▲ AI PRISM* Personalized Economic Briefing
* Editor's note: "AI PRISM" (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and delivers six news items tailored to each reader type.
[Key Issue Briefing]
■ Yen Rebounds Sharply: The yen, which had kept weakening despite currency coordination between the U.S. and Japan, climbed to a fresh high for a second straight day. Expectations that the Bank of Japan will raise rates again this year and speculation that Japan's Government Pension Investment Fund (GPIF) will expand its yen-denominated holdings gained traction at the same time. Investment banks warned that if the 155 yen per dollar line breaks, a chain of short-position unwinding would accelerate the yen's strength. Carry trade positions built on interest rate differentials are also showing signs of being unwound.
■ Fed Turns Cautious: Influential figures at the U.S. Federal Reserve have voiced caution about raising rates one after another. Behind the shift is a judgment that, while inflation still runs above the 2% target, the downward trend in core prices has become clear. As a result, expectations in the futures market for a September hike weakened sharply in a single day. Views are also growing that the U.S.-Japan interest rate gap could narrow, given the prospect of a Bank of Japan hike.
■ Rotation Into Batteries: Signs have emerged of a rotation in which money that had crowded into large-cap semiconductor stocks is moving into secondary batteries. Energy storage systems (ESS) are emerging as a way to offset slowing electric vehicle demand, and expectations for the commercialization of all-solid-state batteries have added to the shift. Expanded North American production by domestic battery makers has also supported investor sentiment. Retail money continues to flow steadily into related exchange-traded funds (ETFs).
[News of Interest to Financial Product Investors]
- Key summary: The yen strengthened to as much as 155.3 per dollar during trading on the 4th, its highest level in a month. Compared with 160.39 on the 2nd, that is a gain of more than 5 yen, or 3.2%, in two days. The trigger came from Hajime Takata, a Bank of Japan policy board member and a leading hawk, who said there is no need to fix the size of increases at 0.25 percentage point and raised the possibility of a big step — a move that lifts the benchmark rate by 0.50 percentage point at once. Nomura Securities projected that the Bank of Japan could raise rates three times in a row through December. JPMorgan Chase estimated that yen short positions amount to 16 trillion to 17 trillion yen and said that a move below 155 could trigger unwinding that accelerates the currency's strength.
2. Fed Heavyweights Sound Dovish in Succession — Waller Says Inflation at 2.8% Is Acceptable
- Key summary: Federal Reserve Governor Christopher Waller said on the 3rd that signs of disinflation are appearing and that he would support holding rates steady if data over the next two weeks continue along the same path. His remarks followed a similarly cautious tone from New York Federal Reserve President John Williams the previous day. Waller stressed that the three-month average rate of core price increases, excluding food and energy, had come down from 4.76% in February to 3.05%, and said a three-month core inflation rate of 2.8% is an acceptable level. He drew a line, however, saying that a hike could be appropriate at the September Federal Open Market Committee (FOMC) meeting if August data released on the 11th show the slowdown was temporary. Based on the Chicago Mercantile Exchange (CME) FedWatch tool, the probability of a 0.25 percentage point increase in September fell from 63.2% to 50.5%.
3. Rotation From Chips to Batteries — Up 21% in a Month
- Key summary: The KODEX All-Solid-State Battery ESS TOP2 Plus posted a one-month return of 21.24%. Cumulative net buying by retail investors since its listing in June this year totaled 50.9 billion won. The product holds LG Energy Solution (373220) and Samsung SDI (006400) at 27.65% and 27.14% respectively, putting the two stocks at more than 54% of the fund, with the remainder spread across power equipment makers such as LS ELECTRIC (010120) and Hyosung Heavy Industries (298040), along with companies in ESS materials and components and key all-solid-state battery materials. According to SNE Research, global shipments of lithium-ion batteries for ESS reached 461.3 gigawatt-hours in the first half of this year, up 71% from a year earlier, while the two companies' combined share of the North American market rose from 13.9% to 19.7%.
- Key summary: Shares of Korea Gas Corporation (036460) closed at 35,100 won on the 4th, down 2,600 won, or 6.90%, from the previous session, after falling more than 8% during trading. The decline followed the government's plan, unveiled the previous day as part of a push to overhaul the functions of state-run institutions, to merge Korea Gas Corporation and Korea National Oil Corporation into an entity tentatively named Korea Energy Resources Corporation. Korea National Oil Corporation carries debt of more than 20 trillion won and has fallen into a state of complete impairment of capital, while Korea Gas Corporation had unrecovered receivables of 14.178 trillion won as of the first half of this year, fueling concerns that the merged entity's financial burden could grow. Investors argue that the government decided on the merger while disregarding the views of minority shareholders, breaching the duty of loyalty to shareholders under the revised Commercial Act, and are demanding protective measures such as a tender offer.
▶Read the article: Yen Jumps on Japanese Rate Hike Bets and Pension Buying Talk — Break Below 155 Would Push It Higher
▶Read the article: "The Government Breached Its Duty of Loyalty to Shareholders" — Korea Gas Falls 7% on Merger With Oil Corp
▶Read the article: Only 27 KOSDAQ Listings This Year — IPO Slump Clogs VC Exit Market
