BOK Signals Rate Hike as Governor Shin Says "Right Time Has Come"

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "AI-based personalized news recommendation and summary service" developed with support from the Korea Press Foundation. It selects and provides six customized news items for each reader type.

1. Shin: "Will Raise Rates at Appropriate Time"...Big Step Possibility Lowered

- Key Summary: Bank of Korea Governor Shin Hyun-song said at a briefing to the National Assembly's Finance, Economy and Planning Committee on the 9th that it is necessary to raise the base rate at an appropriate time. The BOK has held the base rate at the 2.5% level since July last year, but the market expects a hike at the Monetary Policy Board meeting on the 16th, considering strong growth, inflationary pressure, and a high exchange rate. Shin cited improved growth momentum from a strong semiconductor cycle and rising prices, and suggested that the possibility of a "big step" raising rates by 0.5 percentage points at once is not high. He diagnosed recent exchange rate volatility as a temporary phenomenon and explained that a Korea-U.S. currency swap is not a necessary mechanism for now.

2. "AI Investment Doubts, Frequent Volatility Maximize Fatigue...7,000 Is Support Line"

- Key Summary: As the KOSPI fell nearly 20% from its peak and repeated sharp swings, investor fatigue is rising. In a survey conducted by Seoul Economic Daily of research center heads at major securities firms, experts pointed to a re-verification phase for AI investment and the semiconductor sector and expanded volatility in single-stock leveraged ETFs as the backdrop for the correction. On the 9th, the KOSPI closed at 7,291.91, up 45.12 points (0.62%) from the previous trading day, but individuals net sold 1.2673 trillion won, revealing weakened confidence. Experts presented the KOSPI 7,000 level as a short-term psychological support line, and forecast that the future direction of the market will be determined by U.S. Big Tech capital expenditure and semiconductor company earnings announcements.

3. "Are Samsung and Hynix the KOSPI?" With Leverage Added, They Dominate 83% of Trading Value

- Key Summary: The trading concentration in Samsung Electronics and SK hynix is reaching an extreme as single-stock leveraged products are added. According to the Korea Exchange, on the 8th the trading value of the two stocks was 9.5563 trillion won and 15.256 trillion won respectively, accounting for 51% of the combined KOSPI and KOSDAQ trading value, and including the trading value of 16 related leveraged and inverse products, the proportion soared to 83.1%. This concentration was reflected directly in index movements, with the KOSPI also falling 4.91% and 5.35% on the 7th and 8th when the two stocks plunged. The Bank of Korea and the Financial Supervisory Service expressed concern over the intensifying concentration and said they would continue to monitor the market impact of the related products.

4. U.S. Treasury Yields Stir Again...Renew Highest Level Since May

- Key Summary: With the military conflict between the United States and Iran resuming, U.S. Treasury yields showed an upward trend again. In the New York bond market on the 8th, the yield on the 10-year U.S. Treasury note rose 2.9 basis points from the previous trading day to 4.581%, the highest level since May this year, while the 30-year and 2-year yields also rose 1.7 and 3.3 basis points respectively. International oil prices surged on heightened Middle East tensions, stimulating inflation concerns, and the Fed's June meeting minutes confirmed that some members left open the possibility of tightening. As a result, government bond yields in major countries including Japan, Germany, and the United Kingdom also rose together, climbing to their highest levels in about a month.

5. As the Commodity Rally Pauses...Mining Stock ETFs Plunge

- Key Summary: Commodity mining stock ETFs that posted high returns from late last year to early this year have shown large declines recently. According to Koscom's ETF CHECK, as of the 7th of this month, the three-month returns of the gold mining ETFs GDMN and GOEX were -28.46% and -19.38% respectively, while the silver mining ETFs SLVP and SILJ were also weak at -16.42% and -17.22% respectively. The international gold price hit an all-time high above $5,595 per ounce in January this year, then fell below the $4,000 line at the end of last month as profit-taking flooded the market, and JPMorgan lowered its fourth-quarter gold price target from $6,000 to $4,500. In contrast, the copper mining ETF COPJ rose 0.15% over the past three months on expectations of copper demand from AI data centers, the only one to post a positive return.

6. Single-Stock Leverage Cap Limited to 20%?...Authorities: "Not True"

- Key Summary: Information of unknown origin that the government is preparing a regulatory plan to limit the fluctuation cap of single-stock leveraged ETFs to 20% spread mainly through the Yeouido securities community and online communities. It even included raising the basic deposit to 50 million won and requiring investors to watch one hour of mandatory lectures each week, but the Financial Services Commission said on the 9th that the content is not true. The FSC explained, however, that it has been continuously reviewing the market impact and the need for investor protection since the launch of single-stock leveraged products, and is examining whether any supplementation is needed. Earlier, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol also mentioned that relevant agencies are monitoring concerns that leveraged ETFs are increasing stock market volatility.