U.S. Treasury Yields Hit Highest Since 2007, Won Slides to 1,365

* 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.

1. U.S. Treasury Yields Highest Since 2007; 3 Trillion Won in Foreign Net Selling Deepens Won Weakness

- Key points: The won-dollar rate closed at 1,365.10 on the 28th in the Seoul foreign exchange market, up 7.6 won from the previous session's close. According to the Bank of Korea's overseas offices, the U.S. two-year Treasury yield stood at 4.85% as of the 25th, the 10-year at 5.16% and the 30-year at 5.49%, with the five-, 10- and 30-year yields at their highest since 2007. Remarks following the September Federal Open Market Committee meeting left open the possibility of further rate increases, weakening expectations for cuts. A U.S. Treasury buyback also came in at just $4.08 billion, short of the $6 billion cap, damping appetite for bonds. Market watchers say the won-dollar rate could trade in the 1,350 to 1,370 range for the time being, with month-end exporter dollar selling and Middle East negotiations capping the upside.

2. KOSPI Gives Up 7,000 for First Time in Four Sessions as Selling Targets Chip Stocks

- Key points: The KOSPI closed at 6,889.74 on the 28th, down 191.18 points, or 2.70%, falling below 7,000 for the first time in four sessions. Foreign investors and institutions net sold 3.2403 trillion won and 1.0174 trillion won respectively, while individuals net bought 2.6053 trillion won to defend the index. Samsung Electronics ended down 5.43% at 270,000 won and SK hynix fell 5.05% to 1,768,000 won, ranking first and second among foreign net-sold stocks. The 30-year U.S. Treasury yield's surge to 5.519% during the holiday and international oil prices approaching $100 a barrel again weighed on sentiment.

3. Three-Year Korean Treasury Yield Tops 4.1% as U.S. Rates Surge

- Key points: The three-year Korean treasury bond yield closed at 4.119% on the 28th in the Seoul bond market, up 0.113 percentage points and its highest level since November 2022. The five-year yield stood at 4.345% and the 10-year at 4.539%, with all maturities rising. During the holiday, the U.S. 10-year Treasury yield topped 5.2% and the 30-year exceeded 5.5%. Analysts said domestic yields followed suit because there was no offsetting factor to cushion the move. The Bank of Korea held a market situation review meeting the same day, chaired by Deputy Governor Kwon Min-soo, examining the direction of negotiations between the United States and Iran, fiscal soundness concerns in major economies and shifting expectations for the artificial intelligence industry as key variables.

4. [Investment Window] Find Tomorrow's Winners

- Key points: The FTSE Russell index's regular reconstitution in June this year significantly changed the composition of the Russell 1000 Growth index. As memory stocks moved from the value index to the growth index, the weighting of semiconductor and semiconductor equipment companies expanded to 33.1% from 24%, while the weighting of the Magnificent Seven fell to 43.1% from 52.8%. Market-capitalization weighting is effective when leading stocks are rising, but a concentrated portfolio faces greater risk if semiconductor demand slows or if AI capital expenditure fails to translate into earnings. That risk was on display in July, when shares of some large memory companies plunged more than 25% in a single month.

5. Trading Activity Cools on KOSPI; Turnover Ratio at 0.5%, Lowest This Year

- Key points: The average daily turnover ratio for KOSPI-listed shares was 0.50% from the 1st to the 23rd of this month, the lowest level this year. After peaking at 1.74% in March, it declined for six straight months, to 1.48% in April, 0.81% in June and 0.54% in August. This month, individuals and foreign investors net sold 16.6931 trillion won and 16.4192 trillion won respectively on the main board. Share buybacks at Samsung Electronics and SK hynix were also 85.95% and 66.27% complete, leaving less room for that source of demand. Securities analysts point to the U.S. personal consumption expenditures price index for August and Micron's earnings, both due on the 30th, as the keys to a rebound.

6. Samsung Electro-Mechanics (009150) Overcomes Won Strength; Third-Quarter Operating Profit Seen at 605.1 Billion Won

- Key points: According to financial data provider FnGuide, the consensus estimate for Samsung Electro-Mechanics' third-quarter operating profit is 605.1 billion won, nearly triple the 206.3 billion won posted a year earlier. That is about 30% higher than the 470 billion won estimate of three months ago, and KB Securities and iM Securities forecast more than 650 billion won. The company's heavy reliance on dollar-denominated revenue makes won strength a burden. Still, analysts said demand for components and rising unit prices driven by the AI data center boom should offset that. Earlier this month, Samsung Electro-Mechanics signed a record 1.0722 trillion won supply contract in its multilayer ceramic capacitor business, and the share of long-term agreements is also rising for flip-chip ball grid array substrates used in AI chips.