KOSDAQ Jumps 32% After Single-Stock Leverage Curbs

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

1. Curbing Leverage Revives the KOSDAQ

- Key Summary: The KOSDAQ market is recovering quickly after regulations on single-stock leverage products were tightened. On the 10th, the KOSDAQ index closed at 854.47, up 55.66 points (6.97%) from the previous session, a gain of 32.5% from the 644.78 recorded on the 30th of last month, the final trading day before the regulations took effect. During this period, a sidecar (a temporary halt on program buy orders) was triggered four times, and institutions posted overwhelming buying, purchasing 1.5222 trillion won worth of shares over seven trading sessions. Market watchers interpret this as a "spillover effect," in which money that had concentrated in leverage products flowed into KOSDAQ-related ETFs (exchange-traded funds).

2. Rotation Rally Begins Into Chip Materials and Bio; Forecasts Split Between Short-Term Rebound and Trend Recovery

- Key Summary: Brokerage assessments are diverging sharply over the nature of the KOSDAQ's August strength. Yoo Jong-woo, head of the research center at Korea Investment & Securities, characterized it as closer to a short-term rebound driven by individual investors' money moving in pursuit of high risk and high returns, while Park Yeon-joo, head of the research center at Mirae Asset Securities (006800), said she judges it to be a trend recovery, as earnings are passing their trough. Institutional money in fact concentrated on net purchases from the 31st of last month through this day: 384.3 billion won in the electrical and electronics sector, which spans semiconductor materials, parts and equipment as well as information technology (IT), and 169.3 billion won in the KOSDAQ pharmaceutical sector. Experts also pointed out that a sustained long-term rise will be possible only if institutional improvements such as the delisting of zombie companies and the introduction of a promotion-relegation system (segment reform) are put in place as support.

3. Declaring War on Bond Yields: Bessent's Three Cards

- Key Summary: U.S. Treasury Secretary Scott Bessent is mobilizing every policy tool to bring down soaring long-term Treasury yields. The 30-year U.S. Treasury yield rose to as high as 5.28% intraday on the 31st of last month, its highest level in about 19 years since July 2007. In its Quarterly Refunding Announcement (QRA), the Treasury changed its language on issuance of coupon bonds and floating-rate notes (FRNs) from a review of "increases" to a review of "changes," and after joining Japan in coordinated yen buying intervention for the first time in 28 years since 1998, it also lent support to Federal Reserve (Fed) Chair Kevin Warsh. Still, observers noted that removing the underlying cause faces limits, with the annual fiscal deficit approaching $2 trillion and national debt reaching about $40 trillion.

4. Growth Assessment Upgraded, but U.S. Tariffs and Middle East Risks Resurface

- Key Summary: In its August "Economic Trends" report on the 10th, the Korea Development Institute (KDI) assessed that the Korean economy is showing a broadening recovery centered on chip-related sectors. All-industry production in June rose 4.2% from a year earlier, facility investment increased 21.7%, and July exports surged 62.8%, producing a trade surplus of $30.32 billion. On the other hand, the gain in the number of employed people in June was just 63,000, far below the first-quarter average of 183,000, and while the July consumer price inflation rate eased to 2.8%, core inflation edged up to 2.6%. Accordingly, the KDI again cited U.S. tariff measures and instability in the Middle East as risk factors, assessing that internal and external uncertainty persists.

5. SK Group Concentration Eases; Trading Value Share Falls to 30% Range

- Key Summary: The trading influence of SK Group, which had swayed the stock market, is shrinking rapidly. According to the Korea Exchange on the 10th, the share of trading value at 19 SK Group affiliates was 35.08%, down sharply from 51.67% on the 3rd of last month, narrowing the gap with Samsung Group (33.47%) to 1.61 percentage points. Over the same period, SK hynix (000660) shares fell 41.36% from 2.425 million won to 1.422 million won, and SK Square also dropped 40.28%. Meanwhile, the trading value shares of other major groups all expanded — Hanwha (000880) Group by 2.98 percentage points and LG (003550) Group by 1.27 percentage points — reflecting a dispersal of investor interest.

6. Bae Jae-kyu: "Invest Long-Term in Korea's Growth Industries Rather Than Chase Leverage"

- Key Summary: Bae Jae-kyu, president of Korea Investment Management, again sounded a note of caution about leverage investing aimed at short-term gains. At a seminar on the 10th for the new listing of ACE ETFs, Bae said that investing is a function of direction and time, and that portfolios should be built around strategic industries with global competitiveness. Korea Investment Management will list the "ACE Semiconductor Plus Strategic Industry ETF," which reflects this philosophy, on the 11th; it holds at least 40% in semiconductors, permanently includes shipbuilding, defense and nuclear power, and swaps out one strategic industry each quarter based on quantitative assessment. As of the listing, the additional strategic industries have been set as autos and humanoids.