Moon Jae-in has been through a lot in his three and a half years as South Korea’s president: defused a potential war in 2017, brokered three meetings between Donald Trump and Kim Jong Un in 2018 and 2019, and led one of the most successful responses in the world against the coronavirus pandemic in 2020. But this time, his team may have finally met its match: Seoul’s real estate market.
Real estate is a sensitive political issue everywhere, but in Seoul it’s explosive. South Korea’s wealth has flowed into real estate to an unusual degree because there are few other options. The country’s domestic stock market is good but not great: The chaebol conglomerates are vastly overrepresented in the overall market (as of March, Samsung Electronics alone represented nearly 34 percent of the entire KOSPI market cap), making it difficult to have stable and diversified investments. Persistent corporate governance issues plaguing the chaebol sometimes lead to share price manipulation, undermining the confidence of public investors in the system. While investing abroad, especially into the red-hot U.S. stock market, is increasingly becoming more popular, the unfamiliarity as well as the foreign exchange rate fluctuation make the returns difficult to anticipate.
