Chips Rebound, Wall Street Says KOSPI Has More Room to Run

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

1. Wall Street Floats Korea Market Bottom Theory: "Chip Selloff Will Stop"

- Key Summary: As the KOSPI slid to the 6,000 range, global IBs including Morgan Stanley, JP Morgan and UBS have all released analyses calling it a bargain-buying opportunity. Spot prices for server DRAM surged as much as 146% since mid-July, while domestic DRAM export prices jumped 523% from a year earlier. As Supermicro announced its AI server order backlog surpassed $60 billion (about 89 trillion won), concerns over a contraction in Big Tech capital expenditure eased somewhat. Samsung Electronics (005930.KS) closed up 0.58% at 260,500 won that day, and the previous day S&P Global raised its credit rating outlook on Samsung Electronics to "positive."

2. Nvidia and AMD 'Bundling'…Companies Forced Into Either-Or Choices

- Key Summary: Nvidia announced on the 21st that it plans to supply its next-generation AI server rack "Vera Rubin NVL72" to OpenAI. This is interpreted as a countermove following AMD's start of supplying its AI rack "Helios" to Microsoft (MS). As the two companies strengthen rack-level sales, purchasing companies face the burden of having less room to select individual components, observers noted. Meanwhile, TSMC, the world's largest foundry (contract chip manufacturer), also plans to raise its contract manufacturing prices by up to 10% next year, so chip cost burdens are expected to grow further.

3. Yen at 40-Year Low…"BOJ Considers Accelerating Rate Hikes"

- Key Summary: The yen weakened to the 163-per-dollar range, falling to its lowest level in 39 years and 7 months since December 1986. Bloomberg reported, citing sources, that the Bank of Japan is discussing a faster-than-expected rate hike. The yen's weakness is interpreted as having intensified after the Takaichi Sanae cabinet reaffirmed its expansionary fiscal stance and dollar-buying pressure was added amid instability in the Middle East. Japanese Finance Minister Katayama Satsuki said, "If necessary, we will respond decisively at any time," but the yen has struggled to escape its weakness.

4. On Hedge Funds' Deliberate-Loss Tax Strategy…US Treasury: "Will Not Tolerate It"

- Key Summary: The US Treasury plans to review hedge funds' aggressive tax-saving strategies. Kevin Salinger, US Deputy Assistant Secretary for Tax Policy, warned, "If an investment looks too good, it's likely not true." More than $90 billion is estimated to have flowed into the so-called "tax alpha" strategy from early 2025 through April this year. The Treasury said it has no immediate plans to introduce new regulations, but stated it will engage in sufficient dialogue with the industry.

5. WSJ: "Trump Approves Agreement With Saudi Arabia Allowing Uranium Enrichment"

- Key Summary: US President Donald Trump has approved a nuclear agreement that potentially allows Saudi Arabia to enrich uranium, the Wall Street Journal (WSJ) reported. The two countries will conduct a two-year joint study reviewing the commercial viability of building uranium enrichment facilities on Saudi territory, with the agreement estimated to reach tens of billions of dollars over the next 30 years. Reuters pointed out that the agreement does not include safeguards (nuclear safety measures) to prevent diversion to nuclear weapons. Meanwhile, the agreement comes as discussions on Korea-US cooperation on nuclear-powered submarines are delayed, and analysts suggest US strategic priorities are shifting to the Middle East.

6. Hit Hard by China Oversupply…Petrochemical Industry Credit Ratings Fall in Succession

- Key Summary: As the deterioration in profitability from China-driven oversupply prolongs, the credit ratings of domestic petrochemical companies are falling one after another. In this year's first-half regular rating reviews, the credit ratings or long-term outlooks of five companies including LG Chem (051910.KS) and Lotte Chemical (011170.KS) were downgraded. The dominant view is that a short-term improvement in supply and demand will be difficult, as new capacity additions of about 28 million tons of ethylene and about 18 million tons of propylene are planned globally for 2026-2028. Hana Securities estimated that once the restructuring of the Daesan and Yeosu industrial complex businesses is completed, Lotte Chemical's debt ratio will fall from 76.0% to 52.8%.