KOSPI Retakes 7,000 as Chip Rally Gains Momentum

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

1. KOSPI Retakes 7,000 After Month and a Half: "Structural Change in the Chip Cycle"

Key points: The KOSPI closed up 97.12 points, or 1.40%, at 7,051.64, retaking the 7,000 mark on a closing basis for the first time in 33 trading sessions since July 23. SK hynix jumped 3.51% to close at 1.856 million won, and semiconductor materials, parts and equipment shares rose alongside it, with buying spreading to secondary batteries, AI infrastructure and optical communications. At KB Financial's Korea Conference, Kim Dong-won, head of research at KB Securities, said memory demand could rise to roughly three times current levels as agentic AI spreads and by up to tenfold at the physical AI stage, adding that because new production facilities take three to four years to translate into added supply, the memory shortage could persist through 2028. One concern is the outflow of retail investors, who sold a combined 16.8356 trillion won over five straight sessions, including 2.2874 trillion won on the day.

2. Corporate Operating Margin Hits Record High, Improving Even Without Samsung and SK hynix

Key points: The overall corporate operating margin came in at 16.9% in the second quarter, up 3.7 percentage points from the previous quarter and the highest since 2015, while the manufacturing operating margin surged to 24.0%. Revenue growth of 26.7% was also the highest since the statistics began, with machinery and electrical and electronics (88.5%) and electronics, video and communications equipment (119.7%) posting the sharpest gains. Excluding Samsung Electronics and SK hynix, the overall operating margin falls to 6.2%, but manufacturing revenue growth held at 14.0%, which the Bank of Korea says makes it difficult to conclude that the earnings improvement is concentrated only in the large chipmakers. Construction also turned positive, with revenue growth rising from minus 4.0% to 0.3% for its first increase in eight quarters, as the recovery spreads across industries.

3. Flames Spread Beyond Hormuz to Saudi Refining Facilities: "Oil Could Reach $150"

Key points: Houthi rebels attacked Aramco energy facilities with drones and ballistic missiles, causing fires and shutdowns at some sites, and the United States retaliated by destroying five Iranian oil tankers, sending Brent crude to touch $100.02 a barrel. Crude exports from Middle Eastern oil producers, which reached 18 million barrels a day before the war, are now estimated to have fallen to around 11 million barrels. Goldman Sachs said Brent could exceed $120 if Gulf oil production remains 4 million barrels a day below prewar levels, while BofA warned prices could spike to as high as $150 in the event of a broad escalation. The CME FedWatch tool is pricing a 59% chance of a 0.25 percentage point rate increase in September, reflecting growing concern that high oil prices could revive monetary tightening.

4. Global Investors Gather in Yeouido: "Now Is the Turning Point for Korea's Capital Market"

Key points: With 800 domestic and overseas participants — about double the previous year — attending KB Financial Group's Korea Conference, KB Financial Group Chairman Yang Jong-hee said Korea's capital market stands at a turning point in its advance toward developed-market status. Memory's share of AI investment is expected to expand from about 40% this year to 57% next year, with TrendForce projecting as much as 68%, prompting forecasts that the center of AI profits will shift from GPUs to memory beginning next year. Christopher Wood, global head of equity strategy at Jefferies, by contrast warned of a capital destruction scenario, saying most hyperscalers are unlikely to recoup their investments and likening the situation to the railway mania of the late 19th century. Hyperscaler capital spending is forecast to rise from $723 billion this year to $987 billion, or about 1,320 trillion won, next year.

5. Won Tracks Stronger Yen, Closing at Lowest in 1 Year and 11 Months

Key points: The won closed 9.5 won stronger at 1,336.1 per dollar, its lowest level in about one year and 11 months since Oct. 4, 2024, when it stood at 1,333.7. The yen extended gains as markets priced in a 0.25 percentage point rate increase by the Bank of Japan in September as all but certain, and expectations of a further increase this year are building after Japanese wage growth came in strong at 4.7% from a year earlier. One foreign exchange specialist said the stronger yen and weaker dollar are driving the won-dollar rate lower, but that the Middle East-driven surge in oil prices could lift demand for dollars to settle crude purchases and become a factor pushing the rate back up. Dollar selling by exporters and strength in the domestic stock market were also seen as contributing to the decline.

6. A 0.5 Percentage Point Rate Rise Would Add 6.5 Trillion Won to Household Interest Costs a Year

Key points: According to data the Bank of Korea submitted to the National Assembly, a 0.5 percentage point rise in interest rates would increase annual household interest payments by an estimated 6.5 trillion won, rising to 13.1 trillion won for a 1 percentage point increase. The central bank's Monetary Policy Board raised the base rate from 2.50% to 2.75% in July and lifted it again to 3.00% in August with another 0.25 percentage point increase, marking two straight months of hikes, and left the door open to further increases. By income bracket, high-income households face the largest additional burden at 4.2 trillion won, but the combined burden on middle- and low-income households reaches 2.3 trillion won. Because the heavier interest burden could squeeze spending capacity, monitoring is warranted when investing in industries tied to domestic consumption.

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