Alex Jenson 0:08
You’re listening to koreabizcast with the KBLA. I’m your host, Alex Jensen on this Monday, March 28. And we’re approaching a major North Korean anniversary in the next month. Although the North didn’t seem to wait that long before showing off some of its most impressive missiles recently, including the big one, the Hwasong 17 Monster Missile as it’s been nicknamed, an ICBM test then carried out by the North for the first time since 2017. And even though of course, the big consideration for this is the area of security. Whenever there’s anything like this in this part of the world, it naturally filters out into a variety of areas. We could even stretch the area of security to the subject of moving the presidential office to Yongsan as the incoming administration plans to do. So, on this general theme. Let’s bring in our special issues reporter Kyungmi Choi. Thank you very much.

Kyungmi Choi 1:06
Thank you for having me, Alex.

Alex Jenson 1:08
So let’s kick things off with that latest missile test from the North. It was an ICBM and intercontinental ballistic missile, pour fish and the ISI. They’re constantly being bombarded with missiles, it seems. But this is extra significant, despite a dozen launches this year because it was an ICBM,

Kyungmi Choi 1:29
Right, and it was also conducted just four days after the North fired for artillery shots into the LOC from its south Pyungan province, and Seoul’s Joint Chiefs of Staff says that the launch was detected from the Sunhan airfield and Pyungyang at 2:34pm on Thursday, and the missile flew some 1080 kilometers with a maximum altitude of over 6200 kilometers. And it lasted for about 70 minutes before landing and waters off of Japan. And in response at 4:25pm Sould’s military conducted a joint live fire exercise near the EC as well. This was in a demonstration of the south of firepower and combat readiness, and the military here had mobilized key missiles in a similar move back in September and November of 2017 of just a few months into President Moon Jaein’s term, and the military has also heightened its surveillance and readiness in case of additional provocations. And the Joint Chiefs of Staff strongly condemned the launch, saying Pyungyang should immediately halt its destabilizing actions. And according to Korean and Japanese military officials, the missile is estimated to reach 15,000 kilometers when fire at a normal trajectory. And this means that the entire US mainland can be reached within target distance of a missile carrying a nuclear warhead. And this also comes just a couple of months after Pyungyang threatened to lift its voluntary moratorium on nuclear tests and ICBM launches. All this was made in April 2018. It raised the possibility that the North could launch further provocations going forward. And North Korea announced early next day on Friday that its leader Kim Jong Un order the launch of this new ICBM, Hwasong 17. He also stated that he would thoroughly prepare for the long term confrontation with the US.

Alex Jenson 3:15
Yeah, really interesting. They didn’t try to hide behind space technology, trying to claim that this was something related to launching a satellite. This was totally aimed at the United States, and it was apparently a defensive move in terms of building a nuclear deterrence. You might though, from a business perspective, have expected the markets here in South Korea at least to become a bit twitchy, but actually, they seem to have been rather desensitized.

Kyungmi Choi 3:44
Right, so it seems like the launch had limited impact on the stock market. The day after the launch on Friday, the local market closed almost flat, and the benchmark KOSPI closed at 2729 Point 98 points after rising by 0.32 point or 0.01%. And this was up by 0.85% from a week ago, and trading volume was moderate at about 590 million shares worth some 10 point 7 trillion won, or around 8.8 billion US dollars on losers, outnumbered gainers, 503 to 343. And institutions sold on net was 103 billion won. Foreigners sold 553 billion won while individual investors bought 670 billion won and the Korean one closed at 1,218.8 against the dollar, which was the same level as the previous sessions close.

Alex Jenson 4:41
You know, some people might say look, we’re so used to this. Now of course, there’s not going to be a huge impact but just playing devil’s advocate let’s remember back in 2017, the last time North Korea filed an ICBM. That year, there was so much tension around it and around other comments by then US President Donald Trump, and still North Korean leader Kim Jong Un and that they were actually starting to plan the evacuation of foreigners from this peninsula. And there was all sorts of discussion about war and it was starting to get very tense. But the fundamentals are that a lot of this is about mood. And that seems to be based on what some of the analysts are saying in the short term anyway, can you take us through some of their comments?

Kyungmi Choi 5:25
Right, so chief of Samsung security’s global investment strategy team. You Seungmin, he stated that unlike Russia’s invasion of Ukraine, the North provocations don’t trigger instability in prices of major raw materials. So it has limited impact in the short term. But he did say that it’s necessary to continue monitoring the impact of continued geopolitical uncertainties on the market. And he added that prior to 2017, the global financial market actually evaluated the instability on the Korean peninsula as a regional issue and didn’t show much reaction to it. And you pointed out that there was even a tendency of the local and the global market overlooking North Korean issues, as they have been ongoing for years. But then, as you pointed out, following the inauguration of former US President Donald Trump and Washington and Pyongyang, all continuing to exchange provocative words, along with the North on nuclear and missile capabilities developing to a threatening level, North Korea emerged as a variable in the global financial market. And he also said that the current situation is actually more complicated politically compared to 2017. And that, with the US China Strategic competition intensifying and Russia also challenging the US led unipolar world, China and Russia may not take part in sanctions against North Korea. And Analysts also say that the selling spree by foreign investors can be explained by the won to dollar exchange rate staying in the 1200 won range, despite some favorable factors such as the US announcing solid economic indicators and some progress in talks or at least hopes of progress and talks between Russia and Ukraine on a potential ceasefire. Meanwhile, stock prices of Korea’s defense industry businesses showed mixed reactions to North on missile launch as well. So for example, the aerospace and defense company first tech and Hanhwa aerospace it rose by 1.57 and 2.02%. While electronic warfare system company, Vic tech and Hanil forging industries, which manufacturers guided missile components. They each dropped by 3.27 and 3.23%. All this is another indicator that the North’s latest missile launch had a limited impact on the market. And the secondary Kosdaq rose by 0.32% to close at 934.69 on Friday.

Alex Jenson 7:46
He talked about the changing landscape and keeping an eye on geopolitical uncertainties. We obviously have a president about to take office in May here in South Korea, who already as President Elect has been warning North Korea that it’s going to gain nothing from these provocations has been talking about building up South Korea’s security through essentially focusing on military deterrence, same kind of strategy as North Korea, although very different context, of course, especially very different level of endorsement by the UN Security Council. But But this all threatens to potentially drive up tensions. And then on top of that, we got this climate in Korean politics where there are great concerns about security being raised by current president Moon Jae In about his successes plan to move the presidential office. And apparently, during government transitions even at the best of times, that’s when we’re most vulnerable, not just a physical attack, potentially, but also to things like cybersecurity weakness. So tell us a bit more about this plan to move the presidential office for anyone who needs to catch up on that.

Kyungmi Choi 8:56
Right, oo President Elect Yoon Sukyeol recently unveiled his plan to move the presidential office from the current tomada compound to what is currently the Defense Ministry building in Yongsan, which is several kilometers away. And all this would be after his inauguration on May 10th. And he said that Cheongwadae symbolizes imperial power, and that he wants to move out of it to be closer to the people. And he would also open Cheongwadae fully to the public after this move. And the defense ministry would move into the Joint Chief of Staff building in the same young compound, and Yun seems adamant about not starting his term in the current Cheongwadae area. He said that if the plan to move his office to Yongsan doesn’t materialize. He would stay in his current office for his transition committee into new groups or districts to meeting when he begins his term on May 10. And he said that this was to keep the pledge of opening up the presidential office to the public

Alex Jenson 9:49
Tell you what, I mean, this is a challenging time President Moon himself had wanted to be the president of the people based in one moon that has not materialize during the course of his administration, I can tell you that. As a reporter when I’ve tried to do some media work outside of the compound, nothing that you would think would be too much of a security threat. The amount of attention you get from guards and police around there is intense. What I’m really trying to say is that anywhere where Yoon goes, it’s gonna require a massive security consideration anyway, just for the possible unknowns. That’s some of the context of the background here, especially on the Moon front he’s not against In other words, the idea in principle of moving the office. What is his current stance, or at least his office’s current comments on this?

Kyungmi Choi 10:40
So a day after Yoon unveiled his plan and President Moon held a National Security Council meeting where this issue was discussed, and following the session, or Senior Presidential Secretary for Public Communication Park Suhyun mentioned that President Moon himself had pledged to open an arrow of the presidential office in the Gwanghwamun area, and that he does agree with Yoon’s intention to return the top office to the people. But he said that with little time left until the new government’s inauguration, it seems unreasonable to relocate the Defense Ministry into the Joint Chiefs of Staff building and also move the offices of the president, secretaries and Presidential Security Service. And he also stated that it’d be more reasonable to push forward with this plan, with more time when all parties involved are ready, unless there’s a reason to urgently implement the plan. And as you mentioned, the top office at the time of government transitions are most vulnerable to a so called security vacuum, especially with former North Korean leader Kim Il Sung’s birthday and the South Korea US Joint Military training coming up next month. And it expressed concerns that the sudden relocation of the defense ministry, the GCS and the presidential office, this crisis management center could also cause confusion. And Yoon wanted to use a 49.6 billion won of the government’s reserve funds to implement his relocation plan, but he needs the cabinet’s approval in order to use the funds. And as things stand now it seems highly unlikely that it would be granted.

Alex Jenson 12:07
So while the outgoing and incoming governments are not exactly on the same page, the announcement has already had an impact away from security on the real estate market in Yongsan.

Kyungmi Choi 12:19
Right, so according to the local media, realtors in Youngstown have already seen an increase in the number of inquiries asking whether there are any properties in the area for urgent sale, as well as regarding redevelopment and investment in small buildings. And people who have put up their properties for sale are retrieving their offers so they can further watch the situation. And apartment prices and young Tom rose the most in Seoul by all 0.15% last week after Yoon made this announcement. This was compared to a week earlier. And according to a housing information provider real estate 114. And it was notable as overall apartment prices in Seoul remained at the same level as a whole and real estate 114 says that some homeowners are retrieving their sale offers and prices are rising in some parts of Seoul due to the expectation surrounding the incoming government’s deregulation, but that it’s not enough to lead to substantial rise in Seoul and the surrounding areas immediately. And it also expects the prolonged slump in transactions to continue affecting the market for at least a few months, as consumers watch the developments surrounding how the new government implements its pledges, including the easing of regulation on mortgage loans. Meanwhile, according to the Korea Real Estate Board, the index for trading of apartments in Seoul last week came to 87.8 showing a slight increase for three consecutive weeks. This was up by 0.3 points from a week earlier. And the index reading below 100 means that home sellers outnumber home buyers. And the index rose at 99.1 during the first week of December, and fell to 86.8 at the end of February and has been showing an upward trend in recent weeks.

Alex Jenson 14:00
But how are young San residents responding I’m actually a Yongsan resident, but I’m a renter. And I feel like already in the last few years we’ve gone through a seriously tough time as renters in well, probably a lot of areas have sold but I can speak for Yongsan because landlords have pushed up rents so significantly, and in some cases have forced people to leave their homes and find somewhere else and when you got a big family downsizing is quite challenging.

Kyungmi Choi 14:29
Right so for now, it seems like they’re showing mixed reactions or some are raising concerns that moving the presidential office to the area would mean additional regulations, which would delay the areas redevelopment plans. Some possible regulations include limiting the type of buildings near the top office, which would affect the redevelopment and reconstruction in the Yongsan area near Hangang River, as well as the establishment of an international business district and Yongsan that’s being pushed forward right now. But in a meeting with Seoul mayor, Oh Sehun, reportedly said that he has no plans to impose additional regulations. And because Yongsan has already been developed with the intention of protecting military facilities, the top offices move wouldn’t require additional legal red tape. And residents welcome this news some saying that there are still concerns that further regulations could be imposed in the future, even if they’re not put into place immediately. For example, allowing the construction of high rise buildings near the top office would expose the office to civilians. So not imposing such regulation is unrealistic in the end, and some also raised concerns that the move would lead to traffic congestion in the area.

Alex Jenson 15:38
Yeah, traffic congestion, certainly an issue, Kyungmi, something that’s already a bit of a problem for us Yongsan residents at times it it gets really bad, but let’s remind ourselves of other considerations as well. It wasn’t that long ago, talking big picture. 1968 The Blue House raid. If people are not familiar with this, look it up. There was actually a raid launched by North Korean commandos to assassinate the then president of South Korea Park Chung Hee, and that was at the Blue House. It was just a remarkable act of bold, brazen aggression by the North, although then President Park was not harmed. It’s certainly a reminder that it’s not beyond the realm of consideration that they have to protect the security of this area. On the other hand, maybe have they gone too far with some of the limitations around where the presidential office currently is? And is that really going to be feasible around Yongsan? We’ll pick up this thread again in the future. Kyungmi Choi,t hank you very much.

Kyungmi Choi 16:39
Thank you, Alex. And as ever, if there’s any particularly special issue that you want to have a look at, ask Kyungmi to get on the case for you. Send us a message through LinkedIn, search KBLA or email info@kbla.net and see you again tomorrow.