Government to impose stricter regulations on single-stock leverage products
The government is set to strengthen regulations on single-stock leverage products, which have been identified as a cause of the recent stock market decline. Measures will include setting individual investment limits to prevent excessive concentration of funds in specific products, as well as imposing transaction costs and mandating simulated trading to curb excessive trading activity.
Deputy Prime Minister and Minister of Economy and Finance Ku Yun-cheol convened an emergency market situation assessment meeting on July 29 at the Government Seoul Building, attended by Bank of Korea Governor Lee Hyun-sung, Financial Services Commission Chairman Lee Ok-won, Financial Supervisory Service Chairman Lee Chan-jin, and Chief Economic Growth Officer Ha Jun-kyung, to discuss recent trends in domestic and international financial markets and response strategies.
Participants in the meeting assessed that the recent stock market decline was significantly influenced by intensified competition in memory semiconductors from China and concerns over funding for major U.S. tech companies. They noted that the adjustment following previous rapid increases, along with weakened investor sentiment and supply-demand instability, contributed to the market's downturn.
However, they clarified that this decline does not stem from a deterioration in the fundamental strength of the economy. They emphasized that strong export performance in key sectors like semiconductors continues, the earnings outlook for KOSPI-listed companies has been revised upward, and the current account surplus is expanding, warning against excessive panic.
The government will maintain a high level of vigilance and activate a 24-hour monitoring system in collaboration with relevant agencies. In particular, they will implement additional measures immediately, as they believe the concentration of funds in single-stock leverage products is exacerbating market volatility.
To manage the investment scale in single-stock leverage products, the government plans to set individual investment limits, proposing a cap of 20% of an individual's total investment amount for these products. They are also considering applying the excessive bid burden currently in place in the futures market to single-stock leverage products to curb excessive trading behavior.
Korean firms push for joint development of next-generation aircraft
Domestic companies are moving beyond supplying aircraft parts to participate in the joint development of next-generation civil aircraft. Hyundai Motor Group plans to expand its collaboration into eco-friendly energy sectors, including hydrogen and small modular reactors (SMRs), based on local production capabilities.
During a Korea-Brazil business roundtable held in São Paulo on July 28, seven memorandums of understanding (MOUs) were signed in areas such as aerospace, critical minerals, and AI healthcare.
The most notable area of focus is next-generation civil aircraft. Brazilian company Embraer is considering expanding its business from existing 70-120 seat regional aircraft to 150-200 seat mid-sized aircraft. Korea Aerospace Industries (KAI) and Korean Air are discussing the possibility of joint development with Embraer through separate negotiations.
KAI has also signed an MOU with Embraer for cooperation in the civil aircraft and aerospace sectors. KAI currently supplies wing structures for civil aircraft and electric vertical takeoff and landing (eVTOL) structures, while Korean Air provides aircraft fuselages and components. Both companies plan to expand their roles beyond parts supply to participate from the design and development stages.
Ruling party advances bill to abolish supplementary investigative powers
On July 29, the National Assembly's Legislation and Judiciary Committee and the Operations Committee approved a bill to abolish supplementary investigative powers as part of amendments to the Criminal Procedure Act, along with a bill to shorten the fast-track period. As a result, these bills are set to be presented and processed at the plenary session scheduled for July 30, prompting the ruling People Power Party to plan to block them through unlimited debate (filibuster).
The Legislation and Judiciary Committee and the Operations Committee held full meetings on the morning of the same day to begin reviewing the bills and voted on the amendments.
Initially, the Criminal Procedure Act amendment was to be submitted to the plenary session through the full meeting of the Legislation and Judiciary Committee. However, members from the People Power Party protested against the Democratic Party's push and referred the matter to the agenda coordination committee.
After passing through the agenda coordination committee, the Criminal Procedure Act amendment is now set to be presented to the full meeting of the Legislation and Judiciary Committee, led by the Democratic Party, ahead of a vote in the plenary session.
'Black Wednesday' reality as semiconductor stocks plummet despite record earnings
Following 'Black Tuesday,' 'Black Wednesday' has become a reality. Despite SK Hynix announcing record earnings, it was insufficient to revive investor sentiment. A sharp decline in U.S. semiconductor stocks and disappointing earnings expectations led to a widespread sell-off in domestic semiconductor stocks, causing both the KOSPI and KOSDAQ indices to drop more than 10% during trading.
According to the Korea Exchange on July 29, the KOSPI closed at 5,663.24, down 360.42 points (5.98%) from the previous trading day. The index started at 6,089.11, up 65.45 points (1.09%), but quickly reversed its gains and fell sharply. The KOSDAQ index also opened at 713.71, up 7.86 points (1.11%), but soon turned downward, closing at 662.68.
As the decline continued, the KOSPI market triggered its 15th and 9th first-stage circuit breaker of the year. The KOSDAQ market also activated its 14th and 4th first-stage circuit breaker of the year. This marked the first time both markets experienced simultaneous circuit breakers for two consecutive days.
Earlier that day, SK Hynix reported a consolidated revenue of 79.3187 trillion won and an operating profit of 60.5426 trillion won for the second quarter of this year. Despite achieving record earnings, the results slightly fell short of market expectations, failing to revive frozen investor sentiment. Consequently, SK Hynix's stock price plummeted by 9.61%, while Samsung Electronics also fell by 5.23%, leading to a broad sell-off in major semiconductor stocks.
Bill Gates plans visit to South Korea next month for AI and nuclear collaboration talks
Bill Gates, co-founder of Microsoft, is expected to visit South Korea as early as next month. If the visit occurs, discussions on collaboration in future industries, including artificial intelligence (AI) and next-generation nuclear power, are likely to be key agenda items.
According to the information and communication technology (ICT) industry on July 29, Gates' representatives have recently communicated with Prime Minister Han Seung-soo's office to arrange a meeting and coordinate the schedule and agenda. Specific details regarding the visit and meetings have yet to be confirmed.
During his previous visit to South Korea last year, Gates met with government officials and business leaders to discuss potential collaborations in AI and small modular reactors (SMRs). He engaged in discussions with prominent figures such as SK Group Chairman Chey Tae-won, HD Hyundai Chairman Chung Ki-sun, and Samsung Electronics Chairman Lee Jae-yong regarding cooperation in nuclear power, biotechnology, and AI.
If this visit materializes, it is expected to revisit discussions on advanced industry collaborations initiated last year.
* This article has been translated by AI.
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