A city of alleys... From Choryang-dong, Busan to Yeongdo

Exhibits on Ibagu-gil. Photo : Gapsu Choi

Busan is a city of alleys. As refugees flocked in during the Korean War, the city suddenly grew huge, and roads were built wherever possible. The roads in Busan that run along the hills and mountains are narrow, steep, and sometimes reckless, leaving travelers perplexed. 

However, sometimes this embarrassment stimulates the curiosity of travelers and gives them pleasure. The series of alleys starting from Busan Station, passing through Choryang-dong, Jungang-dong, Nampo-dong, and Jagalchi Market to Yeongdo is a course where you can experience the true colors of Busan.

A place where the lives of Busan’s common people live

If you leave Busan Station and cross the street, you will reach Chinatown. There are many famous Chinese restaurants such as Shinhwawon, Maga, and Hongseongbang. Some restaurants have delicious dumplings, while others have delicious black bean noodles. Another restaurant is famous for its sweet and sour pork. After passing Chinatown, you will reach Texas Street. After passing the Choryang 2-dong community center on Texas Street, you will reach Choryang Elementary School, and this is where Choryang's 'Ibagu Road' begins. It continues through the old Baekje Hospital, Kim Min-bu Observatory, and all the way to Kakkomak.

Climb the hill along Ibagu Road. You can see houses crowded together on the hill. The small houses are close together and seem to be crouching, shoulder to shoulder. These are the houses where refugees came to live during the Korean War. Workers from the nearby Jagalchi Market, factory workers, and dock workers also flocked. The steps up the road are heavy. 

Yeongdo landscape. Photo : Gapsu Choi

A series of alleys… The true face of Busan

From Busan Station to Jagalchi Market and Yeongdo

Feel the footsteps of history and visit delicious restaurants

international market. Photo : Gapsu Choi

The road is narrow enough for two people to barely pass by, shoulder to shoulder. The floor is covered with rough cement. As you walk up the road, your steps stop right in front of the ‘168 stairs’. It's as dangerous as a ladder hanging in the air. People from the mountain village went up and down these stairs several times a day. Adults scooped well water and carried it on their backs, and children ran up and down the stairs to run bean sprouts and tofu errands. In the evening, after finishing their hard work, the heads of families would have a drink and stumble up the stairs. 

Next to the 168 stairs is the ‘Kim Min-bu Observatory’. Minbu Kim is a poet born in Busan. He died young at the young age of 31. His poetry was outstanding, but because he left the world too early, few people remember him. On one wall of the observatory, 'Waiting Heart', a song included in a high school music textbook and lyrics written by Minbu Kim, is engraved. There are many unique stores around the mountain, such as ‘Ibagu Playground’, ‘6·25 Makgeolli’, and toy stores. From here, you can see Busan Port so close you can touch it.

Bibim Dangmyeon at Gukje Market. Photo : Gapsu Choi

A fun-filled market tour

If you go down Ibagu-gil, it passes through Jungang-dong and leads to Nampo-dong and Gukje Market. Gukje Market originally refers to a complex consisting of a two-story building and a total of six facilities, but the nearby Sinchang Market, Changseon Market, and Bupyeong Market are generally referred to as Gukje Market. If I had to compare it, it resembles Namdaemun Market in Seoul. Shops selling shoes, bags, glasses, jewelry, etc. are intertwined like a maze along the narrow streets. 

It's fun to look at the various products at Gukje Market, but the highlight is finding delicious restaurants hidden in every nook and cranny. Inexpensive and delicious street food welcomes you in every alley. It is difficult to list them all, including fish cakes, bibim vermicelli, Chungmu kimbap, banquet noodles, green onion pancakes, sundae, sikhye, tofu sushi, and millet kkumi.

Grilled lamb tripe. Photo : Gapsu Choi

Across the street from Nampo-dong is Jagalchi Market. It is the largest seafood market in Korea. It is said that 30-50% of Korea's marine products and dried fish are supplied here. When you enter the market, street vendors are lined up, and there is no end in sight. There are various types of fish, including whale meat, on the stalls. The streets, filled with the unique scent of the sea, are crowded with visitors.

I'm hungry so I go to a grilled fish restaurant. Order the mackerel set meal. Six or seven side dishes, two pieces of mackerel, and gobong rice are served on an ‘obong (tray)’. This is a restaurant for sailors who came to Jagalchi. Open from 3 am. The mackerel is fresher and more delicious. There is no fishy smell. 

Meet Old Busan

If you cross Jagalchi Market, you will reach Yeongdo. It is called ‘Old’ Busan. When you go to Yeongdo, the atmosphere is noticeably different from Haeundae, Gwangalli, Nampo-dong, and Seomyeon. When it comes to Seoul, it feels like Jongno. It feels a little old, but in modern terms, it's vintage and retro. 

When you think of Yeongdo, Yeongdo Bridge comes to mind. It is the only bridge in Korea that is raised and lowered. Even now, we do bridge crossings. The village in front of Yeongdo Bridge is called Kangkangi Art Village. It is a neighborhood built around an old ferry dock, and it is also where the shipbuilding industry began with the opening of Korea's first modern shipyard in 1912 during the Japanese colonial period. The reason it is called ‘kangkang’ is because of the sound of the hammer. To repair a ship, shells and foreign substances stuck to the bottom of the ship must be removed and rust removed. It is said that the sound of hammers doing this work filled the neighborhood all day long. There are still 12 shipbuilding companies in operation. 

The village declined in the 2000s as the shipbuilding industry declined, but with the establishment of various cultural facilities, including a ship experience center, people began to visit again. As you walk around the village, you will find many places to visit, including galleries, museums, and workshops. 

There are 33 works of art installed throughout the Kangkangi Art Village through the ‘Public Art Project’. The location of the works of art is detailed in the leaflet distributed at the information center located at the entrance to the village. As you follow these works one by one, you will understand the history of Kangkangi Art Village little by little. Cloud-shaped streetlights and full-color murals are perfect as a background for a 'shot of a lifetime'. 

 

A place where you can hear the sound of spring coming... Gyeongju Haeguk-gil and Seongdong Market

Gampo Haeguk-gil is a great place to walk. Photo by Gapsu Choi

It's spring. Soon Gyeongju will be covered with cherry blossoms. It's not worth the effort of walking a long way just to see the cherry blossoms this spring. Let’s go to Haeguk-gil, which is still a little less known. You can also enjoy a sea drive. Your itinerary will be more enriched if you taste delicious Gyeongju food at Seongdong Market in Gyeongju.

A good road to walk right now

There is ‘Gampo Kkakjigil’ in Gyeongju. It is a road that connects the coast and villages centered on Gampo Port. Among these, section 4, ‘Haeguk-gil’, is a road that preserves the atmosphere of an old alley. Between buildings with low slate roofs, a winding road that can barely accommodate one person passes. It's not long, about 600m, but as the name suggests, it's a lot of fun walking while looking at sea guksu painted on every wall. Even if you walk slowly, 30 minutes is enough. 

The alley begins across from Gampo Public Market, located in front of Gampo Port. There is a small sign on the wall, and you can easily find it by asking nearby merchants. You can walk in the following order: Haeguk Alley, Haeguk Stairs, old building's basement warehouse, Damuleun House, Hancheontang, Well Saem, and Pine Tree House. The alley is just as narrow as it looks from the outside. There are many places that are barely wide enough for one person to pass through, and you have to turn your body sideways to get through. Rough cement was applied to the road. There are small houses on both sides of the alley, with gates barely large enough for a single person to enter, and windows the size of paintings. 

Seagulls were painted on every wall along the alley. The colors and shapes are all different. There is white sea guk and there is also purple sea guk. The color of haeguk, whose color has faded as time has passed, is also noticeable. As fall deepens, a bunch of real sea guks bloom in front of a picture of sea guk, welcoming travelers.

As you walk along the alley, your view becomes clearer and you come across a path with a large beetle drawn on the ground. If you go up the slope to the left, there is a church and playground, and from here you can see Gampo Port and the East Sea. If you go down the road to the right a little bit, you will come to a staircase with a large sea guksu painted on it. This is the most popular photo zone on Haeguk-gil, and travelers take photos to make memories.

If you pass the stairs and follow the alley, you will see a building that shows the depth of time. On the wall of a building with a brown door, there is a sign that reads ‘Old Building Basement Storage.’ It is said that the building was used as a shelter and underground warehouse. There is a Japanese-style house called ‘Damul-eun House’ 2-3 minutes away from here. Originally, the area around Haeguk-gil was where a Japanese immigrant fishing village was formed after the port was opened in the 1920s, and it is said to have been the busiest street at the time. Damuleun House is a remnant of a village built by Japanese fishermen. Walking along Haeguk-gil, it is not difficult to see old Japanese houses, which are now used as soup restaurants, pharmacies, and laundromats. 

The building located across from Damuleun House catches the eye with its towering chimney. It was a building that was used as a bathhouse, but no one lives there now. If you follow the road next to the building for about 100 meters, you will find the site of an old well. There is a bucket and the water is flowing in the well, but it is not drinkable. It is said to be a well that was commonly used by villagers during the Japanese colonial period.

Songdaemal Lighthouse is located about 10 minutes north of Gampo Port across Haeguk-gil. Songdaemal means ‘the end of a pine tree’. As the name suggests, there are pine trees at the edge of the cliff curved like dragons, and between them, the blue East Sea washes over with white waves. If you pass through the pine forest and go down close to the cliff, you will see two pure white lighthouses. Above the management office building on the left is a new lighthouse modeled after the three-story stone pagoda of Gameunsaji Temple, and next to it is an old lighthouse built in 1955 as an unmanned lighthouse. The scenery of the black rocks and the sea below the lighthouse is beautiful. Anglers spend leisurely time on the rocks.

You can leave Songdaemal Lighthouse, see King Munmu's Tomb and Gameunsa Pagoda in Gyeongju, and then take a tour of downtown Gyeongju. The Tomb of King Munmu is where King Munmu, who completed the unification of the three kingdoms, is buried, saying that he would become a dragon and protect the country even after death. It is also famous as a sunrise travel destination. On the way from the Royal Tomb of King Munmu to downtown Gyeongju, there is the Gameunsa Pagoda, which is called the 'typical Silla pagoda' for its perfect formative beauty. The formative beauty of Gameunsa Pagoda, which has nothing to add or take away, fascinates the viewer. 

Gyeongju’s Kitchen, Seongdong Market

It is said that the world's people have become harsh, but if you are looking for a place where people's hearts and affection still remain, it would be the traditional market. As I walk through the bustling alleys of the market, I feel as if my energy is rising and my heart is naturally enriched. 

In Gyeongju, the thousand-year-old city, there is a market full of people. Seongdong Market is the representative market of Gyeongju. Since the market is just across the railroad crossing from Gyeongju Station, it is visited by many tourists as well as Gyeongju citizens.

Originally, Seongdong Market was located where the Myeongdong Clothing Market is now located in the city center. The size was also small, about 1,300 m2 (400 pyeong). It was called Yeommae Market because it sold only cheap items such as clothing, tools, and simple food. Yeommae is an abbreviation for ‘cheap sale.’

Seongdong Market moved to its current location in 1971. At the time, it was not a large market, measuring about 3,300 m2 (1,000 pyeong). Then, as Gyeongju City grew, the market grew along with it. It is now considered the best market in Gyeongju, covering approximately 13,223 m2 (4,000 pyeong). There are about 600 stores in Food Alley, Fish Alley, Pyebaek Food Alley, Vegetable Alley, and Clothing Alley, and people from Gyeongju as well as Eonyang and Ulsan come here.

Seongdong Market filled with octopuses. Photo by Gapsu Choi

The most eye-catching thing at Seongdong Market is the large octopus hanging in each fish pancake. In the Gyeongbuk region, which has a strong Confucian tradition, octopus must be prepared for major events such as family rites or ancestral rites. Cut the octopus legs in half, place them neatly on skewers, and place them on the table along with beef and shark meat. This is because the character ‘geulwol (文)’ in the name of the octopus symbolizes a scholar. In the past, octopus ink was actually used as a substitute for food. 

There are also pieces of fish that look like tuna, which are shark meat that has been pickled and aged in salt. In the Gyeongbuk region, including Gyeongju, Andong, Yeongju, Yeongcheon, Bonghwa, and Cheongsong, it is called 'Dombegi' or 'Dombegogi'. There is a saying that sea bream was made by cutting shark meat into 'dombak, sea bream,' and there is also a theory that it originated from 'sea bream shark.' Just as 'skate' is not missing from Jeolla-do's ancestral rites, 'Dombegi' is not missing from Gyeongsang-do's ancestral rites. 

A better race on foot

Gyeongju is a great city to travel on foot. The Silla Grand Bell is said to be a reproduction of the King Seongdeok Divine Bell, National Treasure No. 29. It is 3.66m tall, has an average thickness of 20.3cm, and weighs a whopping 20.17 tons. This bell, which began to be made during the reign of King Gyeongdeok of Silla and was completed during the reign of King Hyegong, must have awakened Seorabeol in the morning and comforted it in the exhaustion of the evening for over 1,200 years. How did people make this huge bell back then? I try to guess his feelings, but it is not easy to understand. I imagine the sound of the bell and walk toward Daereungwon. 

I think what makes Gyeongju worthy of being a ancient city is the group of royal tombs, including Daereungwon. Gyeongju is the world's best tomb city. The city is built between tombs such as the Noseo and Nodong-dong tombs, Daereungwon, Hwangori tombs, Hwangnam-ri tombs, King Naemul's tomb, and Oreung. 

When you leave Daereungwon, you will reach Hwangridan-gil. It is the trendiest place in Gyeongju. There are many cafes, restaurants, souvenir shops, and independent bookstores. It gets very crowded starting around evening. Director Hong Sang-soo also filmed his movie ‘Discovery of Life’ here. 

If you cross Hwangridan-gil, you will reach Cheomseongdae. After Cheomseongdae, you will reach Gyerim, and soon you will reach Wolseong. Wolseong is the site of the Silla palace, and when you climb up here, you can see the entire city of Gyeongju, including Daereungwon and Hwango-dong. 

 

“High-tech biopharmaceuticals, Chile will become the next epicenter of Korean medicine”

 Chile, located on the other side of the world from Korea, is a very distant country from us. There are no direct flights, so even if you fly, it takes 26 hours to travel halfway around the world. The time and seasons are opposite. However, if we narrow it down to the economic field, Chile and Korea are quite close countries. The Korea-Chile Free Trade Agreement (FTA), which was signed in February 2003 and took effect in April 2004, played a decisive role in narrowing the distance between the two countries. Since then, Chilean wine and pork belly have become part of the Korean diet, and speeding Korean cars have become a familiar sight on Chilean streets.

Chile's population is approximately 20 million, so it is difficult to say that it is a large market. However, Chile has recently been receiving a lot of attention from around the world. This is thanks to lithium, which is called ‘white oil’. Lithium is a key raw material used in almost all types of batteries, and its price has recently risen as electric vehicles have gained popularity. 

On April 18, I met Ambassador Matthias Franke at the Chilean Embassy in Jung-gu, Seoul. He said that Korean cars are competing with the world's leading brands in the Chilean market and are showing off their high status in terms of reliability and reputation, and that "the elimination of tariffs on Korean products through the conclusion of the FTA may have also helped." In addition, he said that the current global economy is very different from when the Korea-Chile FTA was negotiated, and conveyed the Chilean government's desire to conclude supplementary negotiations within this year, which marks the 20th anniversary of the FTA's entry into force. 

Ambassador Franke, a former lawyer, majored in international law at the Catholic University of Chile and received a master's degree in international studies from Georgetown University in the United States. Before taking office as Chile's ambassador to Korea in July 2022, he served as Chile's permanent representative to the World Trade Organization (WTO) and Chile's deputy ambassador to the United Kingdom.

How do you evaluate the performance over the past 20 years since the Korea-Chile FTA was signed?

“I am looking at it very positively. According to the Korea International Trade Association, the amount of trade between the two countries increased more than five-fold between 2003 and 2023. Results were seen quickly, with the number more than doubling 20 months after signing the contract. Korea is Chile's fourth-largest export market. Last year, exports to Korea amounted to $7.5 billion (about 10.3 trillion won). “Exports of Korean products and services to Chile more than doubled from $517 million (about 700 billion won) in 2003 to $1.25 billion (about 1.7 trillion won) last year.”

Matthias Franke , Chilean Ambassador to Korea,
Bachelor of International Law from the Catholic University of Chile, Master of International Studies from Georgetown University, Former Permanent Representative of Chile to the World Trade Organization (WTO), Former Deputy Ambassador of Chile to the United Kingdom Photo by Reporter Lee Yong -seong

After the conclusion of the FTA, the popularity of Chilean wine in Korea and Korean cars in Chile increased significantly. 

“Chilean wine ranks first among Korean imported wines in terms of volume. Chilean pork belly is also popular in Korea. Automobiles from Korea's Hyundai Motors and Kia are competing with the world's leading brands in the Chilean market, showing off their high status in reliability and reputation. This is a significant achievement considering that competition among global brands is very fierce because Chile does not have its own automobile industry. “The elimination of tariffs on Korean products through the conclusion of the FTA would certainly have helped.” 

Chilean wine has been ranked first in the country in terms of imported volume for several years. Considering that Chile ranks 6th and 5th, respectively, in global wine production and export, it can be said that the FTA with Korea has had a significant effect. Hyundai Motor Company and Kia Motors have the largest share of the Chilean automobile market. As of August last year, Hyundai Motors was in third place, behind Toyota and General Motors (GM), but when combined with Kia in fifth place, monthly sales of about 25,000 units far exceed Toyota (17,857 units). Korean smartphones, televisions, and home appliances such as washing machines and refrigerators are also popular.

I think the global craze for Korean culture, including K-pop, may have played a role in the rise in the status of Korea and Korean companies in Chile.

“In the 1980s, Koreans began immigrating to Chile, especially in the capital Santiago. At that time, most of those who immigrated to their home country (Korea) for trade successfully settled down, and as a result, Korean culture began to become known in Chile. In addition, the K-pop and K-drama craze that broke out in the 2010s served as an opportunity for Chilean youth to become more familiar with Korean culture. “Today, Santiago has become a city where K-pop bands on international tours must stop by.”

I am curious whether there are any signs that interest in Korea, sparked by the popularity of Korean Wave cultural content, will shift to new industrial fields. 

“In Chile, interest in K-food has recently increased significantly. The number of Korean restaurants has rapidly increased everywhere, and efforts to adapt to local tastes by using Chilean ingredients based on traditional Korean food are also noticeable. I think K-beauty will take over the baton next. Several Korean related companies have already opened stores in Chilean shopping malls. It is expected that more Korean companies will enter related fields in the future. “I think the next epicenter of the Korean Wave in Chile will be cutting-edge technologies such as biopharmaceuticals.”

As the spread of electric vehicles increases worldwide, the status of Chile as a lithium powerhouse has also increased. 

“Chile holds about 40% of the world’s lithium reserves. It is responsible for 24% of global production, ranking first in this sector. Although the Atacama Lake is the only place in Chile where commercial lithium production is currently taking place, there are 45 other salt lakes in Chile with various chemical and geological characteristics. The Chilean government recognizes the importance of Chile in the production and distribution of major minerals, including lithium, and is making efforts to help the growth of related industries. “The announcement of the national lithium policy last year is part of such efforts.”

What is the core of the national lithium strategy?

“The government and the private sector are working together to promote the growth and development of Chile’s lithium industry. Government participation will be through Codel-co, Chile's state-owned mining company and one of the world's largest copper producers, and Enami of Chile. Economic growth is not the only thing that is important. Local communities and experts also participate to ensure environmentally, politically, and socially sustainable development. The Chilean government is trying to attract Korean companies interested in Chile's lithium resources. “We hope to one day become part of the Chilean lithium ecosystem and will continue to collaborate with them.” 

Currently, three domestic battery companies (LG Energy Solutions, Samsung SDI, and SK On) are producing batteries with lithium hydroxide made by processing lithium carbonate. These companies receive most of their lithium carbonate imports from Chile. Previously, Chilean lithium producer SQM signed long-term lithium purchase contracts with LG Energy Solutions and SK On.

Negotiations are underway to supplement the Korea-Chile FTA. What direction do you think we should move in? 

“The current global economy looks very different from the early 21st century (when Korea-Chile FTA negotiations were underway). The role of small and medium-sized businesses and the importance of global supply chains in trade have increased, and things to consider, such as the environmental impact of production and trade, have also increased. For this reason, the two governments agreed to supplement the existing FTA in 2018. The Chilean government hopes to finalize the supplementary agreement within the year. If that happens, it will be the best event for both countries to celebrate the 20th anniversary of the FTA.” 

What kind of Chilean imports would you like to see more of in Korea in the future? Conversely, is there any Korean export product you would like to introduce to Chile? 

“I hope that many Chilean agricultural products, which were excluded from the first FTA agreement, will come into Korea. Chile is a producer and exporter that boasts world-class competitiveness in the agricultural sector. After concluding an FTA with Chile, Korea also gave preferential treatment to other countries (with which it signed an FTA). I just hope that we can compete with them on an equal footing and allow Korean consumers to make choices. The focus of the Chilean Embassy in Korea on trade is to help export Chilean products to Korea, but it also provides opinions on the export of Korean products to Chile. “Korean seaweed, persimmons, meat, and some seafood are likely to be very popular with Chilean consumers.”

“AI’s short-term trading speed of 300 times a day has caught up with human traders.”

 “When I tell investors that artificial intelligence (AI) beat the market by an average of 2 percentage points, they don’t really feel it. Rather, they are very surprised when they say, ‘A short-term AI model that buys and sells 300 times a day makes money even when the market falls by 2%.’ “Even investors who thought they were confident in short-term investment say they are finally feeling the power of AI.”

Stock investment, especially short-term buying and selling of stocks, has been recognized as an area where humans can generate higher profits than AI. Unlike long-term investment, information such as price and flow is important in short-term investment, but there is a perception that price, etc. are unsuitable as a learning target for AI. However, AI is also showing off in short-term hits. Korean company Craft Technologies (hereinafter referred to as Craft) is pioneering this area.

1 ‘Crescendo’, a short-term price prediction model developed by Craft Technologies. Even on March 15, when the KOSPI index fell -1.91%, Crescendo recorded a return of 0.11%. Photo: Craft Technology Logis

Kraft's recently developed short-term price prediction model 'Crescendo' targets an expected return of 0.10% in daily trading, including achieving positive returns for 28 out of 30 days in the Korean stock market. In fact, even on March 15, when the KOSPI index fell -1.91%, Crescendo recorded a return of 0.11%.

Craft CEO Kim Hyeong-sik said, “It was only a few years ago that I thought that Baduk was a field where AI could not beat humans because it was so complex and required insight. “But now I know that even baduk was ultimately a kind of calculation,” he said. “I think trading is also a human domain now, but you will soon realize that if you have data, you can make profits every day.”

Kraft is focusing on developing technology that uses AI to analyze vast amounts of financial data and identify investment opportunities and patterns. What is noteworthy is that the AI ​​Exchange Traded Fund (ETF) has been listed on the New York Stock Exchange since 2019. In November last year, LQAI (LG Qraft AI-Powered US Large-cap Core ETF), an ETF in collaboration with LG AI Research Institute, was listed on the U.S. stock market. I recently met CEO Kim at Craft headquarters in Yeongdeungpo-gu, Seoul. CEO Kim, who founded Craft in 2016, is a 'geek' who graduated from Seoul Science High School and Seoul National University's Department of Electrical Engineering. He began his path to entrepreneurship while developing a quantitative model algorithmic trading program for stock investment during his master's degree in economics at Seoul National University. The following is a Q&A.

2 (From left) FSITC Investment Trust Chairman Paul Yu, Softbank Executive Director Yuichiro Shinozaki, and Kraft Technologies CEO Kim Hyung-sik are announcing cooperation in developing AI-based financial investment technology. Photo FSITC Investment Trust

How does AI hit a single hit? 

“You can think of it as being similar to a trader at a securities company. This is a method in which AI determines the stock price fluctuations of stocks that need to be traded in the market at any time and places an order when it determines that the price is optimal. Craft has over 1,000 AI models. Models that make short-term predictions, such as seconds or minutes ahead, trade 200 to 300 times a day. This short-term model has good predictive power, but its operational CAPA is small. So, it is operated directly by Craft. There is no method available to individual investors. “Monthly and yearly forecast models have large capacity, so they are made public or supplied to financial companies to create and sell financial products such as ETFs.”

Can AI really beat humans? 

“While humans tend not to change their existing thoughts once they have decided, AI does not hesitate to buy or sell when an abnormal signal occurs. It can create an infinite number of products that suit investment tendencies, and can also play a role in reducing the information gap between institutional and individual investors. In addition, AI has recently developed interpretation skills like humans. Among the research data released by S&P Dow Jones Indexes, the 'SPIVA Report Card', which evaluates whether fund managers are actually generating excess returns compared to the benchmark, shows that fund managers that have been generating excess returns compared to the benchmark for five years are at the level of 13%. It's just that. “I think the Craft AI model has caught up to this level.”

3 Kim Hyeong-sik (front row, center), CEO of Kraft Technologies, participated in the New York Stock Exchange ETF listing ceremony in May 2019. Photo Craft Technologies

We also developed an ETF with LG. 

“The capital market prediction and investment portfolio construction model developed by LG AI Research Institute has been integrated into Kraft’s AI ETF operation process. I find it really fascinating to be overseas. This is because LG is famous for home appliances, so it is difficult to think of it as an AI company. They said it felt as if Miele, a German company famous for washing machines, had launched an ETF. So it received a lot of attention.

However, as it turns out, LG is investing a lot in AI. Since we are in the battery business, raw material prices are important, so we have already been using AI to predict lithium prices. LG AI Research Institute's investment portfolio construction AI model ranked 4th in the rate of return category in the 'M6' competition, the world's largest time series forecasting competition. We ended up collaborating because that part was similar to predicting stock prices. The results are not bad either.

“It’s been about 5 months since the ETF was listed, and the rate of return fluctuates around 20%.”

You have listed an ETF on the US market. How long do you think the bull market will continue? 

“Personally, I think it’s an upward trend. Of course, there will be an adjustment, but I think it will go up from a long-term perspective. This is a big difference from Korea, as the U.S. structure has a well-designed stock-based economic system, and incentives for each entity are designed to increase stock prices. “If you look at it that way, I think it would be a good idea to adopt a beta investment strategy that follows the market rate of return based on the efficient market hypothesis.”

Can AI predict Bitcoin signals? 

“I think short-term predictions are ultimately possible. In a perfectly efficient market, prediction is impossible. However, if you look at the Bitcoin market participants, there are basically more investments for speculative purposes than the stock market. There are many people who act irrationally. The market size is not large and there are many sudden rises and falls. “It is a highly volatile market (although it is more difficult than the stock market), so I think it is possible to make predictions if you approach it by analyzing the data well.”

There is a lot of talk that the price will rise further when the halving occurs, when Bitcoin mining volume is reduced by half.

“The half-life is too big a signal, but there are only four so it doesn’t have much statistical value. Of course, if the price of Bitcoin has risen during all four halvings, you can think that it could rise for the fifth time as well. However, considering that the halving logic is that supply decreases and the price increases, it is questionable how much of an impact it will have in a situation where a lot of Bitcoin has already been released.”

What will future asset management look like?

“I think AI has almost completely encroached on the trading field, and it seems like that has already happened. Wouldn't people become more free from analyzing numbers and instead start thinking more in the humanities? “Until now, AI focused on data calculations and still required humans to extract insights from this data, but now even that is becoming automated.”

So what strategy should investors develop? 

“It is important to find a good company not only in Korea but also around the world. In any case, frequent trading or short-term trading is likely to become increasingly difficult. Then, people need to find something they can do well. From a long-term perspective, it is insight into how the industrial structure will change and which companies will grow. “This is something AI can never have.” 

Korea’s challenges in being overtaken by China in science and technology

 In a recent technology evaluation of major countries announced by Korea's Ministry of Science and ICT, Korea was evaluated as clearly lagging behind China, which is shocking. Based on the United States, the European Union (EU) was rated at 94.7%, Japan at 86.4%, China at 82.6%, and Korea at 81.5%. In 2020, Korea and China were both analyzed to be 3.3 years behind the United States, but in this evaluation, China (3 years) narrowed the gap with the United States more than Korea (3.2 years). 

The problem is that in the strategic technology sector, which can be considered a future industry, Korea is inferior to China in most areas, such as secondary batteries, semiconductors, displays, and hydrogen, and especially in artificial intelligence (AI) and next-generation communications, where competition between countries is fierce. In fields such as , quantum, aerospace, and maritime, the country is significantly behind China, adding to the seriousness of the situation. 

China's progress was a predictable result

China's rapid progress can be said to be a somewhat expected result, considering that China is moving away from past imitation and is focusing its efforts on technological innovation. Recognizing that China's future depends on technological innovation, the Chinese government is leading the development of key technologies by linking government research institutes, academia, large corporations, small and medium-sized enterprises, and even defense-related organizations, and is pouring enormous manpower and resources into it. . In particular, following the technology war between the US and China, China regards the current situation as an emergency and is pouring all its capabilities into technological development. 

In the field of AI, which is receiving the most attention these days, China is considered the only country that can compete with the United States. This is because China already announced its 'Next Generation AI Development Plan' in 2017, making AI an arena for future international competition and economic development. This is the result of tremendous efforts made to develop AI, with the expectation that it will become a new engine for AI. The government is taking the lead in promoting detailed utilization plans in each industry, including manufacturing, logistics, commerce, finance, and agriculture, by establishing infrastructure, establishing development plans, and establishing annual strategic goals. 

Pay close attention to China's industrial policy

Looking at the above results, it appears that China is achieving the desired results despite the US ban on technology transfer. There may be many reasons, but broadly speaking, it can be seen as the Chinese government's consistent industrial policy and consumers' rapid adaptation. 

First, in the early days of opening, the Chinese government created large-scale protective barriers. A representative example is the protective barrier that China built in the 1990s, the so-called ‘Great Firewall’. The reason for building this firewall was because there were concerns that China would lose its ability to control information, which would restrict many American internet platform companies from entering China, creating a space for Chinese startups to breathe and develop. It achieved unexpected results. Initially, Google, Facebook (now Meta), Twitter, etc. were active for several years in the early days and then left, but Amazon and Airbnb, which entered the market later, immediately exited the Chinese market. 

On the other hand, Chinese entrepreneurs and scientists avoided the firewall and continued exchanges with technologically advanced countries such as the United States, thereby promoting the flow of advanced technologies and innovative systems into the Chinese ecosystem. This situation has recently become an opportunity for the United States to disallow technological exchanges with China, and in the future, China will have no choice but to pursue independent technological development and is expected to invest more resources and manpower. 

In China, once a specific industry or field is selected as a national key technology, each sector exerts all its efforts and cooperates to achieve the goal. For example, for the aforementioned AI development, transportation authorities are investing large amounts of money into creating autonomous driving pilot programs, each local government investing in AI accelerators, universities investing in machine learning, and police investing in cutting-edge surveillance systems. What is worth noting is that although some projects may have failed during the technology development process and may be economically inefficient, it appears that the desired results are being achieved in terms of achieving technological tasks. China does not seem to mind project failure at all, believing that even failed projects produce a synergy effect in terms of overall scientific and technological development. 

Meanwhile, consumers who quickly and flexibly accept cutting-edge technologies and products produced by innovative entrepreneurs and the rapid changes that result from them also play a role. Over the past 30 years, while most countries' GDP (gross domestic product) has increased less than 10 times, China's GDP has increased more than 30 times. As China has experienced tremendous changes, Chinese consumers have adapted to the changes in order to survive. One example is that in China, even beggars do not accept cash, but instead scan QR codes to receive money through WeChat Pay or Alipay. This well explains why in China, 1.2 billion WeChat Pay transactions occur per day, while Apple Pay occurs 1 billion transactions per month. 

How China's Technological Leaps Affect Us

China's technological superiority is expected to be a huge burden on us. The Korea-China trade balance already turned into a deficit last year. There are some temporary factors, but mainly it is because the competitive edge of our products has disappeared due to China's technological development. Last year, Korea's exports to China decreased by 20%, while its imports from China decreased by only 8%, resulting in a trade deficit with China of $18 billion (about 23.7 trillion won). 

Technology is a measure of competitiveness between countries. The fact that China's technology evaluation is superior to ours means that we are more likely to import from China than to export to China in the future. This means that Korea's trade deficit with China will become entrenched, and more broadly, it means that Korea and China, global manufacturing powers, will engage in a fierce battle for market share in the global market. 

Considering the competitiveness of our products without any other factors, there is a high possibility that we will lose our market to China in the global export market. In particular, our inferiority in future technology means that our inferiority will continue for a long time.

Our government may not be able to do something like China, which operates almost like a planned economy system, but we need to more clearly present the direction we should take with a future-oriented, macroscopic perspective on national science and technology development. In particular, the government's role is said to be significant in the field of basic technology, which is difficult for individual companies to handle. 

Specifically, it is very important to steadily expand the proportion of research and development (R&D) to GDP and to use R&D costs efficiently in terms of improving efficiency compared to expenditures. As China has enormous human and material resources, including a huge budget and over 40% of science and engineering graduates, it is imperative that we use our limited resources efficiently in order to compete with China. Technical cooperation between large corporations and small and medium-sized enterprises is also important. Additionally, I think it would be a good idea for the government to build a technological cooperation infrastructure so that R&D cooperation between government research institutes, universities, and companies can occur smoothly. 

Full-scale commercialization of D2D satellite communication... Creation of new revenue sources in satellite, semiconductor, and communication

 As the era of direct-to-device (D2D) satellite communications begins in earnest, new growth opportunities are being created in the satellite, semiconductor, and communications industries. What would happen if communication became possible anywhere on the planet using only mobile devices such as smartphones or Internet of Things (IoT) devices without any special equipment? Deloitte predicts that sales of satellite-connected smartphones will exceed 200 million units in 2024, and that these smartphones will be equipped with special semiconductor chips worth a total of about $2 billion (about 2.756 trillion won). Additionally, as investment in satellite production and launch increases, the D2D market size is expected to exceed $3 billion (approximately KRW 4.135 trillion) in 2024.

 D2D is a technology that provides limited connectivity in areas without access to wireless networks, and does not compete with wireless network services that provide high-speed, low-latency connectivity. Rather, wireless network operators can earn additional profits by providing text or voice services in areas where wireless networks do not reach through collaboration or contracts with satellite operators. 

D2D commercialization, likelihood of success

Satellite-based global communications services are already being actively developed. Emergency disaster/relief communication, simple text messaging, IoT monitoring, etc. have already been realized, and thanks to recent emergency disaster/relief communication, precious lives have been saved in the event of a car accident or natural disaster.

 In addition, for D2D commercialization, capital investment, satellite launch, semiconductor development, establishment of regulatory framework, and consultation with wireless network operators are actively taking place. Satellite communication is a new revenue-generating opportunity for all players in the ecosystem. First, smartphone manufacturers who are concerned about recent poor sales performance are expecting that satellite communication will serve as an attractive feature that will encourage consumers to replace their smartphones with the latest models. Second, wireless network operators seeking new revenue sources by increasing the number of subscribers and providing additional services can expand their geographic service coverage without spending enormous amounts of money to build new land infrastructure. Third, it is also a new opportunity for satellite operators seeking ways to significantly expand their customers and investments by expanding their presence in the global communications market.

 Consumers driving the growth of the D2D market can be divided into two types. According to estimates by the Global Mobile Communications Association (GSMA), approximately 400 million people, or 5% of the world's population, cannot use wireless networks, so they can benefit from satellite-based wireless services. However, a much more important consumer group is the 5.6 billion wireless subscribers worldwide. Combining satellite and terrestrial wireless networks can eliminate service gaps and maximize users along with the geographic reach of services. Even if only a small number of existing wireless communication subscribers use satellite communication additional services, the D2D market can grow rapidly.

 In addition to the consumer market, corporate and government services are also important market factors. D2D technology especially shines in communication services for public safety and national security. D2D is also ideal for IoT applications (apps) where only intermittent communication and limited data transmission is possible. In particular, it has great potential for use in healthcare, industry, and transportation sectors. 

D2D industry leader

Apple & Global Star  Apple invested $450 million (approximately KRW 620 billion) in Global Star, securing 85% of Global Star's low earth orbit (LEO) constellation satellite capabilities. Currently, 740 million iPhone 14 and 15 users in 14 countries can use the ‘Satellite-based Emergency SOS’ function to request emergency rescue in the event of an emergency outdoors where Wi-Fi or wireless service access is not available, and ‘Roadside Assistance’ You can receive AAA's emergency vehicle service in remote areas. 

Space  ​We plan to expand. 

Link Global  American venture company Link Global is building its own constellation of satellites to provide D2D services. Link Global emphasizes that its satellite system can communicate with all smartphones without requiring a special semiconductor chip. 

MediaTek & Bullet  Android or iOS devices equipped with a geostationary orbit (GEO) satellite-compatible semiconductor chipset developed by Taiwan's MediaTek can be connected to Bullet's 'Satellite Connect' platform. Because this service utilizes GEO-based satellites such as Inmarsat and Ecostar, sending and receiving messages takes longer than low-orbit satellite-based services, but it has the advantage of being available regardless of the location of the smartphone.

Huawei & China Telecom  Huawei's flagship smartphone, the Mate 50 series, is equipped with a function that can send emergency rescue texts based on China's Beidou satellite navigation system. The latest model, Mate 60 Pro, has calling and messaging capabilities based on the Tiyantong-1 GEO satellite. China plans to expand D2D services by adding one to two LEO constellation satellites within the next few years.

The value of D2D technology has already been proven... Speed ​​of market formation is key

Although the D2D market is in its early stages, it is growing dynamically with many companies around the world actively entering the market. However, just because the technology has been developed and the enthusiasm is high, it does not necessarily mean that it will be successful. The D2D market faces the following challenges. 

Economic Challenges  D2D services are pouring in, but will demand grow commensurately? Are consumers willing to pay for the service? So how do you set up a rate plan to maximize profits? Will the capital needed to launch, operate, and manage constellation satellites continue to be raised? Will demand for D2D semiconductors and devices also increase rapidly?

Technical Challenges  Large-scale constellation satellites themselves present a number of technical challenges in launching and operating in already crowded orbital environments. Moreover, D2D services based on this must overcome another technical obstacle. First of all, coordinating frequency use and managing the possibility of conflict between operators is a problem that cannot be easily solved. Global standards are also needed for issues such as cybersecurity and interoperability. We must also consider the question of what the mainstream technological method will be.

Challenges in establishing regulations  Currently, there is almost no regulation for the D2D market. Therefore, satellite and wireless network operators must take the lead in establishing regulations on issues such as frequency allocation, orbital deployment, and satellite service licensing, working with appropriate regulatory authorities in each country. 

 Combining different markets to create an air-like communications environment is certainly a big challenge, but it is also an opportunity to create valuable value. A great deal of value can be created, including providing communications services to those without access, improving citizen safety and emergency response, expanding IoT apps, and strengthening the resilience and reliability of global communications infrastructure. The value of D2D has already been proven like this. Now, the point to watch is how quickly new innovations and consumption patterns emerge that can fully realize the combination of satellite and terrestrial networks and form a market on a large scale. 

More Item

Smartphone armed with biometric authentication app re-proves status as ‘top consumer device’

Duncan Stewart Research Director, Deloitte Canada, Advanced Technology, Media, and Telecommunications,
International Financial Analyst, CFA Instititue, USA

The trend of smartphones replacing and surpassing today's tens of billions of physical authentication and payment methods, including card keys, passwords, driver's licenses, passports, credit cards, and cash, is expected to begin in earnest starting in 2024. This is why the measure of smartphone success cannot be quantified simply by sales volume. There are also expectations that smartphones will once again prove their status as the ‘top consumer device.’

 Smartphone sales in 2024 will be 1.26 billion units, which will be somewhat lower than the all-time high of 1.57 billion units, but it is expected to be a more successful year than usual. With 5 billion users around the world forming an ecosystem, its value is becoming more prominent as it is highlighted as a reliable authentication method.

 The authentication function of smartphones is being used in increasingly diverse ways. As biometric authentication apps rapidly increase in 2024, the number of smartphone authentication cases is expected to reach tens of trillions per year in the medium term, and authentication functions are expected to grow explosively in the long term.

A wind of change in the changing financial environment and asset management strategies

The reality is that the pace of change in asset management is felt. Even though Robo-Advisor and Open AI's chat-type AI (artificial intelligence) ChatGPT have only recently appeared, various institutional changes are underway, with AI guidelines in the financial sector being designated and security regulations in the financial sector being advanced through expanded use of the cloud. Many areas of asset management are changing at a truly rapid pace. Let’s check out the ‘Changes in the Financial Market in 2024’ announced by the Korea Institute of Finance (KIF) in the second half of last year and take a look at things to consider in changing asset management strategies.

Competition is intensifying and population is decreasing.  

The first issue is ‘intensifying competition’. Many banks are now devising improvement plans in various areas, such as strengthening soundness regulations, diversifying business, and activating overseas expansion. In addition, competition is intensifying as competition through digital channels goes beyond traditional competition.

The second issue is ‘interest rate competition’. With the introduction of infrastructure such as refinancing loan platforms and the expansion of online deposit product brokerage services, comparison of financial product conditions such as interest rates and fees is becoming easier. From the bank's perspective, it is necessary to strengthen platform partnership cooperation and prepare for the possibility of intensifying interest rate competition.

The third issue is ‘increased funding volatility’. This year, the interest rate gap between Korea and the United States remains the same, and the concentration of funds may increase due to restrictions on corporate bonds by rating. If there is instability in the financial system, such as the bank run (mass deposit withdrawal) that occurred last year at Silicon Valley Bank (SVB) and Signature Bank in the United States, fund outflow may occur at an unexpected speed. Accordingly, there is a growing need to examine strategies and related policies in preparation for rapid capital movements that may occur in the digital environment.

The last one is ‘demographic change’. What led the mid- to long-term loan growth of domestic banks were household loans and loans to small and medium-sized businesses and individual business owners (SOHO). However, as their demand for loans decreases due to demographic changes, there is a possibility that they will enter a new paradigm.

photo shutterstock

 There is opportunity in crisis

Of course, even in the changed financial environment, there are many opportunities. A representative example is ‘Em-bedded Finance’. Embedded finance refers to non-financial companies embedding fintech (a portmanteau of finance and technology) services into their own platforms using IT and digital technologies beyond the level of brokering or selling financial services. If financial services related to online commerce are developed and regulations on financial companies' business entrustment and entrustment are relaxed, or the financial services that can be provided through platforms are expanded, it can be an opportunity for banks. Because industrial capital can also advance into these embedded financial services, we believe there is a need to dominate distribution channels and develop financial services.

In addition, the financial market area occupied by cryptocurrency is also expanding. Therefore, banks must pursue management strategies such as strengthening digital competitiveness, preparing a foundation for sustainable growth, and strengthening risk management in line with the intensifying competition environment. In terms of strengthening digital competitiveness, domestic banks may seek digital innovation through partnership opportunities with non-financial companies. In fact, cooperation between financial and non-financial companies is expanding overseas. This is to understand the customer life cycle and strengthen asset management sales force. Domestic banks are also increasing consumer accessibility by expanding cooperation with Big Tech (large information technology companies) and non-financial companies. Going forward, our strategy is to explore customized financial services for customers, develop competitive financial products through digital channels, and expand partnerships with distribution channels.

In addition to developing products suitable for digital channels, it is also necessary to expand deposit brokerage and alternative lending and increase collaboration with distribution channels through the 'My Data Platform' to determine which products are suitable. MyData refers to a service that gathers together consumers' financial information scattered across various institutions and provides customized asset management solutions. Efforts must be made to dominate distribution channels and create competitive products suitable for digital channels. 

It is also important to develop various niche markets. For example, they can suggest financial solutions related to the succession of a family business or arrange a merger. In relation to geopolitical risks, it is also possible to expand corporate financial services to domestic companies that adjust their overseas bases. There is also a need to explore ways to strengthen the digital competitiveness of the corporate finance sector. It would be a good idea to strengthen digital competitiveness in corporate finance in an open manner by looking at the cases of overseas financial institutions.

photo shutterstock

Robo-advisor with increased usability

Wealth management includes a variety of financial products, investments, portfolio management, and financial planning. Customers use asset management services to receive quality services such as investment management, tax experts, legal, and real estate advice. Asset managers must suggest and explain financial products and services to customers in a consultative manner and enable customers to make their own decisions. Changes in customer expectations are also a consideration. The goal of a good asset manager is to understand the needs and expectations of clients. Recently, many customers do not purchase one-way services but study on their own. Ask the opinions of experts and colleagues and gather a variety of information. It also uses mobile apps as a key tool to access financial advice.

These changes in customers have also brought about changes in the nature and delivery method of financial advice. Robo-advisors are a representative example. Robo-advisor is an electronic service that provides algorithm-based automated asset management advice. It primarily provides portfolio management advice. It is a low-cost service that is well-received by the MZ generation (Millennials + Generation Z, born 1981-2010) because it can be accessed online and does not require a certain amount of assets.

Robo-advisors can analyze customer data with complex algorithms to create personalized asset allocation and financial plans. There are also robo-advisors that manage individual retirement plans. Of course, it should be applied to asset management with quantifiable risk. It is difficult to apply to unavoidable risks such as market crashes. Customers who need social security and tax guidance can also use a staff member or robo-advisor capable of financial planning. There are also automated robo-advisory services for investors looking to pay the lowest taxes. Fintech technology can universalize access to investment products and provide financial products and services at low costs. This means that you can track and rebalance your investment portfolio through a robo-advisor.

However, many customers still prefer human-tailored service. Human interaction is still needed to reassure customers and provide them with solutions during these uncertain times. The excellent asset management experience and capabilities of PBs (private bankers), which can be considered representative, still play an important role in asset management. Therefore, it is advisable for asset management companies to use robo-advisors and PBs together.

According to big data expert Song Gil-young's book 'Just Don't Do It', society is changing in three directions. First of all, it is differentiated. I live alone and am moving into smaller groups. The second is the reality of longevity. We live much longer and younger than in the past. Third is the spread of non-face-to-face. This reflects not only technology, but also people's reluctance to meet face-to-face. What the author's three keywords emphasize is the fact that he is ultimately alone. Amid numerous changes in the asset management market, where the proportion of digital and non-face-to-face services is increasing, we recognize the reality of living alone and think about the need to appropriately coordinate our own judgment with the help of PB.