▲AI PRISM* Customized Economic Briefing
*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "artificial intelligence (AI)-based customized news recommendation and summary service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.
[Key Issue Briefing]
■ Chip Peak Theory: KOSPI semiconductor stocks underwent a sharp correction for the first time in three weeks as the fading of catalysts following SK hynix's (000660.KS) American Depositary Receipt (ADR) listing coincided with a downgraded second-quarter earnings outlook. The dominant interpretation is that this resulted from a combination of the AI investment peak theory and supply-demand shock from leveraged exchange-traded funds (ETFs). While major regional markets including the Nikkei, Hong Kong's Hang Seng Index, and Taiwan's Taiex maintained relative stability, the KOSPI recorded a distinct weakness this month compared with global markets.
■ Hormuz Blockade: As the U.S. military's airstrike on Iran marked the fourth in a week, prompting Iran to declare a re-blockade of the Strait of Hormuz, international oil prices surged and Middle East energy instability reignited. Domestic refiners have preemptively secured short-term crude oil import volumes, but concerns are emerging that if the situation is prolonged, securing volumes and price burdens after September could materialize simultaneously.
■ Japanese Bank Rises: Riding expectations of a Bank of Japan (BOJ) rate hike, Mitsubishi UFJ Financial Group (MUFG) overtook Toyota Motor to top the Tokyo Stock Exchange in market capitalization, marking 40 years since the post-bubble economy for a financial institution to reclaim the summit. Mitsubishi UFJ has now transformed into a global business structure, with overseas operations accounting for more than half of its net operating profit, and is concurrently pursuing plans to introduce AI into its financial system.
[Global Investor News of Interest]
1. SK hynix ADR Catalyst Fades, Earnings Outlook Cut Too... 'Chip Peak Theory' Ignites
- Key Summary: As the fading of catalysts following SK hynix's American Depositary Receipt (ADR) listing coincided with Korea Investment & Securities' downgrade of its second-quarter operating profit outlook, the combined market capitalization of four KOSPI semiconductor stocks (Samsung Electronics, SK hynix, SK Square, and Samsung Electro-Mechanics) fell by 1,522.2983 trillion won over three weeks from its peak on the 25th of last month. Korea Investment & Securities set SK hynix's second-quarter operating profit at 60.4 trillion won, about 8% below the market consensus (approximately 65 trillion won), explaining that with a high proportion of high-bandwidth memory (HBM) sales, the average selling price (ASP) growth rate would be lower than the market average. While the KOSPI (-8.95%) and KOSDAQ (-4.55%) plunged, the Nikkei fell only 1.92%, and Hong Kong's Hang Seng Index and Taiwan's Taiex rose, highlighting the distinct weakness of Korea's stock market. Beginning with Alphabet on the 22nd of this month, earnings announcements and conference calls from Meta, Microsoft, and Amazon are expected to confirm whether AI investment will continue, which is cited as a key variable for future share price trends.
2. Trading Volume Falls, Retail Investors' Reserves Depleted... Collapse Despite Valuation Bottom
- Key Summary: With the KOSPI plunging more than 20% from its peak, the weekly average daily trading value shrank to 37.2639 trillion won, and investor deposits also contracted to 105.5758 trillion won, raising the likelihood of a break below 100 trillion won. The KOSPI's 12-month forward price-earnings ratio (PER) stood at 6.36 times, approaching the lowest point during the 2008 financial crisis (6.3 times) and lower than during the 2020 COVID-19 period (7.5 times) and the 2018 U.S.-China trade conflict (7.6 times). Meanwhile, this year's operating profit forecast for KOSPI-listed companies was 970.8568 trillion won, revised upward by 5.27% over the past month, widening the gap between corporate fundamentals and share prices. Yang Hyung-mo, a researcher at DS Investment & Securities, interpreted the current market as "a transition away from price formation premised on unconditional growth toward a phase of reassessing capital efficiency and cash flow," diagnosing that the correction's valley is inevitably as deep as the mountain was high.
3. Hormuz Blocked Again... Government "Two Months of Crude Secured"
- Key Summary: As uncertainty over the Middle East situation heightened following the U.S. military's airstrike on Iran and Iran's declaration of a re-blockade of the Strait of Hormuz, the Ministry of Trade, Industry and Energy held an emergency meeting to review the crude oil supply situation, chaired by Vice Minister Moon Shin-hak. Domestic refiners' preemptively secured July-August crude oil import volumes stood at more than 100% of the previous year, and while the government's position is that the short-term supply impact is limited, concerns were also raised that if the situation is prolonged, securing volumes and price burdens after September could intensify simultaneously. On this day, international oil prices recorded a rise in the 3% range, and the number of ships passing through the Strait of Hormuz fell to six, the lowest level in five weeks. Bing Hyun-ji, a research fellow at the Korea Institute for Industrial Economics and Trade, explained that the "ping-pong situation" of repeated escalation and de-escalation is highly likely to be prolonged, and that this is a time to strengthen stockpiling and supply-source management on the premise of constant volatility and rising crude oil import prices.
[Global Investor Reference News]
4. "Don't Believe the Friendly Fire"... U.S. Strikes Iran Four Times in a Week
- Key Summary: The U.S. Central Command launched additional airstrikes on Iran under the pretext of weakening its capacity to attack merchant ships transiting the Strait of Hormuz, the fourth attack in a week, with a total of about 310 sites targeted. Iran also responded in kind, targeting a HIMARS (High Mobility Artillery Rocket System) launcher of U.S. forces deployed in Kuwait, U.S. military facilities in Bahrain, and a radar system in Oman, with Iran's supreme leader declaring, "We will certainly carry out retaliation." Mike Waltz, U.S. Ambassador to the United Nations, fully rebutted Iran's friendly-fire claim as "not true," and the U.S. Central Command also announced that "Iran blatantly attacked the United States," deepening skepticism about the possibility of negotiations. On Europe's ICE Futures Exchange, Brent crude for September delivery was at around $79 per barrel, up more than 4% from the previous session, and West Texas Intermediate (WTI) for August delivery on the New York Mercantile Exchange also rose more than 4% to around $74 per barrel.
5. Middle East Embers Rekindled... Shipping Rates 'Soar'
- Key Summary: Due to renewed military tensions in the Middle East, according to Clarksons Research (a UK shipbuilding and shipping market analysis firm), the average shipping rate rose 3.3% from the previous week, with the rate for mid-sized Aframax tankers in particular surging 44.7% from the previous week to $60,367 (approximately 90.97 million won). The rate for very large crude carriers (VLCCs) also soared 11.7% to $137,248 (approximately 206.8 million won), and the Baltic Dry Index (BDI), a bulk carrier market indicator, also rose 8.4% from the previous week to 2,944 points. In addition, the China Containerized Freight Index (CCFI), which aggregates container ship rates, continued its upward trend, rising 3.4% from the previous week to 1,873.15 points. Um Kyung-ah, a researcher at Shinyoung Securities (001720.KS), assessed that with oil prices rising due to war and constraints also arising in route operations, it is an environment where upward movements in shipping rates are inevitable.
6. Mitsubishi UFJ Overtakes Toyota to Top Japan's Market Cap... Banks Reclaim Summit After 40 Years
- Key Summary: Aided by expectations of a Bank of Japan (BOJ) rate hike, Mitsubishi UFJ Financial Group (MUFG) overtook Toyota Motor with a market capitalization of 42 trillion yen (388 trillion won) to top the Tokyo Stock Exchange, marking the first time a financial institution has claimed the top market cap in 40 years since Sumitomo Bank (now Sumitomo Mitsui FG) during the bubble economy era of 1986. This resulted from an inflow of investment funds on expectations of expanded loan interest income following the BOJ rate hike, and even as the Nikkei average fell 1.92%, Mitsubishi UFJ bucked the trend to close up 2.31%. As a result, unlike during the bubble economy era, the current Mitsubishi UFJ, in net operating profit, from the U.S., Asia, and other regions
