[January 6th issue in major countries] We’re sending it to you.

United States of America

At the annual general meeting of the American Economic Association (AEA) in 2025, concerns were intensively discussed that Trump’s tariff policy would have negative effects such as worsening corporate profitability, a shock to the labor market and destruction of trade transactions. A study has been published showing that the burden of tariffs is passed on to consumers and small businesses, and that trade uncertainty causes GDP and employment to decline. If Trump fails to resolve the trade deficit, there is a possibility of switching to a weak dollar policy, and there are warnings that global trade fragmentation could have a serious adverse impact on economic growth. Mary Daly, president of the San Francisco Fed, is concerned that tariffs and a slowdown in China’s economy could serve as a negative factor for the U.S. economy, hinting at the possibility of a rate freeze in the first half of the year. The global economic division caused by protectionism is expected to deepen the decline in GDP and the weakening of economic cooperation.

Microsoft plans to invest 80 billion U.S. dollars in AI data centers, more than half of which will be heavily invested in the U.S. to foster AI infrastructure. Microsoft will work with OpenAI, Antropic, and xAI to strengthen AI software and cloud-based applications, and emphasize the U.S. leadership in AI competition. President Brad Smith is wary of China’s subsidy policy and its strategy to spread AI platforms, and insists that the U.S. should strengthen its global AI competitiveness through innovation and education. Microsoft has invested more than 13 billion dollars in OpenAI and has urged the private sector and the government to respond quickly to maintain its AI technology advantage.

China

It has been reported that China will increase the basic salary of civil servants by 300 to 500 yuan (about 60,000 to 100,000 won) for the first time in 10 years. The plan to apply before the Spring Festival aims to boost domestic demand and morale. This also applies to workers in public institutions such as doctors and teachers in public hospitals, and has the effect of partially compensating for the reduced bonuses. The measure is evaluated as part of a policy to increase the income of ordinary workers amid a decrease in the income of civil servants due to tax cuts and economic stimulus after COVID-19. The wage increase is consistent with the Chinese authorities’ policy of “increasing the proportion of labor remuneration” and affects about 7.1 million civil servants and 30 million workers in public institutions. Some pointed out that a slight increase does not sufficiently offset the actual decline in income.

Korea

Foreign exchange reserves reached $415.6 billion at the end of December 2024, up $210 million from the previous month, the first increase in three months, according to the Bank of Korea’s statement. The martial law on December 3 did not cause a sharp drop in foreign exchange reserves despite concerns over a surge in the exchange rate, mainly due to reduced intervention by foreign exchange authorities and an increase in foreign currency deposits by financial institutions at the end of the quarter. Securities declined, but deposits increased by $6.09 billion, while gold reserves remained unchanged. The December increase in foreign exchange reserves was attributed to the end-of-quarter effects and operating income amid the strengthening U.S. dollar and easing volatility. South Korea’s foreign exchange reserves ranked ninth in the world, staying high after China, Japan and Switzerland.

The U.S. Environmental Protection Agency has reduced the number of vehicles subject to tax credit from 40 to 25, with five new models including Hyundai Motor Group’s Ioniq 5, Ioniq 9, Kia EV6, EV9, and Genesis GV70. Hyundai Motor Group will be on the tax credit list for the first time and receive a $7,500 subsidy each. Major brands such as Volkswagen, Rivian, and Nissan are excluded from the list. Meanwhile, Hyundai Motor Group said Hyundai Motor (including Genesis) and Kia Motors sold a total of 1.7 million units in the U.S. last year, up 3.4 percent from the previous year, the highest ever. Increased sales of electric and hybrid models are the main factors in the growth.

Other

As President Biden denied Japan Steel’s acquisition of US Steel due to concerns over weakening national security, the Japanese government and companies strongly protested and controversy spread internationally. Japan Steel proposed an agreement to resolve security concerns, but it was not accepted, and announced a legal response plan, but the possibility of reversing the president’s decision is low. Both Biden and Trump have maintained their opposition to US Steel’s acquisition of foreign companies and emphasized the protection of US manufacturing and workers. The decision makes it unclear the possibility of US Steel’s management reconstruction, sending its stock price down 8% and raising concerns about restructuring. The Japanese and US media criticized the issue as politically motivated and are concerned that it will negatively affect the US open investment culture.

economic indicators

US ISM Manufacturing Buyers Index for December 49.3 (Predicted: 48.2/Previous: 48.4)

[Daishin Securities Investment Strategy / Marketplace Telegram Channel]