💢💢💢

South Korean stocks continue to plummet,
completely ruined by their own actions,
not because of market reasons,
but because of uneven profit distribution.

Yesterday, Kim Yong-bum, the Chief of Staff for Policy at the South Korean Presidential Office, posted on social media proposing the idea of a "citizen dividend," aiming to return the excess profits generated by AI to the whole society.

Because of his one statement, the South Korean stock market once fell by more than 5%.

Then, news just came that negotiations between Samsung and the union have broken down, and a strike is highly likely. This morning, the South Korean stock market plunged 200 points.

Who is Kim Yong-bum? Why does one statement have such a big effect?
The South Korean president has very significant power, and the Chief of Staff for Policy is his main advisor, wielding great influence over major issues.

His idea is essentially a windfall profit tax, so the stock market plummeted directly.

01) Samsung Strike, National Crisis
The Samsung union negotiations already have the feel of a national crisis, also stemming from dissatisfaction with profit sharing.

What happened?
Memory chip prices have skyrocketed over the past two years, and South Korea's Samsung Semiconductor and SK Hynix have been raking in huge profits.

SK Hynix proposed an "outrageously" generous dividend, with an average per capita dividend of 3 million RMB in 2025, and around 6 million RMB expected in 2026. SK Hynix also said this level of payout would last for ten years, meaning an ordinary employee could receive 30-40 million RMB over a decade.
This immediately upset Samsung employees because their dividends are much smaller than SK Hynix's.

So, Samsung's union immediately stepped in, making four demands:
First, increase the dividend payout ratio from 10% to 15%, totaling 210 billion RMB this year;
Second, provide a long-term dividend commitment;
Third, abolish the bonus cap;
Fourth, a 7% salary increase.
If not agreed to, an 18-day strike will begin on May 21st.

This has the South Korean government worried. Don't underestimate 18 days; this would be the longest strike in Samsung's history, likely causing a global memory chip supply crunch and price surge, severely impacting South Korea's exports and foreign exchange reserves.

So the president directly stated, "Samsung is a national community asset, and a strike is unacceptable."

02) Why the public is also upset
This statement not only failed to convince the Samsung union but also angered the public.

They say that when the memory chip industry wasn't profitable, South Korea supported Samsung and SK Hynix with the nation's full strength.

Tax cuts, low-interest loans, infrastructure—all were provided by the government, and ultimately, wasn't that taxpayer money?

So South Korean taxpayers are all invisible shareholders. Why should everyone share the losses when times are bad, but the profits are kept for themselves when times are good?

You could call this jealousy, but they can't help but be jealous.

The average annual salary for South Koreans is less than 240,000 RMB. A 6 million RMB dividend is equivalent to an ordinary person working for 25 years without spending a dime.

This huge disparity in distribution is the real reason others are unhappy.

So on the surface, they're arguing about how companies should share profits, but at its core, it's questioning: when an industry receives nationwide support and reaps super profits, should it give back more to society beyond just taxes?

That's why Kim Yong-bum's "citizen dividend" idea hit the stock market so hard.

04) Utopia or Inevitability?
But this idea is too utopian.

Will the chaebols agree? How to define excess profits? How to levy them? How to distribute them? These are all practical problems.

South Korea's problems aren't new. Chaebol economy, wealth gap, class rigidity—these underlying issues have long been present. The windfall profits from memory chips just concentrated and ignited these contradictions.

From an investment perspective, what insights does this give us?
First, policy risk is the biggest black swan for emerging markets. One statement causing a 5% market drop—this fragility can't be explained by fundamentals.

Second, if Samsung really strikes for 18 days, global memory supply will tighten, causing short-term price spikes. But in the medium term, government intervention, union demands, and the windfall tax discussion will all compress corporate profit margins.

Third, the internal divergence between SK Hynix and Samsung is a warning sign. Both are memory giants, yet the dividend gap is so large, indicating deep-seated issues in corporate governance and profit distribution. Such issues are masked by profits in good times but erupt in bad times.

Finally, the essence of this matter is: when a country's economy is held hostage by a few chaebols, when wealth distribution is extremely uneven, when the government must both rely on corporations and appease the public, the stock market becomes an outlet for emotions.

The plunge in the South Korean stock market isn't because memory chips are failing, but because the already taut string of South Korean society was plucked and snapped by the issue of uneven profit sharing.

For those of us in the US stock market, this is a mirror.

The windfall profits from AI infrastructure continue, but distribution issues will come eventually.

Whether to follow South Korea's path of letting conflicts intensify, or to proactively establish a more reasonable profit-sharing mechanism, will determine how far this cycle can go.

The AI narrative continues, and the strategy of buying semiconductor dips remains unchanged.