Exchange Rate, Treasury Yields Plunge on Ceasefire Hopes

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

1. Crude Oil and Inverse ETFs Sweep Top Returns Amid War

- Key Summary: During March, as war between the U.S./Israel and Iran continued, crude oil, energy, and inverse products swept the top return rankings in the domestic exchange-traded fund (ETF) market. 'KODEX WTI Crude Oil Futures (H)' took first place with 61.54%, while 'TIGER Crude Oil Futures Enhanced (H)' came in second at 57.71%. The backdrop was a surge in May-delivery Brent crude futures from the $77 level to $112.78, driven by the Strait of Hormuz bottleneck. Inverse products also occupied 23 of the top 50, with 'RISE 200 Futures Inverse 2X' gaining 35.42%, benefiting as a mirror image of KOSPI's 19.08% March decline. Meanwhile, individual investors net sold 17.3 billion won in the top two crude oil ETFs, largely missing out on the actual gains.

2. Institutions' Record 4 Trillion Won Buying Spree Recovers Four Days of Losses in One Session

- Key Summary: On the 1st, KOSPI closed at 5,478.70, surging 426.24 points (8.44%) from the previous trading day and rebounding for the first time in five trading days. Institutions led the rebound with net purchases of 4.0268 trillion won — a record for single-day institutional net buying — of which 3.4408 trillion won came from financial investment firms, estimated to largely reflect individuals' ETF purchases. Large caps and construction and securities stocks rallied sharply, including Samsung Electronics (005930.KS) (up 13.40%), SK hynix (000660.KS) (up 10.66%), and Daewoo Engineering & Construction (047040.KS) (up 24.95%). Korea's inclusion in the World Government Bond Index (WGBI) also added to the positive sentiment. However, foreign investors extended their selling streak to 10 consecutive trading days with net sales of 612.6 billion won. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "This is a reversal of excessive risk-aversion sentiment rather than a fundamentals-based move," and recommended using the period as an opportunity to review portfolios.

3. Exchange Rate and Treasury Yields Plunge on Ceasefire Hopes

- Key Summary: On the 1st, the won-dollar exchange rate closed at 1,501.3 won in the Seoul foreign exchange market, down 28.8 won from the previous trading day, reflecting a recovery in risk-on sentiment. Treasury bond yields also fell across the board, with the 3-year yield dropping 0.182 percentage points to 3.370%, while the 5-year and 10-year yields recorded 3.567% and 3.689%, respectively. The start of Korean government bonds' inclusion in the WGBI reportedly brought in approximately $1 billion in related inflows the previous day, adding downward pressure on the exchange rate. However, Baek Seok-hyun, an economist at Shinhan Bank, noted that the average daily WGBI inflow (approximately $300 million to $400 million) falls short of individual investors' daily net purchases of overseas stocks (over $1 billion per day), potentially offsetting the effect.

4. Single-Stock 2x Leveraged ETFs Could Debut as Early as Next Month... Signs of SK hynix Tilt Already Emerging

- Key Summary: With single-stock leveraged ETFs potentially launching as early as May, signs of a tilt toward SK hynix have emerged. Financial authorities are reviewing a plan to initially allow products based on Samsung Electronics and SK hynix as underlying assets, and a majority of industry players are reportedly favoring the launch of SK hynix products first. This is attributed to SK hynix's 12-month forward price-to-earnings ratio (PER) of approximately 3.7 times — lower than Samsung Electronics' approximately 6.3 times — and its dominant position in the high-bandwidth memory (HBM) market. Industry observers have also raised concerns that limiting initial approval to just two stocks could trigger a fee-cutting war among asset managers.

5. Is 'Buy the Dip' Still Valid in a Volatile Market?

- Key Summary: Amid extreme volatility shaking the market, questions have been raised about the effectiveness of the "buy the dip" strategy. According to analysis by data scientist Nick Maggiulli, in 100 years of data from 1920 to 2020, even when the bottom was timed perfectly, buying the dip outperformed dollar-cost averaging only about 30% of the time. Missing the bottom by just two months caused this probability to plummet to 3%. The argument is that since markets trend upward over the long term, time spent holding cash on the sidelines directly translates into opportunity cost losses. ETFs with automatic purchase functions and systematic investment funds were presented as tools for steadily accumulating assets without emotional interference. It was noted that the compounding effect and tax deferral benefits are maximized when executed over the long term in pension accounts that offer tax incentives.

6. War Shock and RIA Launch Slash Korean Retail Investors' U.S. Stock Purchases by Two-Thirds

- Key Summary: In the wake of the Middle East war, Korean individual investors' net purchases of overseas stocks in March plunged 68.6% to $1.509 billion (approximately 2.266 trillion won) from $4.804 billion in January, effectively shrinking to one-third. U.S. stock custody holdings also fell 9.33% month-on-month to $146.5 billion in March — a decline exceeding the S&P 500's 7.78% drop — suggesting that actual selling of holdings accompanied the decrease. Nvidia custody holdings fell 7.36% and Alphabet's dropped 14.94%, showing clear position reductions beyond mere valuation losses. The Returnee Investment Account (RIA), introduced on March 23, is a system that provides partial capital gains tax relief when overseas stock sale proceeds are reinvested domestically. Im Jeong-eun, a researcher at KB Securities, described it as "a structural mechanism that could change the direction of capital flows."