August 13 Real Estate Measures Announced: Seoul Metropolitan Area Greenbelt Release, Loan Limit Expansion

The Lee Jae-myung administration's fourth real estate supply measure was announced yesterday. Three housing sites were designated by releasing greenbelts in the Seoul metropolitan area, through which 27,000 households will be supplied.

An additional 73,000 candidate sites are expected to be announced within this year, which will fulfill the 100,000 new homes in the Seoul metropolitan area.

This measure is evaluated as being differentiated from existing real estate policies in terms of financial support as well as supply. The Financial Services Commission has decided to raise this year's target for household loan growth rate in the financial sector from 1.5% to 3.0%.

This is expected to create an additional lending capacity of approximately 30 trillion won across all financial companies.

The authorities had maintained a strong stance on household debt management, stating that there were no plans to revise the 1.5% annual household loan growth rate announced in April. However, this stance has been adjusted after four months.

Until recently, financial companies had raised lending thresholds to meet their total loan targets, causing inconvenience for actual demanders, such as 'open runs' at banks to secure loans. This adjustment is analyzed to reflect these difficulties.

In this measure, other existing loan regulations are maintained without easing. The Loan-to-Value (LTV) and Debt Service Ratio (DSR) remain unchanged, and the 600 million won limit for reconstruction and redevelopment relocation loans is also maintained.

Furthermore, the standard for recognizing temporarily surging performance bonuses as income when calculating DSR will be tightened. Currently, the assessment is based on the past year's earned income, but moving forward, for individuals whose income has increased by 20% or more, the average of the past two years will be applied, and for those whose income has increased by 30% or more, the average of three years will be applied.

The measures announced yesterday include restrictions on Jeonse loan guarantees for single homeowners deemed to have speculative intentions. Starting January 1st of next year, if a couple has never actually resided in an apartment they rent out in the Seoul metropolitan area or a regulated area, they will not be able to receive a Jeonse loan while owning that property.

Even if an existing Jeonse loan is in place, its extension will not be possible. This demonstrates the government's strong will to fundamentally block 'gap investment'.

The Jeonse loan guarantee ratio for single homeowners will also be lowered. In the Seoul metropolitan area and regulated regions, it will decrease from the existing 80% to 70%, and in non-Seoul metropolitan areas, from 90% to 80%.

A lower guarantee ratio can be interpreted as a reduction in the loan limit.

The threshold for dual-income newlyweds to receive the Bogeumjari loan, a policy loan provided by the government, will be lowered. Currently, it is available for unmarried individuals with an annual income of 70 million won or less, and for newlyweds with a combined annual income of 85 million won or less, but dual-income couples often exceeded this standard.

Starting in October, even if the combined income of a couple exceeds 85 million won, if one of the two has an annual income of less than 70 million won, they will be able to receive a Bogeumjari loan.

A new product for young people buying their first home, 'Youth Future Bogeumjari Loan,' will be launched. It is for those aged 39 or under with an annual income of 70 million won or less.

When purchasing non-apartments (villas, residential officetels, etc.) with a price of 400 million won or less and a dedicated area of 85 square meters or less, up to 80% of the home price will be lent. Apartment purchases are not applicable.

While the opening of the Bogeumjari loan is positive, home price restrictions still exist. In the Seoul metropolitan area, only apartments under 600 million won are eligible for the Bogeumjari loan, but it is currently difficult to find homes in this price range due to high apartment prices.

Regarding this, the Financial Services Commission stated that there were opinions that the price limit itself should be changed, but they took a negative stance, saying that the real estate market situation could not be ignored.

The KOSPI index rebounded by 21.8% from its low, leading to assessments that it has entered a technical bull market. The KOSPI 200 Volatility Index (V-KOSPI) fell to its lowest point in three months, reaching the 55 level.

This phenomenon is attributed to the strengthening of regulations on single-stock leveraged trading and the nearing completion of the global semiconductor market's adjustment.

Yesterday, Samsung Electronics surged 4.89% to close at 268,000 won, and SK Hynix rose 5.92% to 1,593,000 won. Samsung Electronics and SK Hynix have recorded over 20% growth in two weeks, continuing their rally.

Among large-cap stocks, Samsung Electro-Mechanics attracted attention after investment bank Morgan Stanley announced it had changed its top pick from Samsung Electronics to Samsung Electro-Mechanics. The target price was raised from 2.56 million won to 2.62 million won.

Morgan Stanley cited the high probability of continued strength in multi-layer ceramic capacitor (MLCC) prices and improved demand for Ajinomoto Build-up Film (ABF) substrates as reasons for selecting Samsung Electro-Mechanics as its top pick.

Following this news, Samsung Electro-Mechanics rose 12.58% yesterday to 1,503,000 won. With MLCC drawing attention, related stock Samhwa Condenser also rose 17.39% to 103,300 won.

Among large-cap stocks, Korea Electric Power Corporation (KEPCO)'s stock price fell significantly. Securities firms lowered their target prices in succession after its Q2 earnings fell short of expectations.

KEPCO's Q2 revenue decreased by 0.1% year-on-year, while operating profit plummeted by 47.2% and net profit by 76.4%. IM Securities attributed the poor performance to increased costs for crude oil and LNG purchases, decreased nuclear power plant utilization, and increased operation of expensive fossil fuel power plants.

In the KOSDAQ market, individual investors net bought over 200 billion won, but foreigners and institutions net sold over 100 billion won each. Semiconductor-related materials, components, and equipment stocks showed strength.

In contrast, many cosmetic stocks, which had recently seen significant price increases, experienced fluctuations due to profit-taking. JYP Entertainment's stock price fell 11.2% after its Q2 operating profit decreased by 41.4% year-on-year to 31 billion won, missing securities firms' forecasts, and other entertainment companies also saw a decline.

LG Energy Solution will restart its Ohio battery plant, jointly operated with General Motors (GM) as a joint venture, after 7 months. Production is expected to begin as early as next week.

The plant had ceased operations in October last year due to decreased electric vehicle demand following the abolition of EV subsidies and is now recalling laid-off employees. The restart aims to accelerate market penetration in the US.

E-Mart's Q2 earnings were poor. It recorded an operating loss of 43 billion won on a consolidated basis, returning to the red after two quarters. This performance significantly missed the 46 billion won operating profit expected by securities firms.

Starbucks Korea recorded an operating loss of 18.4 billion won in Q2 this year, for the first time since its entry into Korea in 1999, dragging down E-Mart's overall profitability. The controversy surrounding the 5.18 anniversary 'Tank Day' marketing led to a boycott, and as a result, the representative summer marketing event 'Summer Frequency' was not held, causing sales to decrease by 6.1% and negatively impacting profitability.

Korea Investment Holdings has been selected as the preferred bidder for KDB Life Insurance, which was put up for sale in the M&A market. Hungkuk Life and Hanwha Life also participated in the main bid, but Korea Investment Holdings secured the win.

Korea Investment Holdings' plan to increase capital by up to 1 trillion won if it acquires KDB Life Insurance, indicating a strong will for normalization, is cited as a winning factor. Korea Investment Holdings has now entered the insurance industry, a long-cherished aspiration.

With both the Consumer Price Index (CPI) and Producer Price Index (PPI) confirming stability, market opinion is converging towards the Federal Reserve (Fed) not raising interest rates at the September Federal Open Market Committee (FOMC) meeting.

This is interpreted as a signal of slowing inflation and acts as a factor easing market burden regarding interest rate hikes.

There was news that former President Donald Trump instructed overseas shipbuilding companies that have invested in the United States to build two vessels in their home countries.

Former President Trump explained that this applies to foreign shipbuilding companies that simultaneously build new shipyards in the U.S. or secure ownership or a majority stake in existing U.S. shipyards.

Hanwha, which acquired the Philadelphia shipyard, meets the conditions mentioned by former President Trump, and the market is paying attention to whether it will benefit from this policy. News also reported that former President Trump signed a proclamation imposing tariffs of up to 100% on drones and drone parts.

This is interpreted as targeting China, and Korean-made products are expected to face a 15% tariff.