Key Briefing
ETF Performance Diverges Sharply: Only 12 of the top 50 domestically traded ETFs by transaction volume posted gains since the Middle East conflict escalated. Excluding money market products, profitable investments narrowed to just six funds—inverse, defense, and gold ETFs. Leveraged products suffered losses of up to 30% while the KOSPI index fell 10.15%.
Private Credit Anxiety Spreads: Major Wall Street financial institutions have begun restricting redemptions from private credit funds to quarterly limits. Morgan Stanley honored only 45.8% of redemption requests for its North Haven fund, which totaled 10.9% of net asset value. Cliffwater and BlackRock's HPS Investment Partners also enforced caps of 5-7%.
China Accelerates AI Ambitions: China has officially adopted an AI-driven "intelligent economy" as its growth strategy in its 15th Five-Year Plan (2026-2030). Beijing aims to expand its domestic AI industry to 10 trillion yuan (approximately $1.4 trillion) by 2030, formalizing its pivot toward technology-led growth.
News for Financial Product Investors
1. Only Inverse, Defense, and Gold ETFs Gain Amid Middle East Conflict
Just 12 of the top 50 domestically traded ETFs by transaction volume generated positive returns between April 3 and April 11. The KODEX 200 Futures Inverse 2X led gains at 13.87%, followed by defense-themed funds including TIGER K Defense & Space (10.78%), PLUS K Defense (7.02%), and KODEX Defense TOP10 (6.05%).
Meanwhile, KODEX Secondary Battery Industry Leverage plummeted 30.78%. Popular index funds also posted steep declines: KODEX 200 fell 10.94%, KODEX Leverage dropped 24.51%, and KODEX KOSDAQ 150 Leverage lost 17.75%.
Trading volume for the top three index products reached 53.75 trillion won during this period, compared to just 6.92 trillion won for the three profitable defense ETFs—indicating most investors suffered significant losses.
2. Individual Treasury Bonds Sell Out for Second Consecutive Month
Treasury bonds for individual investors sold out in both January and February, reflecting surging demand for safe assets with yields exceeding bank deposits.
The government raised premium rates on bonds with maturities of 10 years or longer by more than 100 basis points. This brought compound annual yields to approximately 3.8% for five-year bonds, 5.8% for ten-year bonds, and 7.9% for twenty-year bonds.
January's offering of 140 billion won attracted 335.1 billion won in subscriptions. February's 170 billion won issuance drew more than 400 billion won. The government plans to introduce three-year bonds in April and permit retirement account investments starting September. Investors holding bonds to maturity can receive separate taxation benefits on amounts up to 200 million won.
3. Morgan Stanley Honors Only Half of Private Credit Redemptions
Morgan Stanley returned just $169 million—45.8% of redemption requests totaling 10.9% of net asset value—from its North Haven private credit fund.
Cliffwater's corporate loan fund, which manages $33 billion in total assets, received redemption requests for 14% of shares but capped payouts at 7%. BlackRock subsidiary HPS Investment Partners also enforced a 5% limit.
These restrictions reflect mounting concerns over AI-driven industry disruption and excessive credit exposure spreading across the private lending market.
In contrast, Blackstone fully honored $3.8 billion in redemption requests for its BCRED private credit fund on April 2, highlighting divergent approaches among asset managers.
Reference News for Investors
4. KOSDAQ Active ETF Holdings Surge Up to 47% in Four Days
Seongwoo Hitech, a holding in Samsung Active Asset Management's KoAct KOSDAQ Active ETF launched on April 10, soared 47.07% over four trading days. Sungho Electronics and Curient also jumped 28.3% and 22.8% respectively, triggering investment warning designations.
The concentrated buying followed the portfolio's disclosure one day before listing. Securities analysts warn that advance portfolio disclosure for active ETFs may invite front-running.
The KoAct KOSDAQ Active ETF attracted 625.3 billion won in net retail purchases over two days, while Timefolio Asset Management's TIME KOSDAQ Active ETF drew 348.2 billion won.
Investors should exercise caution as small-cap KOSDAQ stocks face elevated volatility risks, particularly if removed from fund portfolios.
5. Samsung and Nvidia Partner on 1,000-Layer NAND Technology
Samsung Electronics and Nvidia have launched joint R&D on ferroelectric NAND flash memory, drawing significant industry attention.
Ferroelectric NAND can stack up to 1,000 layers while reducing power consumption by 96%, potentially addressing both memory shortages and power constraints at AI data centers.
According to market research firm Omdia, global NAND supply has declined since peaking in 2022 and will continue falling through this year. NAND prices surged 90% in the first quarter alone.
Samsung leads global patent filings for ferroelectric devices with 255 applications, representing a 27.8% market share across five major countries.
6. China Commits to 'Intelligent Economy' with $1.4 Trillion AI Target
China finalized its 15th Five-Year Plan (2026-2030) at the close of the National People's Congress on April 12, officially adopting an AI-based "intelligent economy" as its core growth strategy.
Premier Li Qiang projected in his government work report that China's AI industry will reach 10 trillion yuan (approximately $1.4 trillion) by 2030, designating artificial intelligence as a key growth engine.
The plan allocates seven of 20 quantitative targets to livelihood areas including employment, income, education, and healthcare—pursuing both consumption stimulus and technological innovation.
Reuters separately reported that China's National Development and Reform Commission has decided to immediately ban exports of refined petroleum products including gasoline, diesel, and jet fuel starting this month.
