US, Japan Jointly Intervene to Defend Yen for First Time in 28 Years

*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. Concerns Over Massive US Treasury Selloff... Joint Front to Halt Yen Weakness for First Time in 28 Years

- Key Summary: The United States and Japan launched a joint intervention to defend the value of the yen for the first time in 28 years. When the yen-dollar exchange rate surged to the 163.9 yen range on the 29th of last month, pushing the yen's value to its lowest level since 1986, the Japanese government and the Bank of Japan carried out market intervention, and the United States joined by selling euros and buying yen. As a result, the yen-dollar exchange rate came down to the 157 yen range, but the market also raised concerns that a sharp rise in the yen could lead to the unwinding of yen carry trades. However, observations have also emerged that the effect of intervention will be short-lived unless fundamental factors, such as the US-Japan interest rate gap and Japan's fiscal deficit, change.

2. July Exports at $98.9 Billion, Second-Highest on Record... Semiconductors Top $40 Billion for Two Consecutive Months

- Key Summary: July exports were tallied at $98.89 billion, marking the second-highest performance on record. Semiconductor exports rose 178.8% year-on-year to $41.01 billion, exceeding $40 billion for the second consecutive month, and computer exports surged 404%, driven by expanded AI infrastructure investment. Automobile exports also increased 7% to $6.24 billion on strong hybrid vehicle sales. As a result, the trade balance posted a surplus of $30.32 billion, continuing a surplus in the $30 billion range for the second consecutive month.

3. Will Warsh Cut the Number of Fed Rate Decisions for the First Time in 45 Years?

- Key Summary: Kevin Warsh, Chair of the US Federal Reserve (Fed), is reportedly considering a plan to reduce the number of regular FOMC (Federal Open Market Committee) meetings for the first time in 45 years. The New York Times reported that Chair Warsh raised the reduction of meeting frequency at the FOMC meeting held on the 28th and 29th of last month. The Fed has maintained an eight-meetings-per-year system since 1981, and legally it is possible to reduce this to as few as four times a year. However, concerns have arisen that if meeting frequency is reduced, the policy signals provided to the market would also shrink, potentially shaking the trend of enhanced transparency that has continued to date.

4. Will July Inflation Stay in the 3% Range... US Labor Data Also in Focus

- Key Summary: With Statistics Korea set to release the July consumer price trends on the 4th, attention is focused on whether the inflation rate will fall below the 3% range. The consumer price index exceeded 3% for two consecutive months in May and June due to the impact of rising international oil prices from the Middle East war. Meanwhile, the Bank of Korea will release preliminary June balance of payments data on the 6th, and amid strong semiconductor exports, the May current account posted a surplus of $38.61 billion, a record high. In the United States, employment indicators such as the job openings and labor turnover report and non-farm payrolls will be released in succession, which is expected to affect the outlook for the Fed's rate decision.

5. Worst Day for the Market... Savvy Investors Loaded Up on Samsung Electronics

- Key Summary: In the plunging market where circuit breakers were triggered for two consecutive days late last month, savvy investors were found to have bought Samsung Electronics the most. According to an analysis commissioned by Seoul Economic Daily to a major brokerage of the portfolios of 164,978 investors who achieved returns in the top 5%, the top net purchase on the 28th and 29th of last month was Samsung Electronics in both cases. Despite Samsung Electronics falling 13.3% and 5.2% respectively during this period, 19.6 billion won and 10.2 billion won worth were net purchased, and buying also concentrated on semiconductor-related stocks such as SK hynix (000660) leverage products. On the other hand, inverse products ranked among the top net sales, showing divergent responses among investors amid the declining market.

6. Value Over Earnings... LG Electronics (066570) Lowers Bar While LG Household & Health Care Sees Straight Upgrades

- Key Summary: Following the second-quarter earnings announcements of LG Group affiliates, target price forecasts have diverged among brokerages. According to FnGuide, among the LG Group reports released over the past week, target price upgrades numbered 14 and downgrades 23. Although LG Electronics and LG Innotek (011070) posted results exceeding market expectations, their target prices were lowered due to valuation burdens and stock price declines of comparable companies, while LG Household & Health Care (051900) was the only one to see its target price uniformly raised as its North American sales surpassed China and its cosmetics business turned profitable. On the other hand, LG Energy Solution (373220), LG Display (034220), and LG CNS (064400) saw their bars lowered due to early operating costs, price declines, and expanded cost burdens, respectively.