[Morning Briefing] Kim Keon-hee to appear before special prosecutor for the third time today... New York stocks mixed amid AI bubble controversy

◆ Kim Keon-hee to appear before special prosecutor for the third time after arrest today... Investigation into Geonjin Beopsa allegations

Kim Keon-hee, who is under investigation for alleged violations of the Political Funds Act, will appear for questioning again at 2 p.m. on the 21st before Min Jung-gi’s special prosecutor team. This is her third summons since being arrested on the 12th. She previously appeared before the special team on the 14th and 18th, respectively. Although initially notified to appear on the 20th, Kim submitted a handwritten absence note citing health reasons and postponed her appearance by one day. Today’s questioning will reportedly focus on allegations surrounding Geonjin Beopsa and the Unification Church. In previous sessions, the special prosecutor team probed into allegations involving Myung Tae-gyun's nomination interference and stock manipulation by Deutsch Motors, but Kim mostly refused to testify. Kim is accused, along with former president Yoon Seok-yeol, of receiving the results of 58 public opinion surveys free of charge from so-called ‘political broker’ Myung Tae-gyun during the 2022 presidential election and influencing the nomination of former People Power Party lawmaker Kim Young-sun in a parliamentary by-election as a result, which constitutes a violation of the Political Funds Act.

◆ New York stocks trim losses amid AI bubble controversy... Mixed close

All three major stock indices on the New York Stock Exchange closed mixed for the third session in a row. As valuation controversy swirls around the artificial intelligence (AI) industry, tech stocks continued to see sell-offs today. However, some investors judged the recent losses as excessive and engaged in bargain buying. On the 20th (U.S. Eastern Time), the Dow Jones Industrial Average finished at 44,938.31, up 16.04 points (0.04%). The S&P 500 closed at 6,395.78, down 15.59 points (0.24%), and the NASDAQ Composite Index ended at 21,172.86, down 142.10 points (0.67%). Immediately after the opening, downward pressure on AI and semiconductor-related stocks caused the tech-heavy NASDAQ index to extend its loss to as much as 1.92% during the session. The Philadelphia Semiconductor Index, led by AI and semiconductor stocks, widened its plunge to as much as 3.38% at one point. However, as the NASDAQ fell over 3% at its lowest point in two days, bargain hunting emerged. As a result, major tech stocks recovered some losses by the session’s close.

◆ President Lee: "It's not desirable to overturn the comfort women agreement... Japan is very important"

Ahead of his first visit to Japan since taking office, President Lee Jae-myung, in an interview with Japanese media, stated regarding the comfort women agreement and forced labor compensation issue, "It’s a national promise and therefore not desirable to overturn it," expressing a commitment to uphold it. In the interview published on the 21st with the Yomiuri Shimbun, President Lee said, "While considering policy consistency and national credibility abroad, I also bear the responsibility of taking seriously the positions of citizens, victims, and their families." He emphasized that "Japan is a very important partner" and "Korea will also prove to be beneficial to Japan." President Lee is scheduled to visit Japan on the 23rd for a Korea-Japan summit with Prime Minister Ishiba Shigeru. The interview took place on the 19th.

◆ National Assembly to vote on Broadcasting Culture Promotion Act today... Second filibuster showdown

On the 21st, the National Assembly will hold a vote in plenary session, led by the Democratic Party of Korea, on the so-called ‘Broadcasting Culture Promotion Act,’ one of the ‘three broadcast law’ bills. The bill was the subject of a filibuster at the request of the People Power Party, which ended automatically at midnight July 5 during the current National Assembly session. According to the National Assembly Act, after a filibuster concludes with the end of a session, the bill must be voted on at the first plenary session held afterward. With the Democratic Party holding an absolute majority, they plan to sequentially process the key bills in ‘salami-slicing’ fashion, starting with the Broadcasting Culture Promotion Act, followed by the Korea Educational Broadcasting System Act, revisions to the labor union law (so-called ‘Yellow Envelope Act’), and the second Commercial Act amendment. The People Power Party has also declared its intention to filibuster these bills. As a result, a second filibuster confrontation is expected to resume from today through the 25th in the July regular session.

◆ U.S. 'Jackson Hole Symposium' opens on the 21st... All eyes on Chairman Powell

The Federal Reserve’s largest annual event, the 'Jackson Hole meeting,' begins on the 21st (local time) in the resort area of Jackson Hole, Wyoming, for a three-day schedule. Fed board members, district Federal Reserve Bank presidents, and key U.S. economic policymakers will gather, and the event attracts the attention of global financial markets as crucial messages about the direction of important market indicators—such as the value of the dollar, exchange rates, and interest rates—are expected. Especially as the symposium is held under the theme 'Transitions in the Labor Market: Demographics, Productivity, and Macroeconomic Policy,' this year’s meeting is expected to be conducted under unprecedented tension. The chairman of the Fed, Jerome Powell, who will deliver a keynote speech on ‘Outlook for the Economy and Policy Framework Review’ on the 22nd, is facing intense challenges from both inside and outside. The all-out pressure from former president Donald Trump to dramatically lower the current base rate of 4.25~4.50% has threatened even the Fed’s vital principle of monetary policy neutrality.

◆ FSS Chief Lee Chan-jin hints at "important announcement next week"... Speculation abounds over organizational restructuring

At his first executive meeting since inauguration, Lee Chan-jin, Governor of the Financial Supervisory Service, mentioned that "an important announcement may come next week," stirring speculation both within and outside the agency. With both the Financial Services Commission Chairman and FSS Governor appointed simultaneously, there is speculation that the previously dormant organizational restructuring may proceed quickly next week. According to financial authorities on the 21st, Governor Lee reportedly told executives the previous day that "there may be something to discuss with FSS members next week" and "there may be surprises." He also suggested that important matters would be addressed next week and requested internal feedback. Amid varying interpretations, most believe this hints at plans to separate the Consumer Protection Bureau and establish a new Financial Consumer Protection Agency. The State Affairs Planning Advisory Committee has been discussing such a separation and new agency. On this day, Policy Chief Kim Yong-beom of the Presidential Office also announced that the government reorganization plan would be finalized at a Cabinet meeting in September, adding weight to the reorganization rumors.

◆ Scorching heat and localized showers... Highs up to 35°C

On Thursday the 21st, most areas across the country will see the highest apparent temperatures rise to around 35°C, resulting in extreme heat. According to the Korea Meteorological Administration, heatwave warnings have been issued for most regions, so people are advised to refrain from outdoor activities and pay attention to health care. The morning lows are forecast at 22~27°C, and the afternoon highs at 30~35°C. There will be local showers in the Seoul metropolitan area, northern inland and mountainous Gangwon, and Chungnam until the afternoon, and in the southern regions until night. Expected precipitation is 5~40㎜ for Seoul, Incheon, Northern Gyeonggi, the Five West Sea Islands, northern inland and mountainous Gangwon, Chungnam, Jeonbuk, Daegu, Gyeongbuk, and Jeju Island; 5~60㎜ for Gwangju, Jeonnam, Busan, Ulsan, and Gyeongnam. In regions with showers, be cautious of safety accidents at sea as gusty winds, thunder, and lightning may accompany the rain. Air quality will remain ‘good’ nationwide thanks to smooth atmospheric dispersion.

Cha Eun-ji, Hankyung.com reporter chachacha@hankyung.com