Bills that would "benefit" the economy are blocked, while only bills that would "poison" it pass... A contrarian National Assembly. The Democratic Party, leveraging its majority over the minority ruling party, pushed through the Yellow Envelope Act following the Grain Management Act. Government proposals such as corporate tax cuts and a deferral of the financial investment income tax were not even discussed. With the ruling and opposition parties letting go of compromise, only bills the government opposed pile up on President Yoon's desk.
A generational showdown of a minority ruling party and majority opposition... the gap is wide and cooperative governance is far off. The Yellow Envelope Act and an expansion of the basic pension were "pushed through," while a corporate tax rate cut and a deferral of the financial investment income tax were "opposed." Government policy tasks face a string of risks of running aground. The deadline for the budget and bills is December 2. The party leaders have not met to discuss even once. The People Power Party has no sharp negotiating strategy, while the Democratic Party is absorbed in obstructing state affairs. The Democratic Party opposes the core contents of the Yoon Seok-yeol government's tax law revision, including a corporate tax rate cut, a lowering of the comprehensive real estate tax threshold, a deferral of introducing the financial investment income tax, and an expansion of the family business inheritance deduction. Mortgage loan rates heading to 9% a year.
October COFIX at 3.98%, an all-time high. From the 16th, the variable mortgage rates and jeonse loan rates of banks including KB, Woori, and Nonghyup rose 0.58%. Yoon, who met Xi Jinping, said "I expect a constructive role from China on North Korea's nukes." A Korea-China summit after three years. Yoon: "Let us cooperate for a mature relationship." Xi: "Supply chain stability must be guaranteed." [Exclusive] "Let's ride the NEOM City wave"... a 8.5 trillion won gift bundle for bin Salman. Five companies including Samsung C&T to invest 8.5 trillion won in NEOM City. Bin Salman visits Korea; MOU signed on the 17th. Building a green hydrogen plant in Saudi Arabia. Aramco: "We will export blue hydrogen to Korea and Japan." On the 17th, a domestic consortium consisting of Samsung C&T, POSCO, KEPCO, Korea Southern Power, and Korea National Oil Corporation signed a memorandum of understanding (MOU) with Saudi Arabia's sovereign wealth fund (PIF) for a "green hydrogen plant construction project" worth 6.5 billion dollars.
--> Let's look at NEOM City-related stocks.
Out of fear that "if you can't buy now, you'll never buy"... "leveraging to the hilt" at the housing price peak. Last year 1.03 million people without homes bought, while multiple-home owners sold. The first time it surpassed 1 million a year since tallying began in 2017. Holders under age 30 rose 10%. Mortgage rates exceed 8% a year, and the "leveraged-to-the-hilt crowd" took a direct hit from falling home prices. Multiple-home owners declined for the first time, down 47,000. National home prices plunge to a financial-crisis level... the largest drop in 19 years. In October, Seoul apartment prices fell 1.24%. For Seoul, it was the largest monthly drop since the 2008 financial crisis. Songpa-gu fell 2.0% from the previous month, the largest drop among Seoul's 25 districts. The drops in Nowon-gu (-1.83%) and Dobong-gu (-1.81%), where the "leveraged-to-the-hilt crowd's" buying had concentrated, also stood out.
An analysis that the buying contraction driven by rate hikes hit the real estate market more strongly than during the global financial crisis. World population surpasses 8 billion... "9 billion in 15 years." An increase of 1 billion in 11 years. Likely to exceed 10 billion in 2058. Korea to shrink to 43.6 million. Advances in the health sector that extended life expectancy and dramatically lowered maternal and child mortality. Going from 7 billion to 8 billion took about 11 years. The point when it grows by another 1 billion to 9 billion is forecast at 2037, 15 years away. East Asia and Southeast Asia account for 2.3 billion, 29% of the world population. By country, China and India each have 1.4 billion, the most. India is expected to overtake China in 2023 to become the most populous country. UK: "Resolve the monopoly"... the Korean Air-Asiana merger hits "turbulence." The UK competition authority defers the merger review. UK: "Concerns over price hikes and service decline." Approvals remain in major countries including the US, EU, and Japan. Heightened interest in whether it will affect the review. Korean Air: "We will submit corrective measures soon." "A yield as high as the 9% range"... stocks worth holding when a cold wind blows?
DGB, JB, Woori Financial Group, and others have expected dividend yields exceeding 9%. Hyosung and S-Oil are also in the 7-8% range. Experts: "True dividend stocks require improved earnings." Bank stocks "recommended" amid the high-rate trend. The stock with the highest dividend yield was DGB Financial Group at 9.33%. It was followed by JB Financial Group at 9.31%, Woori Financial Group at 9.06%, and BNK Financial Group at 9.0%, with bank stocks broadly showing strength. Industrial Bank of Korea (7.89%) and Hana Financial Group (7.74%) also had high dividend yields. Among non-bank stocks, Hyosung was highest at 8.57%. It was followed by S-Oil (7.49%), Samsung Card (7.46%), Ssangyong C&E (7.15%), LX International (7.00%), and SK Telecom (6.79%). SAMG Entertainment, ahead of its listing: "We will become Asia's largest kids platform." CEO Kim Su-hoon stated at an IPO briefing. "Single-minded" for the 37th trading day in a row... Jeisys Medical, picked by foreigners. 3.2 trillion won is carved out from grants used only by elementary, middle, and high schools to give breathing room to "fiscally strapped" universities.
A new special account of 11.2 trillion won established.
Even as the school-age population shrinks, grants increase. Increasing financial support for universities in crisis from frozen tuition and others to strengthen competitiveness. How the government supports universities: general financial support doubled to 1.9 trillion won. Investment in self-driven innovation such as utilizing labor costs. An additional 1.1 trillion won for regional universities facing extinction. "Education regresses" vs "university finances stabilize"... the education world split in two. Education superintendents of six cities and provinces strongly oppose. Cho Hee-yeon: "If soldiers decrease, do we cut the defense budget?" KCUE: "University investment should be expanded further." Even the Fed's number two supports the "pace-adjustment theory" on rate hikes. Likely to raise by 0.5 percentage point in December. October producer prices came in below expectations. "Cumulative tightening effects will appear. Personal consumption expenditure is also expected to slow." Recent remarks by regional Fed bank presidents lend support. The possibility of an early rate cut is dismissed. Inflation expectations rise further. Import prices soar amid the weak yen... Japan posts "negative growth" for the first time in four quarters. Third-quarter GDP growth rate -1.2%. The yen's fall increases corporate burden. With entry restrictions lifted, a fourth-quarter rebound is expected. With the year-end shopping season around the corner... Amazon cuts 10,000 jobs, "the largest ever." Fourth-quarter earnings are forecast to be weak as consumption declines. Bezos: "We must prepare for a recession." He said "the global economy is slowing" and that "we will slow the pace of hiring."
Osstem Implant: "Next year's China sales will surpass Korea's." Interview with CEO Eom Tae-gwan; last year's local sales of 225.4 billion won, ranked first. China accounts for 27% of total sales. "We will concentrate on attacking the public dental market." With a 500 million won mortgage costing 3 million won a month in interest alone... the "leveraged-to-the-hilt crowd" pushed to the edge of a cliff. Mortgage rates heading to 9% a year. October COFIX at 3.98%, an all-time high. COFIX at 3.98%... reflected in variable rates and jeonse loans from the 16th. SC First Bank and Citibank post "strong results" with increased interest income. Third-quarter net profit rose 34% and 58% respectively. "The world would be in trouble without 'this company'"... even Warren Buffett invested 5 trillion won.
Has the chip stock bottomed?... Buffett bought 4.1 billion dollars of TSMC. Looking at Berkshire Hathaway's holdings, it secured a 1.2% stake in TSMC. It appears he judged there is a foundry supply shortage. He bought more Chevron and Occidental. Cumulative stock purchases of 66 billion dollars over three quarters, surging about 13-fold from the same period last year. Estée Lauder nears acquiring Tom Ford for 2.8 billion dollars. The acquisition price dropped to around 200 million dollars lower. A "foothold" for entering the luxury apparel market. The "all-time loser" bitcoin. The ETF "BITO," which tracks futures prices, made its market debut. A 70%-range plunge in a year. A harsh winter from adverse factors such as the FTX bankruptcy. The stock market also feels the Brexit aftershock... London cedes the No. 1 market cap spot to Paris. Global IB CEOs "quietly" scaling back China business. They shouted "business expansion," but as IPOs and others shrank, they cut staff. The "sale price recalculation" dilemma of regional reconstruction. "Let's raise the sale price while we're at it." Daejeon Tanbang 1 and Busan Eomgung 3 districts delay schedules and prepare recalculation. "With market stagnation, fears of unsold units grow, so it's better to proceed quickly," some argue. High sale-price controls were lifted, but a new worry arises. "Reduce the rent" lawsuits surge... industry complaints over "uneven" rulings. Even in the same industry, courts judge differently. Korean Chinese and Koryo-saram can be hired at hotels and golf courses. The government greatly eases work visa restrictions. From this year, the permitted employment sectors for visiting-employment overseas Koreans (H-2 visa holders) [are expanded]. [Editorial] Distributing elementary and secondary grants to universities — can you speak of education reform with such a policy? [Editorial] Calling them "inseparable partners," yet Xi Jinping stays silent on North Korea's nukes. [Editorial] The government took a step toward financial deregulation, but the road to the "global standard" is long.