KOSPI Overheating Warning as Buffett Indicator Soars to 256%

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

1. 'Buffett Indicator at 256%' Sparks Overheating Warning...'Oil Prices, Rates, Elections Are Risks'

- Key Summary: The KOSPI Buffett Indicator reached 256.56%, surging from 154% at the start of the year and even surpassing the U.S. stock market (225.9%), while the Volatility Index (VKOSPI) also jumped to 60.07, raising overheating concerns. Macro variables including inflation pressure from high oil prices, the possibility of rate hikes, and domestic local elections and U.S. midterm elections are compounding risks. Meanwhile, the 30-year U.S. Treasury yield broke through 5%, and the domestic benchmark rate is seen as potentially rising up to two times within the year. Experts emphasized that investors should stay with proven market leaders such as semiconductors and power equipment rather than being swept up by FOMO (fear of missing out) and switching to non-leading stocks.

2. Korea's 30-Year Bond Yield Also Hits Yearly High...'Expansionary Fiscal Policy Needs Pace Adjustment'

- Key Summary: Korea's 30-year government bond yield rose 0.029 percentage points from the previous day to 3.844%, reaching the highest level in 2 years and 6 months since November 2023. The U.K. 30-year yield hit 5.742%, a 28-year high, while the U.S. 30-year yield broke through the psychological resistance line at 5.025%, with long-term bond yields in major countries surging simultaneously. With the Bank of Korea effectively acknowledging a rate hike in the second half, President Lee Jae-myung and Deputy Prime Minister Koo Yun-cheol have successively emphasized the legitimacy of expansionary fiscal policy, heightening tensions with the market. Based on IMF standards, Korea's general government debt ratio is rising from 39.7% in 2019 to 54.4% in 2026, exceeding the G20 average increase rate and intensifying the debate over fiscal soundness.

3. 'Computing, Chips, Power Shortages...$10 Trillion Expected to Flow Into AI Over 10 Years'

- Key Summary: BlackRock CEO Larry Fink and Brookfield CEO Bruce Flatt projected at the 'Milken Global Conference 2026' that $10 trillion (approximately 14,500 trillion won) will be invested in AI infrastructure over the next decade. Flatt diagnosed it as a massive investment cycle requiring 10 to 20 years for the "rewiring" of the global economy, including power grids, data centers, and fiber optics, while Fink argued that huge funds will flow into areas such as cybersecurity due to shortages in power, computing, and chip supply. Fink also emphasized that over 50% of BlackRock's assets ($14 trillion) are retirement funds, expressing a positive view on the potential expansion of private credit funds into retirement pension investments. They directly refuted the AI bubble theory circulating in parts of Wall Street, stressing that bubbles in specific sectors and the explosive demand for infrastructure investment are separate matters.

4. Chinese Big Tech Left Behind in Global Tech Rally

- Key Summary: The Philadelphia Semiconductor Index (SOX) has surged 54% since late March to set a new record high, while the Nasdaq Composite Index (25,326.13) and Taiwan's TAIEX (around 41,000) have consecutively set all-time highs. AMD recorded Q1 revenue of $10.3 billion (up 38% year-on-year), surging 16% in after-hours trading, while Intel, Qualcomm, and Micron all posted double-digit gains. In contrast, Hong Kong's Hang Seng Tech Index fell 10.6% from the start of the year, being left out of the global tech rally. Chinese big tech firms such as Alibaba, Tencent, and Baidu rely heavily on existing businesses like e-commerce, gaming, and advertising, resulting in more limited AI benefit expectations compared to companies centered in the semiconductor supply chain.

5. Gold Prices Fade Amid Stock Rally, Down 20% From Year's Peak

- Key Summary: Domestic gold prices (KRX Gold Market) dropped to 217,050 won per gram, down approximately 20% from the all-time high of 269,810 won recorded on January 29 this year, while international gold prices also fell 14.68% from the year's peak to $4,568.50 per troy ounce. As Brent crude futures closed at $109.87 per barrel, amplifying inflation concerns, the strength of the dollar index (98.07) acted as a factor raising the opportunity cost of holding gold, which pays no interest. Domestic gold-related exchange-traded funds (ETFs) ACE KRX Gold Spot (-4.62%) and TIGER KRX Gold Spot (-4.05%) posted bottom-tier performance among 27 commodity-type ETFs. However, some analyses suggest medium- to long-term demand remains valid as major central banks continue to purchase gold to diversify foreign exchange reserves.

6. Up to 40% Income Tax Deduction...National Growth Fund Sales Begin on the 22nd

- Key Summary: The Financial Services Commission (FSC) announced that the National Participation Growth Fund, which provides up to 40% income tax deduction on investment amounts, will be sold on a first-come, first-served basis through online and offline channels of 25 banks and securities firms from the 22nd to the 11th of next month. The parent fund, consisting of 600 billion won in public funds and 120 billion won in fiscal funds, will invest more than 60% in advanced strategic sectors including AI, semiconductors, and biotech, while also placing 30% as new funding into unlisted companies and KOSDAQ technology-special-listed firms. A 40% income tax deduction rate applies to investments of 30 million won or less, 20% to 30 million-50 million won, and 10% to 50 million-70 million won, with a 9% separate taxation applied to dividend income. As a closed-end fund, early redemption is not possible for five years, and tax reductions will be recouped if shares are transferred within three years of investment, points that must be verified before subscription.