Korean Won Breaks Below 1,390 Per Dollar for First Time in 11 Months

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

1. Won-Dollar Rate Falls for 5th Straight Session; National Pension Service Hedging Is the Variable

Key Summary: The won-dollar exchange rate closed at 1,392.6 won, down 5.1 won from the previous day, marking its lowest level in 11 months since September last year, and fell as low as 1,384.1 won during the session. A decisive factor was the U.S. Treasury doubling the size of its long-term bond buybacks to $4 billion per operation from a previous maximum of $2 billion, which pushed the dollar index down into the 98 range. That amounts to a drop of more than 175 won in less than two months from the July 1 peak of 1,559.20 won. Citi cited the direction of the National Pension Service's foreign-exchange hedging ratio as the variable that will determine whether the won's strength persists. Analysts say that if the exchange rate holds below around 1,390 won, the NPS may refrain from raising its hedging ratio further or resume spot dollar purchases in the second half, which is expected to serve as a factor supporting the floor for the exchange rate.

2. Praise for hynix's Record Shareholder Returns Ignites KOSPI Surge

Key Summary: SK hynix declared it would buy back and cancel its entire treasury stock worth 40 trillion won within the next three months and return more than 50% of cumulative free cash flow (FCF) from 2025 to 2027. It was a striking move that raised the threshold from the previous "up to 50%" to "more than 50%," which JP Morgan called "the most aggressive shareholder return among global peers." The KOSPI closed at 6,852.58, up 381.41 points (5.89%), and the 24th buy-side sidecar of the year was triggered. In the market, forecasts that Samsung Electronics will soon unveil a shareholder return plan of around 150 trillion won are accompanied by assessments that the "concrete shareholder returns" that had been a key condition for foreign investors' return have now been met.

3. Optical Transceiver Supply Crunch Boosts Coherent's Growth

Key Summary: As the investment focus of AI data centers shifts from computing power to data transmission speed, the supply shortage in the market for optical transceivers moving from 800Gbps to 1.6Tbps is intensifying. Coherent has secured long-term supply contracts with customers through the late 2020s and has built a structural production-expansion system that can increase chip output by up to fourfold by converting its existing 3-inch wafer process to 6-inch. Revenue from the "PhotonLink" platform, set to be unveiled in September, and from next-generation co-packaged optics (CPO) is expected to be reflected in earnest from next year, and its more than 20 production facilities in the United States are seen as a supply-chain competitive advantage if regulations on Chinese-made optical transceivers tighten. Analysts say that the more the AI data center bottleneck shifts from GPUs to networks, the greater Coherent's medium- to long-term growth potential will become.

4. Samsung Up 9%, hynix Up 13%; KOSPI Rises 5.9% to Close at 6,850 Level

Key Summary: Foreign investors net bought 1.71 trillion won on the KOSPI that day, leading the index's rise, while individuals net sold 2.27 trillion won and institutions net sold 490.2 billion won. The fact that the U.S. Treasury expanded its buybacks of 10- to 30-year Treasuries by at least double from the previous level, pushing the 30-year yield down more than 10 basis points, also helped improve risk-asset sentiment. Samsung affiliates such as SK Square (up 11.85%) and Samsung C&T (up 7.78%), along with KOSDAQ-listed Alteogen (up 11.86%), also rose in tandem, spreading the rebound broadly. KB Securities analyzed that "the easing of interest-rate pressure combined with news of SK hynix's shareholder returns has strengthened the basis for a rebound."

5. Amid a String of "Excess-Return" Delistings, Easing of Active ETF Rules Is on Hold

Key Summary: Financial authorities have firmed up a policy of not easing, for the time being, the rule requiring active ETFs to maintain a correlation coefficient of 0.7 or higher with their benchmark index. The ACE TDF series and TIME U.S. Dividend Dow Jones Active, which were delisted for failing to meet the correlation coefficient, were in fact products that had outperformed their benchmark indexes, fueling growing industry discontent. While the market is expanding rapidly — the growth rate of active ETFs this year reached 15.9%, double that of passive ETFs (9.1%) — the delisting risk from maintaining the regulation remains an issue that investors must continually monitor. The authorities maintained the position that without the correlation coefficient rule, it would be difficult to control investor harm if products with lower returns than their benchmark indexes were run over long periods.

6. The Paradox of the KOSPI Surge; Net External Financial Assets at $64 Billion, a 12-Year Low

Key Summary: According to the Bank of Korea, net external financial assets stood at $64 billion at the end of the second quarter, down $689.5 billion from the previous quarter — the largest decline since statistics began in 1994 and the lowest level since 2014. This resulted from the balance of foreign-held equity securities swelling from $1.0325 trillion to $1.8806 trillion as the KOSPI surged 67.8%, and analysts say its nature differs in that the cause was a rise in valuation from higher domestic stock prices rather than an expansion of external borrowing. Korea ranked 8th in the world at the end of 2024 (with net external financial assets of $1.0864 trillion) but had already slipped to 9th in the first quarter of this year, and a further decline is unavoidable. The Bank of Korea said "net external claims are stable and external payment capacity is sound," but analysts note that given the metric's sensitivity to asset-price movements, the reverse effect during a stock market correction also needs to be kept in mind.