▲ AI PRISM* Customized Economic Briefing
*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is a 'customized AI-based news recommendation and summary service' developed with support from the Korea Press Foundation. It selects and delivers six tailored news items by reader type.
[Key Issue Briefing]
■ Private Credit Crisis: Redemption requests are flooding into major private credit funds including Apollo Global Management, spreading distrust uncontrollably across Wall Street. In Korea, non-bank financial institution (NBFI) assets have reached 6,213 trillion won — approximately 2.4 times nominal GDP — prompting warnings that the system is vulnerable to liquidity shocks.
■ Upward Pressure on Interest Rates: Treasury bond yields have surged amid fears of a prolonged Middle East war, pushing AA- rated three-year corporate bond yields above 4% for the first time in two years. Although approximately 12 trillion won in corporate bonds mature next month, rising funding costs have deepened a wait-and-see stance among companies on refinancing issuance.
■ Retail Investors Defend the Market: Retail investors net purchased 26.2508 trillion won on the KOSPI in March, absorbing foreign selling. As investors increasingly view sharp short-term declines as buying opportunities, a pattern has formed in which retail capital inflows grow larger as volatility increases.
[News of Interest to Financial Product Investors]
1. U.S. Private Credit Run Is Not Someone Else's Problem — The Solution From Shin Hyun-song, the 'Financial Crisis Prophet'
- Key Summary: As Shin Hyun-song, nominee for Bank of Korea (BOK) governor, has consistently warned of liquidity crises originating from non-bank financial institutions (NBFIs), the materialization of a redemption crisis in the U.S. private credit market has brought renewed attention to his arguments. In a February lecture at Princeton University, Shin diagnosed a structural shift — a "rewiring" — in corporate and household funding from bank-centered to non-bank channels, noting that gaps have emerged in existing supervisory frameworks. The 2022 Legoland crisis demonstrated how quickly NBFI-originated liquidity shocks can spread across the broader market. Experts warn that with non-bank financial volumes expanding explosively under the Lee Jae-myung administration's push for productive finance, risks could propagate throughout the financial system depending on the economic cycle.
2. 12 Trillion Won in Maturities Next Month, Yet Markets Stay on Sidelines Amid Rate Volatility
- Key Summary: With rate volatility amplified by the U.S.-Israeli war with Iran, corporate refinancing issuance has effectively ground to a halt despite approximately 12 trillion won in corporate bond maturities due next month. Since the outbreak of the Middle East war, three-year government bond yields have surged more than 40 basis points, and AA- rated three-year corporate bond yields have jumped above 4% for the first time in two years. At this month's Federal Open Market Committee (FOMC) meeting, the Federal Reserve signaled the possibility of rate hikes if inflation expectations rise, shifting market sentiment from rate-cut expectations to rate-hike concerns. International oil prices are seen as the key variable determining the direction of interest rates, and forecasts suggest that if high oil prices persist, the base rate could be raised at least once.
3. Active ETFs Expand — Targeting Exports and Strategic Industries
- Key Summary: The active exchange-traded fund (ETF) market has swelled by nearly 50 trillion won in two years, putting the 100 trillion won milestone within reach, as competition intensifies in strategy-oriented products reflecting industry cycles and sector rotation. Hanwha Asset Management has listed the "PLUS K Manufacturing Core Companies Active ETF," which concentrates on core "AI hard power" manufacturing firms in semiconductors, energy and defense. Korea Investment Management is preparing to launch the "ACE K Export Core TOP 10 Industries Active ETF," covering 10 major export industries including semiconductors, shipbuilding, defense and cosmetics. Financial authorities plan to allow fully active ETFs without benchmark index requirements within the first half of the year, which is expected to further accelerate market expansion. However, the Financial Supervisory Service (FSS) has urged the industry to minimize market impact, warning that underlying asset price volatility could increase during ETF rebalancing.
[Reference News for Financial Product Investors]
4. "All Current Corporate Valuations Are Wrong" — Growing Distrust in Private Credit
- Key Summary: As distrust of the U.S. private credit market spreads uncontrollably across Wall Street, Apollo Global Management's flagship private credit fund has been hit with $1.7 billion in redemption requests, equivalent to 11.2% of net asset value (NAV). Beyond Apollo, major private fund managers including Blackstone, Blue Owl and Ares Management are also facing massive redemption requests. Cliffwater received redemption requests amounting to 14% of total equity and has capped redemptions at 7%. John Zito, co-head of Apollo Global Management's asset management division, warned that companies acquired between 2018 and 2022 were traded at valuations far above their actual worth, and that he expects to recover only 20 to 40 cents per dollar on credit extended to small and mid-sized software firms. Bloomberg reported that if Cliffwater moves to secure cash to meet redemptions, it could trigger a vicious cycle of declining asset values.
5. L&F (066970) Secures 1.6 Trillion Won LFP Cathode Supply Deal With Samsung SDI (006400)
- Key Summary: L&F has signed a mid-to-long-term supply contract with Samsung SDI for LFP (lithium iron phosphate) cathode materials, securing a large-scale order worth 1.6 trillion won. The contract includes confirmed volumes for 2027–2029 and additional supply options for the following three years. It is the world's first large-scale LFP cathode supply contract by a non-Chinese company, making it strategically significant in the global battery supply chain's push to reduce dependence on China. L&F is currently building production facilities with annual capacity of 60,000 tons. Its first-phase facility with 30,000-ton capacity is set for completion in April, with full-scale mass production expected to begin as early as the third quarter. The global energy storage system (ESS) battery market is projected to roughly double from $50.8 billion (approximately 76 trillion won) in 2025 to $106 billion in 2030.
6. Foreigners Sell 22 Trillion Won on KOSPI — Retail Investors Buy 26 Trillion Won in Defense
- Key Summary: Retail investors net purchased a total of 26.2508 trillion won on the KOSPI in March, absorbing large-scale foreign selling and supporting the market floor. On March 23, when a sell-side sidecar was triggered, retail investors bought a record 7.0031 trillion won in a single session. They posted net purchases on 12 of 16 trading days this month. During the same period, foreign investors sold 22.2577 trillion won, taking profits primarily in large-cap stocks including Samsung Electronics (005930), SK hynix (000660) and Hyundai Motor (005380). However, eight of the top 10 stocks by retail net purchases posted negative returns, showing that individual investors' performance remains poor amid volatile swings.
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