▲ 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 provides six news items tailored to each reader type.
[Key Issue Briefing]
■ Rate hold expected: Expectations are dominant that the Bank of Korea will keep its base rate unchanged at around 3% at its monetary policy board meeting on the 22nd. Forecasts follow that the central bank will move to raise the rate again in November after assessing the tightening effects of consecutive increases in July and August. Whether the government will scale back treasury bond issuance has also emerged as a focus for the bond market.
■ Semiconductor correction phase: Sharp declines in shares of Samsung Electronics (005930.KS) and SK hynix (000660.KS) have spread across the materials, parts and equipment sector. With technological catch-up by China's ChangXin Memory Technologies (CXMT) and doubts about the sustainability of artificial intelligence investment overlapping, supply-demand conditions and investor sentiment are driving share prices more than individual corporate earnings.
■ Shift in fund flows: The National Pension Service is reviewing the creation of a fund dedicated to data centers, widening its stride in alternative investments. In addition, as stock market volatility has increased, money is returning to gold banking accounts and gold bars, reviving demand for safe-haven assets.
[News of Interest to Financial Product Investors]
- Key summary: In a survey of 20 professors of economics and business administration and financial experts conducted by The Seoul Economic Daily on the 18th, 19 respondents, or 95%, forecast that the monetary policy board would hold the base rate on the 22nd. The reason cited was that time is needed to confirm the policy effects of two consecutive increases in July and August. However, 18 respondents, or 90%, expected an additional hike in November this year, and core inflation was cited by 16 respondents, or 80%, as the variable the Bank of Korea would weigh most heavily in setting rates. In addition, nine experts, or 45%, projected that the government would use excess tax revenue from the semiconductor boom to cut treasury bond issuance by a further 5 trillion to 10 trillion won over the two months of November and December.
- Key summary: From the 12th to the 16th of this month, Samsung Electronics and SK hynix fell 17.75% and 24.33%, respectively, marking their largest weekly declines since the fourth week of October 2008. Over the same period, semiconductor materials, parts and equipment stocks also dropped more than 20%, including Eugene Technology (084370.KQ), down 25.35%; LB Semicon (061970.KQ), down 22.09%; Hanmi Semiconductor (042700.KS), down 21.35%; and Hana Micron (067310.KQ), down 20.21%. As recently as the 1st to the 8th of this month, these shares had been rising on expectations of expanded capital spending, but the pattern of differentiation collapsed within a week. Over the same period, foreign investors sold a net 11.239 trillion won on the main board, leaving buying by individuals and institutions unable to absorb the volume.
- Key summary: ChangXin Memory Technologies, China's largest D-RAM manufacturer, estimated its third-quarter revenue at 114.7 billion to 119.7 billion yuan, or about 22.95 trillion to 23.95 trillion won. That represents growth of 589% to 619% from a year earlier, and CXMT Chairman Zhu Yiming on the same day proposed a share buyback of 1 billion to 2 billion yuan, or about 200 billion to 400 billion won. CXMT also said it would release server D-RAM this year using a next-generation 4F² structure that reduces cell area by about 33%. After that, Tesla Chief Executive Elon Musk wrote on X that China will produce an enormous amount of memory chips in 2028, deepening concerns about the leadership of South Korean manufacturers. On Wall Street, however, counterarguments have followed that the recent share plunge is excessive, citing the fact that CXMT has not disclosed full specifications or verified yields.
[Reference News for Financial Product Investors]
4. Samsung and TSMC Expand HBM Volume Using Advanced Processes to Break the Memory Bottleneck
- Key summary: Nvidia is working with Samsung Electronics and TSMC to custom-design the base die, the core component of its own high-bandwidth memory product called NVHBM. NVHBM moves the memory controller previously handled by the graphics processing unit to the base die, allowing bandwidth up to 30% wider and power consumption 15% lower than standard seventh-generation HBM4E. Nvidia requested TSMC's 3-nanometer logic process because an ultrafine process is needed to pack GPU functions into the base die, and TSMC's yield, the share of good chips per wafer, which the industry puts at more than 90%, is also cited as grounds for a stable choice. Meanwhile, investment bank UBS forecast that HBM demand next year would reach about 61.5 billion gigabits, up 91% from this year, while new shipments would come to just 54.6 billion gigabits, raising concerns about a supply shortfall of about 10% against demand.
- Key summary: The National Pension Service is reviewing a plan to create a fund focused on investing in data centers. It is currently at the stage of gauging demand by hearing views from private equity firms and asset managers, and if the plan is confirmed, an outside manager is expected to be selected through a contest. This is the first time the pension fund has created a fund centered on data centers, and it follows the policy of expanding investment in AI data centers that NPS Chairman Kim Sung-joo outlined in a report to the National Assembly in August this year. South Korea's data center market is projected to grow from the 6 trillion won range in 2024 to the 11 trillion won range in 2029 on a revenue basis, and with many projects still at the planning stage, competition to attract fund capital is also expected to be fierce.
6. Gold Investment Revives Amid Stock Market Volatility
- Key summary: Gold holdings in gold banking accounts at KB Kookmin, Shinhan and Woori Bank fell to 9,082 kilograms at the end of July but rose for three straight months from August to reach 9,184 kilograms on the 14th of this month. Gold bar sales at the five major banks came to 33.5 billion won in August and 29.1 billion won in September, with another 10.9 billion won sold from the 1st to the 14th of this month. The Korea Exchange gold price stood at 179,200 won as of the 16th, down 33.6% from its late-January peak of 269,810 won, highlighting the appeal of current prices. Banks are also lowering barriers to entry, with Hana Bank cutting the minimum gold bar sales unit to 3.75 grams from 10 grams starting at the end of this month.
