South Korea's National Pension Fund (NPF), whose assets had surpassed KRW 1,900 trillion earlier this year, has seen its value fall to around KRW 1,700 trillion following the recent stock market collapse. As the KOSPI plunged from around 9,000 to the 5,000 range, the fund's market value is estimated to have declined by approximately KRW 200 trillion.

According to investment banking industry sources on July 30, the NPF's assets have recently fallen to around KRW 1,600 trillion. With the KOSPI hovering near the 5,000 level and U.S. equities also weakening, market participants believe the fund could soon fall into the KRW 1,500 trillion range.

The fund had exceeded KRW 1,900 trillion as of early June and was on track to surpass KRW 2,000 trillion. However, the market turmoil this month has erased nearly KRW 200 trillion in value, effectively wiping out a significant portion of the gains accumulated since the beginning of the year. At the end of last year, the fund stood at KRW 1,458 trillion, buoyed by strong gains in large-cap semiconductor stocks such as Samsung Electronics and SK Hynix, as well as export-oriented sectors including power equipment, defense, and shipbuilding.

Earlier this year, the National Pension Fund Management Committee raised the target allocation to domestic equities from 14.9% to 20.8%, reducing exposure to other asset classes such as domestic bonds and overseas equities. As a result, the heightened volatility in the Korean stock market has had a direct impact on the fund's performance. An industry official said that while the higher equity allocation helped boost the fund's value during the market rally, it also caused the fund to move closely in line with the market during the downturn.

The committee decided not to enforce the fund's asset allocation limits during the first half of the year and began applying the increased domestic equity weighting in the second half. The decision, which departed from the medium-term asset allocation framework, drew criticism at the time for being aimed at supporting the stock market. More recently, critics have argued that the fund has nevertheless failed to act as a stabilizing force during the sharp market decline.

Meanwhile, the National Pension Fund reported a preliminary investment return of 26.18% as of the end of May. Strong performance in domestic equities, which had gained 101.13% since the start of the year, was the primary driver of overall returns. As of the end of May, the fund's assets were valued at approximately KRW 1,848 trillion.

The KOSPI closed at 5,663.24 on July 29, down 5.98%, after falling more than 12% intraday. The previous day, the index had already plunged 10.84%. Circuit breakers were triggered on both days, marking the first consecutive trading sessions in Korea's history to see such measures activated.

The Money Everyone Feared Is Gone

Over the past year, one of the biggest concerns in Korea's housing market was the stock market. As the KOSPI climbed toward the 8,000 level, many feared that investors would cash out their stock gains and pour the proceeds into residential property. Seoul apartment prices had risen for 74 consecutive weeks, while Hwaseong's Dongtan district posted a record 6.25% monthly increase. The Bank of Korea's July survey also showed housing price expectations jumping seven points.

That concern has largely disappeared—not because the money moved into real estate, but because much of it vanished.

For stock profits to flow into housing purchases, investors first need to realize their gains. Instead, many continued holding shares in anticipation of further upside, while margin trading also remained elevated, with outstanding margin loans reaching KRW 37.3 trillion at the end of June. Much of the paper profit recorded in brokerage accounts disappeared before it could become down payments on apartments. On July 29 alone, retail investors were net sellers of KRW 2 trillion worth of stocks on the main KOSPI market.

Semiconductor Weakness Spreads Across the Market

The recent market selloff once again underscored how heavily Korea's broader equity market depends on the semiconductor sector. Disappointing market sentiment following Micron's earnings announcement and a sharp decline in the Philadelphia Semiconductor Index weighed heavily on domestic stocks.

SK Hynix fell more than 18% intraday despite reporting record quarterly earnings, as investors focused more on concerns over future industry conditions than current performance. Samsung Electronics also extended its losses as its share price fell below the KRW 200,000 level. The steep decline in semiconductor stocks significantly weakened overall market sentiment, reducing investors' capacity to channel funds into the housing market.

The Market Is Already Pricing It In

Construction stocks were among the hardest hit during the selloff. GS Engineering & Construction plunged 16.27%, nearly three times the KOSPI's overall decline. The sharp drop suggests investors are already pricing in expectations that the housing market will weaken from here.

Many of the real estate statistics currently being cited also reflect conditions before the market crash. KB Real Estate's latest survey is based on data collected through July 13, while the Bank of Korea's housing sentiment survey closed before the stock market rout. Those indicators therefore capture expectations formed during the market rally rather than current conditions. Notably, KB's Seoul Home Price Expectations Index has already turned lower for the first time in three months.

Forced liquidation of leveraged positions could further pressure the housing market. Monthly forced sales of margin-financed stock positions increased from KRW 56.5 billion in January to KRW 393.5 billion in June. Investors forced to raise cash may end up selling presale apartment rights or gap-investment properties that were awaiting final settlement.

A Stabilized Housing Market Comes at a Cost

Taken together, the likelihood of housing prices losing momentum has increased significantly. For prospective homebuyers who have been waiting on the sidelines, this could appear to be the long-awaited turning point.

However, there are two ways housing prices stabilize. One is through increased supply and rising incomes, making homes more affordable over time. The other is through a broad decline in asset prices that leaves fewer people able to buy homes in the first place. The current situation resembles the latter.

A sharp stock market decline makes it harder for companies to raise capital, potentially slowing investment and hiring. As incomes weaken, households lose purchasing power even if home prices fall. A market where prices decline because buyers can no longer afford to purchase homes is not generally considered a healthy form of stabilization.

An end to Seoul's 74-week streak of rising home prices would be welcome—but few would have wished for it to happen under these circumstances.

Lee Jae Myung and his wife, Kim Hye Kyung, have sold their jointly owned apartment in the Yangji Village complex in Bundang, Seongnam, Gyeonggi Province, for KRW 2.9 billion. The transaction was completed ahead of the redevelopment project's expected designation of a project implementer later this month, allowing the buyers to retain cooperative membership rights. The sale drew attention because a KRW 1.77 billion registered mortgage was established during the transaction.

According to the Supreme Court's real estate registry, the apartment was sold on July 14, with ownership transferred on July 16 from Lee and Kim to two buyers, identified only by their surnames Kim and Cho, who each acquired a 50% stake. The registered mortgage, with a maximum secured amount of KRW 1.77 billion, was established by Lee and Kim in favor of the buyers.

A local real estate agent said the arrangement was intended to preserve the buyers' redevelopment rights. Because Kim Hye Kyung acquired the property in 2018, registering ownership after the project implementer designation could have prevented the buyers from receiving redevelopment rights under current regulations. The mortgage was therefore used to facilitate an earlier registration process. The buyers are expected to repay the balance and discharge the mortgage after selling their current apartment later this year.

The arrangement is a form of seller financing that has been used when bank lending conditions are tight. A real estate expert said the seller effectively lends part of the purchase price to the buyer by registering a mortgage and notarizing a loan agreement, noting that the method was widely used after South Korea's December 2019 housing loan restrictions sharply limited mortgage lending.

Lee first listed the apartment for sale in March. At the time, he said the government would use all available policy measures to make selling more attractive than holding homes purchased for investment or speculation, prompting criticism from the opposition. Lee had owned the apartment since 1998.

Kim Young-soo (Naval Academy Class 45, retired major), head of the Public Interest Reporting Center for a Clean Society, held a press conference at the National Assembly on July 6, disclosing what he described as detailed evidence regarding allegations that Defense Minister Ahn Gyu-back deserted his post during his service as a short-term conscript.

Kim previously filed a police complaint against Ahn on June 27 for allegedly violating the Act on Testimony, Appraisal, etc. Before the National Assembly. The case is currently under investigation by Yongsan Police Station.

Ahn Served 22 Months Instead of 14

Ahn, who served as a short-term conscript ("Bangwi"), faced allegations during his confirmation hearing last July after records showed he had served 22 months, despite the mandatory service period at the time being 14 months.

Born in Gochang, North Jeolla Province, Ahn enlisted on November 5, 1983, and served with the Daesan-myeon Company of the Gochang Battalion under the 35th Infantry Division. Under normal circumstances, he should have completed his service on January 4, 1985, but was instead discharged on August 31, 1985—approximately eight months later.

Opposition lawmakers questioned during the confirmation hearing whether the extended service resulted from desertion.

"Deserted for Seven Months With His Commander's Tacit Approval"

At the press conference, Kim asserted that this was not merely a "desertion allegation" but an actual "desertion case."

According to Kim, Ahn unlawfully absented himself without leave for approximately seven months while serving in 1984, allegedly with the tacit approval of his unit commander. Kim claimed that Ahn was later apprehended after the unauthorized absence was discovered, received 30 days of military confinement, and served an additional eight months, consisting of the seven-month absence plus the confinement period.

Kim further alleged that Ahn remained in Seoul during the unauthorized absence while attending Sungkyunkwan University. He claimed that a Deserter Pursuit (DP) team from the military police was dispatched to Seoul, where Ahn was apprehended and escorted back to his unit.

Ahn's Explanation

During his confirmation hearing, Ahn rejected the desertion allegations and described himself as "a victim of military administrative errors."

He stated that he had completed the required 14 months of service normally, but that six months spent enrolled in university after his scheduled discharge, along with the period during which military investigators handled his case, were added to his military record, resulting in a total recorded service period of 22 months.

Opposition lawmakers requested that Ahn submit his military service records—which document enlistment and discharge dates as well as disciplinary actions—to verify the allegations, but Ahn declined to provide them.

Although Ahn argued that his service records were inaccurate, he did not apply to have them officially corrected, despite such procedures being available.

Kim Claims Multiple Records Could Verify the Allegations

Kim said that evidence supporting his claims extends beyond Ahn's military service records and could include:

• Army personnel orders;
• Military police investigation reports;
• Security unit (now the Defense Counterintelligence Command) case reports; and
• Administrative records held by Army Headquarters.

Kim challenged Ahn to file criminal complaints for defamation or false accusation if the allegations were untrue, arguing that Ahn had never directly addressed the claims.

He further stated that allegations of desertion by a sitting defense minister affect the honor and credibility of the South Korean military and argued that Ahn should publicly clarify the matter.

Kim added that if Ahn continues to remain silent, the public may conclude that Kim's allegations are accurate and that Ahn's explanation is false. He again urged Ahn to correct his military records if he was indeed a victim of administrative errors.

Kim described the case as fundamentally involving alleged military service misconduct and argued that someone who deserted should not lead military reform.

Defense Ministry Response

The reporter contacted Ahn's office on June 30 seeking comment regarding the allegations and the criminal complaint but received no response.

The Defense Ministry's spokesperson has maintained the ministry's position that "the minister completed his military service normally," consistent with Ahn's testimony during his confirmation hearing.

Separately, a National Assembly electronic petition calling for Ahn's impeachment as defense minister had received 290,450 signatures as of 8:00 p.m. on July 6.

Kim Young-soo, who filed the complaint against Ahn, received the Order of National Security Merit (Samil Medal) during his naval service for exposing corruption involving military procurement at Gyeryongdae. After retiring from the military, he served for approximately five years as a defense investigator at the Anti-Corruption and Civil Rights Commission and later headed an investigative division of the Presidential Commission on Military Death Investigations. He was also active in investigating allegations surrounding former Justice Minister Choo Mi-ae's son's military leave.

The revised Information and Communications Network Act, dubbed the "Anti-False Information Act" and criticized for potentially infringing on freedom of expression, takes effect on July 7. The law imposes punitive damages on those who intentionally spread false claims or distribute manipulated information. It was passed in December last year under the leadership of the Democratic Party, ostensibly to eradicate so-called "fake news," and enters into force after a six-month grace period. Despite calls from media organizations and civil society groups to revise the law over concerns that it could become a tool for suppressing speech, it is being implemented with few substantive changes.

Few would dispute that deliberately fabricated or manipulated information can threaten democracy and citizens' rights. The concern, however, is that the definitions of "false" and "manipulated" information remain vague, leaving the law open to abuse by whichever administration is in power. Critics point to the previous administration's treatment of critical media as an example of how such powers could be misused. They also note that the organization responsible for determining what constitutes false or manipulated information receives financial and administrative support from the Broadcasting, Media and Communications Commission, raising concerns that its decisions could become politicized. In addition, the law allows platform operators to proactively remove or block reported content, a provision critics argue could have a chilling effect on free expression.

For news organizations, the greatest concern is the potential misuse of punitive damages through strategic lawsuits against public participation (SLAPPs). Politicians, senior government officials, and large corporations could file lawsuits to silence critical reporting. Investigative journalism often relies on limited evidence and source testimony to raise matters of public interest, with inaccuracies sometimes corrected through follow-up reporting and responses from those involved. Critics warn that if plaintiffs can use isolated factual errors to pursue costly lawsuits against entire reports, news outlets may become reluctant to investigate powerful interests. The objective of such lawsuits, they argue, is not necessarily to win in court but to burden journalists with prolonged litigation, legal costs, and the risk of exposing confidential sources. Media and civil society groups had called for limits on who could bring such lawsuits, but those proposals were not reflected in the final legislation.

False and manipulated information can undermine democracy, and the media has an important responsibility to address it. However, critics argue that if efforts to combat misinformation also weaken the press's ability to hold those in power accountable, the long-term cost to democracy could be even greater.

After President Lee Jae Myung announced at the "Three Mega Projects for Korea's Great Leap Forward" public briefing on June 29 that Samsung Electronics and SK Hynix would invest KRW 800 trillion to build semiconductor fabs in the Honam region, employees within Samsung Electronics' Device Solutions (DS) division—the unit expected to make the investment—were reportedly taken by surprise. Executives who had been coordinating capital expenditure plans around existing hubs such as Hwaseong, Pyeongtaek, Yongin, and Taylor, Texas, are said to be unsettled by the sudden emergence of a new variable.

On June 30, Samsung's DS division maintained publicly that it had "nothing to disclose because no specific plans have been finalized." Internally, however, the company is reportedly grappling with confusion over the government's announcement of a massive investment plan without detailed prior consultation. An executive from Samsung's memory business said the company would first need to establish an overarching framework before determining investment and operational plans, adding that the process would take time because the investment was not initiated by Samsung itself.

Some within the company reportedly described the announcement as "the very scenario we were most concerned about." Samsung had previously taken a cautious stance toward growing political and local government calls earlier this year for the company to build semiconductor facilities in Honam. Another Samsung semiconductor official said that while concerns had been raised since the first quarter about external pressure to establish fabs in the region, few expected it to culminate in an announcement of this scale.

One reason for the internal confusion is that Samsung is already investing heavily in major semiconductor bases including Pyeongtaek, Yongin, and Taylor. The company has carefully timed those investments based on market demand, customer coordination, process transitions, technology development, workforce availability, and ecosystem development. Given the capital-intensive nature of semiconductor manufacturing, investing without those considerations could result in substantial financial losses.

A key concern is how Samsung would allocate its limited workforce and manufacturing resources across an expanded network of production sites. Development of the Yongin National Semiconductor Industrial Complex remains stalled, with a public-private consultative body inactive for seven months and land compensation yet to be completed. Additional production lines are also planned for the Pyeongtaek campus, while Hwaseong continues to serve as the company's primary R&D and manufacturing technology hub. Adding Honam as another major production base would require Samsung to spread limited capital investment and skilled personnel across at least three large-scale sites.

The government's presentation also specified that the Honam project would include a front-end wafer fabrication plant, while packaging and other back-end processes would be carried out in Cheonan and Onyang, South Chungcheong Province. Under that structure, wafers manufactured in Gwangju would need to be transported to central Korea for packaging before final export, raising concerns over logistics efficiency and the greater distance to Incheon International Airport.

The presidential office argued that rapidly growing memory demand justified accelerating existing investment plans, claiming that SK Hynix's fourth fab schedule would be brought forward from 2044 to 2034, while Samsung's planned investments through 2048 would also need to be advanced to around 2034–35. Industry officials, however, counter that memory semiconductor demand is inherently cyclical rather than permanently expanding. Since constructing a new fab typically takes seven to eight years, there are concerns that if the expected post-2027 industry slowdown materializes, market conditions could be significantly different by the time a Honam facility begins full-scale operations.

Industry observers also warned that the project could impose a substantial financial burden on Samsung Electronics and SK Hynix while reducing their flexibility to respond to future technology transitions. One industry official noted that companies are already struggling to recruit enough personnel for existing facilities in Yongin and Pyeongtaek, and distributing skilled workers across an additional Honam campus could prove difficult. If the memory market enters another oversupply cycle, the companies could also face significant financial losses from underutilized production capacity.