trading south korea premium returns

PROFILE

Population (as of June 2022): 51.3 million

Capital: Seoul

Government: Democratic Republic

Table: Economic Profile of South Korea

ECONOMY

2019

2020

2021

GDP ($ billions) **

1,651

1,638

1,824

GDP per capita (USD) **

31,937

31,638

35,196

GDP Growth (% change) **

2.2

-0.8

4.3

Average Consumer Prices (% change)**

0.4

0.5

2.5

Unemployment Rate (%)**

3.8

3.9

3.8

Source: *Bank of Korea/**Statista.com

TRADE

Table: TRADE Profile of South Korea

Foreign Merchandise Trade ($ billions)

2019

2020

2021

Exports to World from ROK**

573.7

512.5

650.0

Imports from World to ROK**

478.5

467.6

573.8

U.S.

That place is South Korea, where 2017’s crypto bubble arguably peaked, amid reports of teenagers spending their pocket money on altcoins and septuagenarians buying BTC with their pension payouts.

The frenetic bitcoin buying of late 2017 resulted in a phenomenon known as the kimchi premium, whereby South Koreans were paying way over the global average to buy tokens on domestic trading platforms.

But while BTC has been scaling new, record-breaking heights on most exchanges, the kimchi premium has shown no signs of return yet, with many 2017 price records still intact in South Korea.

Janet Cho, a Seoul-based IT journalist, told Cryptonews.com,

“The mood here is still very depressed and many people seem baffled by reports from elsewhere in the world that investors are looking at bitcoin as some sort of hedge.


Others still, it seems, are looking to make fast profits by buying abroad for lower rates and then selling high on domestic platforms.

Due to Travel Rule-related restrictions on transactions, some are being forced to make multiple low-value transactions – rather than larger one-off transfers – in order to avoid being flagged as potentially suspicious traders.

Ominously, perhaps, Chosun warned:

“Some have pointed out that [domestic] exchanges are also responsible for the continued speculative trading of LUNA. It said that they have not warned investors or restricted LUNA trading.”

This echoes sentiments already expressed by MPs, who have claimed that exchanges failed to make a concerted, joint response to the market plunge.


The next in line is South Korea’s Coupang and founder Bom Kim has much in common with the world’s richest man. Here’s what you need to know about Coupang stock before the IPO occurs.

Image source: Getty Images

Winning share in its home market

Bom Kim shares Bezos’ relentless focus on the consumer, aiming to create a world where customers wonder “How did I ever live without Coupang?” The company invested significantly in its logistical and delivery network and now boasts a delivery rate of one day or less on 99.3% of its orders through its Rocket Delivery service.

The company claims nearly 70% of Koreans live within 10 minutes of a Coupang logistical center, a figure aided by South Korea’s population density.

Global averages show that crypto-assets like bitcoin (BTC) and ethereum (ETH) have jumped significantly in value.

BTC is up 10% and ETH has gained 20% during the last 24 hours. At 8:42 a.m. (EST), bitcoin’s global average tapped a daily high of $38,800 per coin. However, in South Korea, BTC prices are higher than the global average as Korbit and Bithumb highlight the difference.

Currently, the ‘kimchi premium’ in South Korea for BTC is 8% higher as bitcoin’s global average is $37,700 and Bithumb’s BTC spot price is $40,800 per BTC.

Korbit’s exchange rate is a bit lower at $40,568 per unit but still carries a premium compared to the global average.

ETH prices in South Korea also show a slight uptick as Bithumb and Korbit exchange rates for ETH is $100 higher than the global average.


President Yoon will need to work with National Assembly controlled by the opposition Democratic Party, at least until the next legislative elections in 2024. South Korea’s National Assembly approved a 16.9-trillion-won ($14.2 billion) supplementary budget on February 21, 2022, aimed partly at funding the response to COVID-19 and supporting businesses hit by pandemic restrictions. With the latest supplementary budget, total government spending increased to a record 624.3 trillion won ($515 billion) for 2022.
While Korean growth remains steady, even in the face of the COVID-pandemic, inflation has increased, largely driven by higher costs for imported fuel and industrial inputs.

After decades of rapid growth, Korea’s long-established strength in the steel and petrochemical industries has waned and Korea has become a leader in high-tech industries.

The industries targeted by the Korean Government include healthcare (medical devices, pharmaceuticals, and biotechnology), industrial chemicals, information technology (IT) components, semi-conductor manufacturing, aerospace and defense, energy, environmental technology, and transportation (including reviving the shipbuilding industry). U.S. companies have already begun to identify opportunities in these growing industries. Additionally, U.S. firms have started partnering with local Korean companies to expand market opportunities to third-country markets, including ASEAN, the Middle East, and other Indo-Pacific markets.

Korea remains one of the world’s most export-dependent industrialized nations, with exports of goods and services valued at 36 percent of GDP in 2020. Given its robust shipping and air cargo infrastructure, Korea serves not only as a market destination for U.S.
Bitcoin is trading near $66,000 levels in South Korea as “Kimchi Premium” has returned.

Kimchi Premium is the spread between bitcoin’s price on South Korean crypto exchanges and Western exchanges.

Bitcoin is currently trading at around $66,200 on Bithumb, according to TradingView. That is whopping about 15% or $9,000 higher than bitcoin’s price of around $57,000 on Coinbase.

Ether (ETH) is also trading higher at around $2,350 on Bithumb compared to $2,020 on Coinbase, according to TradingView.

The Kimchi Premium suggests rising demand for bitcoin and ether in South Korea as the cryptocurrency market continues to soar worldwide.

The Kimchi Premium first appeared in 2016, according to the University of Calgary.

S-1 IPO registration filing and is looking to go public at a $58 billion valuation. At 4.8 times trailing revenue, the company is cheaper than all other e-commerce stocks save for Amazon despite trading at only a fraction of its market cap.

Company

Sales/TTM

Market Cap

P/S Ratio

Coupang

$12 billion

$58 billion

4.8

MercadoLibre

$4 billion

$73 billion

18.3

Sea Limited

$4.4 billion

$117 billion

26.6

Alibaba

$99 billion

$648 billion

6.5

Amazon

$386 billion

$1.5 trillion

3.9

Jumia

$170 million

$3.7 billion

21.8

Source: Company 10Ks/10Qs.

Furthermore, Coupang is posting growth rates of 90% versus Amazon’s 38%.

Bithumb has far more dominance than Korbit, as it commands more than $2.4 billion in 24-hour crypto trade volume. Korbit on the other hand captures $149 million on Monday.

Government Looks Closer at Premiums, A Myriad of Crypto Assets See Price Discrepancies in Contrast to Global Averages

South Korea’s crypto premiums have appeared in 2021 on multiple occasions and this has caused regulators to look more closely at the crypto economy and ponder stricter digital currency regulations. A report from Maeil Kyungjae had shown the South Korean government grew concerned about the ‘kimchi premium,’ after the premium touched a high of more than 18% during the first week of April.

A few other crypto assets besides BTC and ETH are seeing premiums in South Korea.

In the Chosun article, which was published in the early afternoon (KST) of May 19, the article’s author noted that prices on the Upbit exchange were over seven times higher than LUNA prices on international platforms like Binance.

Janet Cho, a Seoul-based journalist, told Cryptonews.com:

“This is absolutely typical behavior for some South Korean investors. After stock market crashes of similar magnitudes, some investors rush and pick up shares at super-low prices. It’s a wild punt on a rank outsider, to use horse racing terminology, but super-low prices are sometimes too attractive for some less-risk averse individuals.”

Chosun added that some South Korean traders are seeking to avoid skyrocketing prices by buying on international platforms such as Binance.

For many people in this country, recent government regulations that will restrict the way [cryptoassets] can be traded, as well as new taxes, make bitcoin seem like a very shaky and uncertain investment.”

And Cho agreed that it was a case of “once bitten, twice shy” for many crypto investors, with relatively low demand driving relatively low crypto prices in South Korea after the premium was actually turned on its head last year.

She added,

“Last time people went all-in on crypto, they got bitten hard by a government crackdown and a price slump. With a financial crisis looming due to the coronavirus pandemic, it looks like only dyed-in-the-wool crypto converts are buying tokens now.”

However, per a Hans Kyungjae report, many listed firms with links to crypto-related business experiencing price rises in line with crypto prices.

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