallel.”
• First, hedging to secure strategic autonomy from the U.S. Second, a practical lever to find a foothold for both restraint and cooperation with Russia-China, which are closely aligned with North Korea.
• Related Link.

Nuclear Power is Cheap: A Myth.

• South Korea’s nuclear power budget has tripled from 4.734 trillion won in 2007 to 14.582 trillion won this year. The budget does not account for nuclear waste disposal costs.
• Lee Myung-hee (Kyunghyang Shinmun Columnist) pointed out, “The economic viability of nuclear power must be re-examined from scratch, and the transition to renewable energy should be accelerated.”
• Related Link.

Not to Be Betrayed Again.

• “They are obsessed with fighting over who holds the legitimate claim to power, and are publicly shaming lawmakers who attached their names to other bills while surrounding the prosecution’s supplementary investigation authority. (Omitted) Even as they fragment and engage in vulgar political brawls, they act arrogantly, as if the next administration is already theirs for the taking.”
• Park Rae-gun (Director, Human Rights Foundation People) noted, “This is no different from how the Moon Jae-in administration broke the promises made at the candlelight protests.”
• Park emphasized, “It is time for a radical shift away from growth-centrism,” and stressed, “A resolute rejection of K-shaped growth and a clear vision must be demonstrated.”
• Related Link.