Gold Prices Fall for 7th Straight Day; RIA Accounts Hit 8,300 on Launch Day

*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 delivers six tailored news stories for each reader type.

1. Rate-Cut Hopes Fade… Foreigners Sell 20 Trillion Won This Month Alone as Exchange Rate Soars

- Key Summary: The KOSPI closed at 5,405.75, down 375.45 points (6.49%) from the previous session, amid a "triple shock" of surging international oil prices, a spiking won-dollar exchange rate, and fears of central bank rate hikes across major economies. The won-dollar exchange rate soared to 1,517.3 won, up approximately 6% from 1,432 won before the outbreak of the Middle East war. The probability of a rate hike within the year rose to 24.3% based on the CME FedWatch tool. As liquidity contraction fears materialized, a twin sell-off by foreign and institutional investors hammered the market. Retail investors, meanwhile, recorded a record net purchase of 7.0031 trillion won ($4.6 billion) as they stepped in for bargain buying.

2. Middle East Oil Shock Triggers Bear Flattening… "Case for Rate Hike Has Been Made"

- Key Summary: The three-year Korean Treasury bond yield closed at 3.617%, up 0.207 percentage points from the previous session, breaching the 3.6% level for the first time since November 2023. Korea's net fuel imports account for 6.5% of nominal GDP, higher than Japan (3.1%) and Taiwan (4.2%), making the country structurally more vulnerable to the impact of rising oil prices on inflation and interest rates. Hanwha Investment & Securities (003530.KS) analyzed that current market rates already reflect two or more rate hikes. Additionally, President Lee Jae-myung's nomination of Shin Hyun-song, head of the Monetary and Economic Department at the Bank for International Settlements (BIS) and widely regarded as a "pragmatic hawk" favoring monetary tightening, as the next Bank of Korea governor is being interpreted as a signal that rate-cut expectations have been effectively erased.

3. Safe-Haven Betrayal… Gold Prices Plunge 7% in a Single Day

- Key Summary: On the KRX gold market, the price of one gram of gold plunged 7.86% to 208,530 won, extending its decline to seven consecutive trading sessions. The drop is even steeper compared to the all-time high of 269,810 won recorded on January 29. International gold prices have also fallen 18.30% since the Middle East war. Gold-related ETF returns took a direct hit, with ACE KRX Gold Spot ETF and TIGER KRX Gold Spot each recording around -12% on a one-month basis, while KODEX Gold Futures (H), which tracks overseas gold futures, slid to -16.07% over one month. The strong dollar and retreating rate-cut expectations are the fundamental reasons undermining gold's investment appeal. Experts forecast that while a short-term rebound is possible if the war de-escalates, recovering the previous highs will not be easy.

4. RIA Accounts Hit 8,300 on Launch Day… Securities Firms Scramble for 'Salmon Retail Investors'

- Key Summary: The Reinvestment in Domestic Market Account (RIA), which offers tax benefits for reinvesting proceeds from overseas stock sales into the domestic market, saw more than 8,308 accounts opened at seven major securities firms on its first day, with an average deposit of approximately 100 million won ($66,000) per account. The RIA provides a 50% to 100% capital gains tax reduction depending on the timing of sale when domestic stocks are held for one year or more. Meritz Securities launched a gold bar lottery event worth a total of 100 million won, while Korea Investment & Securities and KB Securities intensified competition with fee discounts and cash incentives to attract customers from rival firms. Notably, the launch coincides with the won-dollar exchange rate surpassing 1,500 won, raising expectations that the program will help repatriate overseas stock funds to the domestic market and contribute to exchange rate stabilization.

5. War Prolongation Fears… Korea's CDS Premium Surges 11% in a Single Day

- Key Summary: Korea's credit default swap (CDS) premium (five-year) — an insurance-like fee paid to hedge against default risk — closed at 33.5 basis points, up 3.6 basis points from the previous session, surging more than 11% in a single day. Compared to the end of last month, the premium has jumped 36.2% to its highest level in 11 months since April last year. The increase exceeded those of Japan (14.9%) and China (17.9%), which also have high Middle East energy dependence. Korea's manufacturing-heavy industrial structure with high crude oil consumption and its export-driven economy make it structurally more vulnerable to shocks from the Middle East crisis. Analysts say this is fueling foreign investors' sentiment to sell the won and buy dollars.

6. Investing in Vetted Assets… Secondary Deals Rise in PEF Industry

- Key Summary: Secondary deals — transactions in which a private equity fund (PEF) acquires portfolio company stakes from another PEF — are increasing. UCK Partners acquired a 49.9% stake in Haenong for approximately 35 billion won and re-acquired Umoment for 210 billion won, while Keystone PE acquired T&W Korea for approximately 80 billion won. With new deal sourcing becoming increasingly difficult, PEFs are adopting a strategy of minimizing risk by investing in vetted assets that have already undergone transparent financial restructuring and operational improvements by previous PEF owners. As Korea's PEF market marks its 20th anniversary and most quality assets have already been transacted, analysts say the main deal pipeline going forward will inevitably consist of companies already held by existing PEFs.