▲ 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 provides six tailored news items for each reader type.
[Key Issue Briefing]
■ Japan's shift to tightening: The Bank of Japan raised its policy rate again after three months, lifting it to the highest level in 31 years. Governor Kazuo Ueda reaffirmed his intention to keep raising rates while signaling a slower pace, saying abrupt increases could heighten market volatility. The move marked the first time Japan, the U.S. Federal Reserve and the European Central Bank all raised rates in the same month, and the foreign exchange market appears not to have read it as sufficiently hawkish.
■ Opening for tokenized stocks: The U.S. Securities and Exchange Commission sharply eased rules governing tokenized stocks, which allow listed shares to be traded in the form of digital assets. The step came two days after the Clarity Act failed to pass Congress, opening the way for fractional trading and round-the-clock trading. The U.S. Commodity Futures Trading Commission on the same day also granted an exemption from registration requirements for crypto wallet operators, and shares of related companies reacted immediately.
■ Shift in leverage: Trading in domestic single-stock leveraged products plunged, but Korean retail investors' appetite for leveraged bets overseas has not cooled. Buying that had concentrated on triple-leveraged semiconductor products in the first half moved to two- and three-times products tracking the Nasdaq 100, broadening the target of bets from sectors to indexes. Meanwhile, share prices of the largest companies by market value fell short of even the lowest target prices set by brokerages, widening the gap between analysts' expectations and actual prices.
[News of Interest to Financial Product Investors]
1. Japan's Policy Rate Hits 31-Year High; Ueda Says Further Hikes Will Be Paced
- Key points: The Bank of Japan on the 18th raised its target for the policy rate, the uncollateralized overnight call rate, by 25 basis points to about 1.25% from about 1.0% at its monetary policy meeting. That is the highest level in 31 years, since 1995, and marks the first increase in three months after the June meeting — the shortest interval between hikes since 1990. Behind the decision was a judgment that rising international oil prices, investment demand tied to artificial intelligence and a steep depreciation of the yen could push up import prices. Governor Kazuo Ueda said the policy phase had changed, reaffirming plans for further increases and leaving open the possibility of a 50-basis-point hike, but the yen weakened to the 157-per-dollar range in the Tokyo foreign exchange market that day.
2. Two Days After Clarity Act Fails, U.S. SEC Eases Tokenized Stock Rules
- Key points: The U.S. Securities and Exchange Commission said it would grant a five-year exemption from rules that had applied to tokenized stock venues meeting certain conditions on the same terms as ordinary securities exchanges. Tokenized stocks are securities that move the ownership and shareholder rights of listed shares onto blockchain tokens, allowing trading regardless of market hours and in fractions as small as one-millionth of a share. The exemption applies only when the tokens carry the same shareholder rights as ordinary shares, including dividends, voting rights and ownership; products that merely track price movements and newly issued shares are excluded. Still, prices of tokenized stocks may diverge from those on existing exchanges, and conflict-of-interest concerns have been raised because venues handle both token issuance and liquidity provision.
3. QLD and TQQQ Instead of SOXL: Korean Retail Investors' Leveraged Bets Show No Sign of Cooling
- Key points: From July 31 to the 17th of this month, Korean investors bought a net $285.27 million of ProShares Ultra QQQ (QLD), which tracks the Nasdaq 100 at twice its move, and $72.58 million of ProShares UltraPro QQQ (TQQQ), the triple-leveraged product. Combined net purchases of $357.85 million were 1.8 times the amount bought in Invesco QQQ, which tracks the same index one-for-one. Over the same period, average daily turnover in four domestic single-stock leveraged products based on Samsung Electronics (005930) and SK hynix (000660) plunged 92.7% to 663.6 billion won from 9.0899 trillion won, a drop attributed to regulators raising the basic deposit requirement to 30 million won in cash from 10 million won. Shin Seung-jin, head of the investment information team at Samsung Securities (016360), said leveraged products are largely suited to short-term positioning, so long-term investors would do better to use ordinary index exchange-traded funds.
4. Widening Gap for Large Caps: Prices Fall Short of Even the Lowest Targets
- Key points: According to financial data provider FnGuide, an analysis of nine of the 10 largest stocks by market value, excluding Samsung Electronics preferred shares, showed that as of the close on the 18th, eight of them — all but SK hynix — traded below the lowest target prices set by brokerages. The widest gap was at SK Square (402340), which closed at 1.079 million won, up 7.04% on the day, but would have to rise another 39.0% to reach the lowest target of 1.5 million won. Samsung Electronics closed at 261,000 won, up 3.37%, 3.4% below its lowest target of 270,000 won, while its average target price of 487,045 won is 86.6% above the current price. Target prices climbed steeply from late last year through the first half of this year, while actual prices moved in a range in response to interest rates and supply-and-demand factors, and the downward rigidity of target prices has also been cited as a factor widening the gap.
▶Read the article: Japan's Policy Rate Hits 31-Year High; Ueda Says Further Hikes Will Be Paced
▶Read the article: HD Hyundai Heavy Industries Union Declares Talks Broken Off; Pre-Chuseok Deal Effectively Off the Table
