"After the 'AI citizenship dividend' upended the market, the President of South Korea personally stepped in to calm the situation."

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After South Korea's stock market suffered a sharp shock caused by a policy statement, President Lee Jae-myung personally clarified the matter in an attempt to calm market panic. The turbulence originated from a social media post by the President's Chief Policy Aide about distributing AI boom profits to the public.

On Wednesday, Lee Jae-myung posted on the X platform stating that his policy chief, Kim Yong-beom, was discussing "the possibility of distributing excess tax revenue generated by excess profits in the AI field as citizen dividends," and did not mean that corporate profits would be used directly to issue subsidies. Lee Jae-myung used strong language, characterizing external interpretation as "manipulative fake news."

Korea’s benchmark index KOSPI plunged 5.1% at one point Tuesday and then narrowed losses after Kim Yong-beom explained his intentions. On Wednesday, KOSPI turned higher and finally closed up 2.6%. This showed that market sentiment recovered somewhat as clarification information spread.

An official from the presidential office told Bloomberg News on Tuesday that Kim Yong-beom's remarks represented his personal views and have not yet entered formal policy discussion.

A post ignites the market

The turmoil stemmed from a post by Kim Yong-beom on Facebook, discussing redistribution of the economic gains from the growth of the AI industry. Due to ambiguity in phrasing, investors had sharply divergent interpretations of the policy’s scope—at one point, the market worried that South Korea would impose new taxes on corporate excess profits and directly distribute "dividends" to all citizens.

This concern quickly triggered a wave of sell-offs. KOSPI fell as much as 5.1% during Tuesday trading, with tech and large-cap stocks facing concentrated selling pressure. As Kim Yong-beom later clarified that his intention was to use the "excess tax revenue" driven by the AI boom, rather than introduce new taxes, market panic gradually subsided.

Clarifying boundaries: redistribution of tax, not corporate taxation

Lee Jae-myung's post further clarified the policy logic. He emphasized, the core discussion is about how the government should use extra tax revenue naturally generated from excess profits in the AI sector, not imposing additional windfall taxes on enterprises. This distinction is crucial to the market—the former relates to fiscal distribution, while the latter directly impacts corporate profit expectations.

Presidential office officials also confirmed that the relevant proposal is currently only a personal policy concept and has not entered the official agenda. This means the so-called "AI citizen dividend" is still a long way from implementation.

As official statements became clearer, the Korean stock market quickly rebounded on Wednesday, partially recovering losses from the previous trading day. The quick market recovery reflects investors' mitigated concerns about systemic policy risk.

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