Chip ETFs Face Rebalancing, With 210 Billion Won in Samsung Shares Set to Be Sold

* 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 news items tailored to each reader type.

1. Chip ETFs Facing Rebalancing Draw Demand Toward Materials and Equipment Makers

- Key summary: With attention turning to shifts in demand for makers of chip materials, parts and equipment ahead of the scheduled rebalancing of semiconductor ETFs, the seven chip ETFs set for index changes this month held combined net assets of 18.9436 trillion won as of the 2nd, according to the Korea Exchange. The TIGER Semiconductor TOP10 fund holds 26.98% in Samsung Electronics, 1.98 percentage points above the 25% cap on a single stock, meaning it must cut about 209.8 billion won. Samsung Securities estimated the process will generate buying demand of about 90 billion won for SK hynix and about 80 billion won for SK Square. "Because the rebalancing overlaps with the options expiration day and is therefore concentrated, investors need to watch for wider price volatility from clashing supply and demand in the stock market," said Jun Kyun, an analyst at Samsung Securities.

2. [Investment Window] The Won-Dollar Rate Has Paused. Will It Rise Again?

- Key summary: The won-dollar rate, which topped 1,550 in early June this year, fell to around 1,330 in early September and has since paused in the mid-1,300 range. The writer expects a level around 1,400 at the end of this year and said the possibility of a rise into the mid-to-high 1,400s next year should be left open, depending on how far external conditions deteriorate. Factors supporting a stronger won, such as SK hynix's issuance of American depositary receipts and policy coordination among Korea, the U.S. and Japan, have already been largely priced in during the slide. By contrast, weakening factors such as U.S. market interest rates rising above 5.1% and the dollar index breaking past 101 have been less fully reflected, according to the writer. The $200 billion investment program in the U.S. is capped at $20 billion a year in disbursements, but as direct investment it was cited as a variable likely to lift corporate dollar demand on a trend basis.

3. Margin Rates on Samsung and SK hynix Derivatives Cut for First Time This Year

- Key summary: The Korea Exchange lowered margin requirements on Samsung Electronics and SK hynix futures for the first time this year. In October's regular adjustment of the derivatives market, the margin rate for Samsung Electronics fell 7.35 percentage points to 42.60% from 49.95%, while SK hynix's declined 0.90 percentage point to 49.05% from 49.95%. Rates for KOSPI 200 and KOSDAQ 150 futures were held at 21.75%. The two stocks' margin rates, at 22.20% and 29.85% respectively in January, climbed through the year and reached just below the 50% ceiling in September. "With cash trading volume at its lowest level of the year, many pointed out that high derivatives margins deepened the liquidity gap," a securities industry official said. "It is a signal that as the market has found a floor, the exchange has shifted its policy direction toward supplying liquidity and reviving trading."

4. IPO Market Lowers the Bar as Companies Worth 100 Billion Won Return

- Key summary: Companies with market values hovering around 100 billion won have returned to the initial public offering market. Optonics, an optical components maker, filed its securities registration statement on the 29th of last month to launch a KOSDAQ offering. Based on the indicative price range of 10,000 to 12,000 won set with underwriter Korea Investment & Securities, its market value is projected at 95.7 billion to 114.8 billion won. The Korea Exchange also approved reviews on the 28th of last month for Celltrix, Solix and Luxco, which are pursuing mergers with special purpose acquisition companies. Their post-merger market values stand at 107.9 billion won, 95.7 billion won and 93.6 billion won respectively, marking the first time in seven months that SPAC merger candidates valued at around 100 billion won have cleared the exchange's threshold. Analysts attribute the shift to a six-month delay in tighter delisting rules that had been set to take effect next year, along with mounting difficulty for venture capital firms in exiting investments.

5. "AI Investment to Run One or Two More Years, With Memory and Power as Beneficiaries"

- Key summary: Lei Qiu, chief investment officer for thematic equities at AllianceBernstein, said in an interview with Seoul Economic Daily that AI-related spending will remain substantial over the next 12 to 24 months. The current AI boom differs from the dot-com bubble because companies with profitability and scale are leading the investment, she said, while cautioning against the possibility of overinvestment at some firms. On Korean chipmakers, she said they "occupy a strategically important position in memory, particularly high-bandwidth memory and DRAM." She also said she favors companies that resolve bottlenecks, such as makers of power grid equipment, cables and liquid cooling systems. AB's International Technology portfolio holds 60 to 90 growth companies with solid cash flow.

6. If Seoul Home Prices Rise 10% a Year, Property Tax on Major Complexes Jumps 50% by 2030

- Key summary: If Seoul home prices keep climbing, the property tax burden on major apartment complexes could rise more than 50% on average by 2030 from this year, according to an analysis. A simulation that Rep. Shin Dong-wook of the People Power Party obtained from KB Kookmin Bank covered the 125 highest-priced complexes across Seoul's 25 districts. If the 10.3% gain in sale prices recorded from January through September this year repeats annually and the fair market value ratio stays at 45%, the average base property tax would rise 53.5% to 3.373 million won from 2.197 million won. The increase reaches 76.1% for 15 complexes in the Nowon, Dobong and Gangbuk districts, outpacing the 46.6% rise in Gangnam, Seocho and Songpa. If the ratio is raised to 60%, the average property tax in 2030 would reach 4.71 million won, or 2.14 times this year's level. Even with the ratio held at 45% and the price growth assumption lowered to 5.15%, the figure would still rise 28.6%.