South Korea at the Crossroads | Global Dinner Dialogues 2025

Event Overview & Strategic Context

• The 2025 Milken Institute Global Dinner Dialogues marked the organization's inaugural event in Seoul, South Korea.
• The event theme, "South Korea at the Crossroads," addresses the nation's pivotal moment amid shifting global geopolitics and domestic political challenges.
• South Korea holds the rank of the 12th largest economy globally and 4th in Asia, driven by a diverse industrial base and tech innovation.
• Chairman Byung-hwan Kim of the Financial Services Commission (FSC) highlighted Korea's historical resilience during the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis as a precursor to current challenges.
• Current uncertainties stem from the second Trump administration's potential policies, including reciprocal tariffs and increased military cost-sharing demands for US forces stationed in Korea.
• Chairman Kim stated the administration's strategy to navigate uncertainty is consistent execution of reforms in corporate value, market opening, and structural changes.

Policy Decisions & Financial Reforms

• In 2024, financial authorities launched a "corporate value program" to enhance shareholder rights and improve capital allocation efficiency.
• The Korea Development Bank will establish a special financing vehicle with a size of 50 trillion Korean Won to support high-end technology companies.
• In December 2023, financial authorities abolished the foreign investor registration requirement for trading in Korean markets.
• Foreign exchange trading hours were extended starting July 2024, moving from a 9 a.m.–3 p.m. window to until 2 a.m. the following day.
• Short selling is scheduled to resume by March 31st, contingent on investors establishing internal control standards.
• A reform of the National Pension Fund was successfully agreed upon by both parties in the National Assembly on March 20th, aiming to address aging population issues.
• The FSC emphasized the need to overcome societal divides regarding structural reforms, citing the National Pension reform as a milestone for achieving social consensus.

Market Outlook & Investment Opportunities (Panel 1: Global Investors Outlook)

• Brian Table Yang (Korea Investment Holdings) noted that the Korean equity market has outperformed the S&P 500 year-to-date and trades at a 30–50% discount relative to developed and emerging markets.
• Yang predicted a robust recovery for the Korean equity market in the latter half of 2025, driven by strategic government stimulus and anticipated easing of interest rates.
• The inclusion of Korean Treasury bonds in the FTSE World Government Bond Index is expected to have a significant long-term impact on longer-duration bonds.
• Brian noted that Korean retail investor assets under management grew at a 23% annual rate over the past five years, with $5 trillion in loans allocated to overseas assets in 2024.
• Timothy Reese (Pennsylvania Municipal Retirement System) stated his portfolio has grown 22% since taking office, citing the addition of Korean-listed companies as part of an international equity diversification strategy.
• Hoon Lee (KIC) observed that while Asian buyout fund exposure to China dropped from 50% to 5–10%, exposure to Korea remained stagnant at 10–15% due to perceived lag in growth compared to India and cost-effectiveness compared to Japan.
• Hoon Lee identified positive shifts in venture capital interest, particularly in K-BT, semiconductor equipment, games, and software, driven by the potential for global competitiveness.
• Timothy Reese highlighted the "tariff tsunami" risk from the US, advising companies to reshape capital alignment, potentially by building new plants in the US or forming new alliances.
• Brian identified shipbuilding as a key sector for strategic growth, citing Korea's leadership in LNG vessels and low-carbon fuel engines as assets for US strategic diversification away from Chinese dominance.

Global Expansion & Sector Trends (Panel 2: Korea on the Horizon)

• John (Attorney) noted that Korean companies face significant litigation risks in the US, with Samsung being one of the two most litigated companies in US federal courts.
• Sam (Lotte Retail) reported that Korean retail is successfully expanding globally by offering "experiential" destinations rather than mere transactions, citing success in Hanoi and Jakarta.
• JP (VC Executive) highlighted Korea's strong adoption of AI, ranking in the top three countries for API usage and developer activity.
• JP described a three-pillar AI investment framework: infrastructure (energy/semis), intelligence (LLMs), and actuators (robots/automation), citing a KAIST battery startup using vanadium ion as a key example of hidden talent.
• John observed that the US regulatory environment for AI has shifted from strict oversight to a more pro-innovation stance, though a patchwork of state and local laws creates compliance complexity for foreign firms.
• Sam noted that Korean retail is growing despite global mall vacancies, with the flagship Jamisil location attracting over 55 million visitors and generating roughly $3 trillion KRW in sales annually.
• Sam highlighted the global export value of K-culture: K-food ($7B), K-beauty ($10B), and K-pop contributing to a $10B food export total last year.
• JP reported bipartisan interest from the US Congress to incubate Korean AI startups, with over 20 congressmen engaging on policy support for these ventures.
• John predicted South Korea as the most vulnerable country to trade risks under a Trump administration based on an analysis of 173 countries by Global Trade Alert.
• John emphasized that Hyundai's Chairman Chong's recent White House meeting signals a shift toward "invest in America" as a pathway for Korean companies to navigate trade frictions.

Forward-Looking Statements & Risks

• Demographic Risk: The consensus identifies an aging population as a primary structural challenge requiring labor flexibility and pension reform.
• Geopolitical Risk: The US- China rivalry and the potential for reciprocal tariffs are viewed as the most significant external threats to Korean industries.
• Investment Thesis: Panelists expressed optimism that resolving political uncertainty will unlock significant capital deployment, particularly in tech and green energy sectors.
• Innovation Potential: Speakers emphasized Korea's "tech sovereignty," citing homegrown unicorns like Naver, Kakao, Coupang, and emerging AI hardware firms as unique global opportunities.
• Retail Expansion: Korean retail and beauty sectors are expected to continue global expansion by leveraging high-speed internet penetration and a highly educated consumer base.
• Capital Allocation: Korean institutional investors are projected to maintain high exposure to global markets (over 50% allocation), with US equities expected to remain the dominant allocation (67%) due to tech growth.
• Ambassador Choi's Closing: Ambassador Jong-Guk Choi affirmed Korea's ranking as the 8th largest holder of net external financial assets globally, signaling its transition into a key player in global financial markets.
• Future Engagement: The Milken Institute committed to continuing Korea-focused events at its LA Global Conference and Asia Summit in Singapore to sustain global investor engagement.