Yen Jumps on BOJ Hike Bets, Pension Fund Buying Talk

* 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. Key Fed Officials Deliver String of Dovish Remarks; Waller Says Inflation at 2.8% Is Acceptable

- Key summary: Federal Reserve Governor Christopher Waller said at a Reuters event on the 3rd that signs of disinflation — a gradual slowing in the pace of price increases — are finally emerging, and that he would support holding rates steady if data over the next two weeks follow the same trend. Waller emphasized that the three-month average core inflation rate excluding food and energy stood at 3.05%, which does not meet the 2% target but has fallen steadily from 4.76% in February. In a question-and-answer session, he said a three-month core inflation rate of 2.8% would be an acceptable level. The remarks followed cautionary comments from New York Federal Reserve President John Williams, regarded as the effective No. 2 at the Fed. As a result, the probability of a 0.25 percentage point rate increase in September fell to 50.5% from 63.2% the previous day, based on the CME FedWatch Tool.

2. Yen Jumps on BOJ Hike Bets, Pension Fund Buying Talk; Further Gains if 155 Breaks

- Key summary: The yen strengthened to as much as 155.3 per dollar during trading on the 4th, its highest in a month, before settling in the 156.2 range. Compared with 160.39 on the 2nd, that marks a gain of 5 yen, or more than 3.2%, in two days. The trigger was a comment from Bank of Japan board member Hajime Takata, considered a hawk, who said there is no need to fix the interval or size of rate increases, raising the possibility of a big step — a single 0.50 percentage point increase in the policy rate. The yen's strength was also lifted by suggestions that the Government Pension Investment Fund may have begun procedures to raise its allocation to Japanese bonds after holding a board of governors meeting on the 21st of last month for the first time in seven years. JPMorgan Chase estimated that short yen positions amount to 16 trillion to 17 trillion yen and said a move below 155 could set off a cascade of short covering. At the same time, it said expectations for the Japanese pension fund and the Bank of Japan appear somewhat excessive, and that the currency is unlikely to move far outside its projected range of 155 to 165.

3. Only 27 KOSDAQ Listings This Year as IPO Slump Chokes VC Exit Market

- Key summary: Venture investment in the first half of this year reached a record 8.8676 trillion won, while the initial public offering market, a main exit route, contracted sharply. According to the Korea Exchange, new KOSDAQ listings this year number just 27 excluding SPACs, and even accounting for 20 companies that have cleared preliminary review, the annual total is likely to fall short of 50. Last year, 69 companies listed. Meanwhile, the Financial Services Commission plans to expand the National Growth Fund to 200 trillion won from 150 trillion won and inject 40 trillion won this year alone. FuriosaAI, which received 370 billion won in direct investment from the National Growth Fund and was valued at about 3 trillion won, carries a price-to-sales ratio of 522.6. The securities industry is pursuing secondary fund investments of up to 1 trillion won over the next three years, and the government has allocated 200 billion won of this year's fund-of-funds resources to forming secondary funds, part of a broader push to widen exit channels.

4. Four U.S. Advanced Tech Firms to Invest 2.8 Trillion Won in Korea; Kim Jung-kwan Vows Chips Won't Face Unfavorable Tariffs

- Key summary: Four U.S. companies in semiconductor materials and equipment and clean energy will invest a combined $2 billion, or about 2.8 trillion won, in South Korea. At an investment signing ceremony held by the Ministry of Trade, Industry and Energy and the Korea Trade-Investment Promotion Agency at the Willard Hotel in Washington on the 3rd, Air Products said it will build industrial gas supply infrastructure at a next-generation semiconductor production hub in Pyeongtaek, Gyeonggi Province. Axcelis Technologies will expand its ion implanter manufacturing facility in Pyeongtaek, and Corning will upgrade its production site in Asan, Chungcheongnam Province. Pacifico Energy is also pursuing a 3.2 gigawatt offshore wind farm in waters off Jindo, Jeollanam Province. Trade Minister Kim Jung-kwan said that during tariff negotiations in October last year there were discussions about treating Korean semiconductors no less favorably than those of competing countries. On the possibility of a structure similar to the U.S.-Taiwan agreement, he noted that deliberations are under way in Taiwan's legislature.