The Trump administration has launched the "Pax Silica" summit with eight partner nations—Korea, Japan, Singapore, the Netherlands, the United Kingdom, Israel, the United Arab Emirates, and Australia—in a strategic move to secure dominance in the artificial intelligence industry and counter China's influence in semiconductor supply chains.
The U.S. State Department described Pax Silica as a strategic initiative to build a "safe, prosperous, and innovative silicon supply chain" encompassing critical minerals, energy, advanced manufacturing, semiconductors, AI infrastructure, and logistics. Participating nations agreed to establish a robust economic order that guarantees an era of AI-driven prosperity and to create a secure, resilient, and innovation-led ecosystem across global technology supply chains.
The State Department signaled the alliance's intent to counter China by stating that participants committed to protecting sensitive technologies and critical infrastructure from "undue access or control by countries of concern."
U.S. Pivots to Financial Deregulation
U.S. Treasury Secretary Scott Bessent announced that the Financial Stability Oversight Council (FSOC) would review whether certain elements of the U.S. financial regulatory framework impose excessive burdens, negatively affect economic growth, and ultimately undermine financial stability.
The move marks a major shift away from post-2008 regulations that raised bank capital requirements and tightened lending rules. Earlier this month, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) lifted leveraged lending guidelines that had restricted bank loans to lower-rated corporate borrowers. Starting April next year, the supplementary leverage ratio (SLR) requirements for large banks will be eased, enabling expanded lending and U.S. Treasury purchases.
Meanwhile, Korea's Financial Supervisory Service is pushing to place National Pension Service-nominated outside directors on financial holding company boards, while lawmakers are mobilizing banks to fund jeonse fraud victim relief and small business support programs, imposing costs of at least several trillion won on the financial sector.
Korean Won Becomes World's Weakest Currency
The Korean won plunged 3.1% against the U.S. dollar in November, marking the steepest decline among 13 major currencies, according to the Bank of Korea's monthly international finance report. The won has now recorded the world's largest currency decline for two consecutive months following October's 4.1% drop.
The won fell more sharply than the Japanese yen (-1.2%), Brazilian real (-1.8%), Indian rupee (-1.4%), and Turkish lira (-1.3%). The won-dollar exchange rate rose from around 1,400 won at the end of September to 1,430 won by late October, and currently trades in the mid-1,470 won range.
The BOK attributed the sharp depreciation to residents' overseas investment and large-scale net selling of Korean stocks by foreign investors, despite expectations of U.S. rate cuts weakening the dollar. November's import price index rose 2.6% month-on-month, the largest increase in 19 months since April 2023.
Battery Sector Rebounds on Major Orders, Policy Support
The secondary battery sector, which underperformed the market throughout the year, is seeing rapid improvement in investor sentiment amid expectations of industry recovery, major supply contracts, and the government's push for a "Korean IRA."
Over the past week, the TIGER Secondary Battery Materials Fn ETF rose 7.3%, while KODEX Secondary Battery Industry Leverage and KODEX Secondary Battery Core Materials 10 gained 6.0% each, according to Koscom ETF Check.
Lithium carbonate prices hit a year-high at the end of last month, raising hopes that the industry has passed its trough. The government's plan to introduce a "production promotion tax system" expanding tax benefits for strategic industries including semiconductors and batteries has further boosted sentiment.
LG Energy Solution (373220.KS) signed a 2 trillion won ($1.4 billion) electric vehicle battery supply contract with Mercedes-Benz, while Samsung SDI (006400.KS) secured a 2 trillion won-plus deal to supply lithium iron phosphate (LFP) batteries for energy storage systems to a U.S. energy infrastructure company.
Over the past week, LG Energy Solution rose 8.7% and Samsung SDI gained 4.1%. POSCO Future M (003670.KS) jumped 8.31%, Chunbo (278280.KQ) surged 13.6%, and Ecopro (086520.KQ) soared 21.8%.
