▲ 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]
■ Physical AI Expansion: The era of physical artificial intelligence, in which robots perceive and make judgments on their own, is arriving faster than expected. Nvidia is bundling everything from AI factories for training to simulation platforms, robot foundation models and on-device chips into a single ecosystem, extending into physical space the full-stack strategy it proved in the data center, according to analysts.
■ Global Rate Surge: Long-term government bond yields in major economies have all jumped to their highest levels in decades as rising international oil prices tied to the Middle East situation compounded concerns over fiscal soundness. Korean treasury bond yields have risen in step, and interest burdens on households and the self-employed are swelling quickly.
■ Shorter Bond Maturities: Money continues to flow out of domestic bond funds in the wake of two consecutive rate increases by the Bank of Korea, while large sums have gathered only in ultra-short bond funds, which are less sensitive to rate moves. With upward pressure on market rates still in place amid the prospect of further tightening, investors are continuing to shorten maturities.
[News of Interest to Global Investors]
1. [Investment Window] Nvidia's Second Golden Age
- Key points: Nvidia is widening its business reach beyond the data center into physical AI. At CES earlier this year, Nvidia declared a ChatGPT moment for physical AI, and Chief Executive Jensen Huang presented humanoids and labor automation as a $40 trillion market. Amazon Web Services will additionally deploy 2 million graphics processing units from the Blackwell Ultra, Rubin and Rubin Ultra generations over 2027 and 2028, while Amazon Robotics has adopted the full-stack platform running from Jetson to Omniverse, Isaac and Cosmos. Nvidia's 12-month forward price-to-earnings ratio stands at 18.7 times, below the S&P 500's 19.9 times, while its projected average annual earnings-per-share growth for 2026 through 2028 is 52.7%, far above the index's 20.1%.
- Key points: Rising international oil prices tied to the Middle East situation and concerns over fiscal soundness are cited as the reasons long-term government bond yields in major economies have all surged to their highest levels in decades. With yields climbing in succession in the United States, Britain, Japan, France and Germany, analysts say Korea is not a safe haven either. On the 2nd, the three-year treasury bond yield stood at 3.930%, near this year's high of 3.959%, and the 10-year yield rose to 4.418%. As a result, five-year fixed mortgage rates at the five major commercial banks ranged from 4.72% to 7.12%, up 0.79 to 0.89 percentage points from the end of last December, when they ranged from 3.93% to 6.23%. Household credit stood at 2,019.8 trillion won at the end of June this year, topping 2,000 trillion won for the first time, and every 0.25 percentage point increase in lending rates adds 1.8 trillion won to the interest burden of the self-employed.
3. "Keep Bond Investments Short": Large Sums Flow Only Into Ultra-Short Bonds
- Key points: Assets in domestic bond funds fell by 385.1 billion won over the past month to 88.6344 trillion won. By category, 625.5 billion won flowed out of government and public bond funds, while 648 billion won flowed into ultra-short bond funds, a clear split in money flows. Three-month returns also diverged, with government and public bond funds posting a loss of 1.69% while ultra-short bond funds returned 0.80%, demonstrating their defensive quality. After the Bank of Korea raised its base rate from 2.50% to 2.75% in July and lifted it further to 3.00% last month, Hana Securities projected a terminal rate of 3.50% and said three-year and 10-year treasury yields could climb to peaks of 4.3% and 4.7% within the year.
[Reference News for Global Investors]
4. Share Buybacks Offer Little Shield as Rates and Oil Shake Stocks
- Key points: Weighed down by geopolitical risk from the Middle East and surging U.S. Treasury yields and international oil prices, the KOSPI closed at 6562.72 on the 2nd, down 3.99%, or 273.08 points. News that China's ChangXin Memory Technologies had begun small-volume production of fifth-generation high-bandwidth memory added to the pressure, sending Samsung Electronics (005930.KS) down 4.02% to 250,500 won and SK hynix (000660.KS) down 4.73% to 1.613 million won. Renewed armed conflict between the United States and Iran pushed the U.S. 10-year Treasury yield above 4.80% and lifted West Texas Intermediate crude for October delivery above $91 a barrel, spreading risk aversion. Meanwhile, net inflows into the iShares MSCI South Korea ETF, a benchmark fund for Korean exposure, totaled $369.61 million in August, down 92.3% from $4.77477 billion in July.
5. AI Data Centers Revive Battery ETFs, Up 30% in a Month
- Key points: Long-neglected battery stocks rebounded, sending related exchange-traded funds to the top of the return rankings. TIGER Secondary Battery TOP10 Leverage gained 45.88% over the past month and KODEX Secondary Battery Industry Leverage rose 38.99%. Their one-week returns of 13.96% and 11.30% ranked first and second among all domestically listed ETFs. Semiconductor stocks paused on the prospect of rate increases and cash flow pressure at big tech firms, drawing rotational money into batteries, while the spread of artificial intelligence data centers has made energy storage systems a new source of battery demand. The North American ESS market reached 75.9 gigawatt-hours in the first half of this year, up 83% from 41.5 gigawatt-hours a year earlier, and the combined share of LG Energy Solution (373220.KS) and Samsung SDI (006400.KS) rose to 19.7% from 13.9%.
6. Overseas Subsidiaries Gain Value as Foreign Stock Filings Hit Record 61.3 Trillion Won
- Key points: The National Tax Service said on the 2nd that reported overseas financial account holdings totaled 107.1 trillion won this year, up 13.3%, or 12.6 trillion won, from last year. It was the first time in three years that the figure topped 100 trillion won, following 186.4 trillion won in 2023. Stocks drove the increase, with reported overseas equity holdings rising 27.4% from a year earlier to 61.3 trillion won, or 57.2% of the total. Corporate filings of overseas stock holdings led the gain, climbing 11.8 trillion won to 53.1 trillion won from 41.3 trillion won. Excluding virtual asset accounts, the United States accounted for the largest amount at 29.7 trillion won. India ranked second at 28.9 trillion won, up 7.2 trillion won from a year earlier. The tax agency cited stock listings by overseas subsidiaries in India, the United States and Taiwan and gains in their share valuations.
▶Read the article: U.S.-Born "Rate Tsunami" Hits Korea's Low- and Middle-Income Households and Stretched Homebuyers First
▶Read the article: Even the Government Could Not Cross the Southern Limit Line for Talent
▶Read the article: August Prices Rise 3.1%, With Everyday Goods Costs Also Stirring
