▲ AI PRISM* Personalized Economic Briefing
* 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.
[Key Issue Briefing]
■ Record junk bond sale: SoftBank Group is launching a large speculative-grade bond offering to raise money for its OpenAI investment, in what is set to be the largest sale ever by a single company excluding distressed debt exchanges. The group is also sharply raising the limit on a margin loan backed by shares of its Arm unit, a sign of its rapidly growing reliance on borrowing.
■ Global fuel crunch spreads: As the energy supply shock stemming from the Middle East drags on, European gas stations are running dry while U.S. diesel and lubricant prices surge at the same time. The number of countries providing direct fuel subsidies has more than doubled in four months, to 38 from 16, and those cutting energy taxes have risen to 57 from 40.
■ Prolonged long-bond losses: The U.S. Federal Reserve's first rate increase in three years is extending losses for investors in domestically listed exchange-traded funds that track long-dated U.S. Treasurys. Losses have widened further on unhedged products exposed to currency moves, as the won-dollar exchange rate has declined.
[News of Interest to Global Investors]
1. All In on OpenAI With Borrowed Money: SoftBank to Issue 15.3 Trillion Won in Junk Bonds
- Key points: SoftBank Group will issue 15.3 trillion won of speculative-grade bonds, known as junk bonds, to fund its investment in OpenAI. Bloomberg reported on the 21st, citing sources, that the offering is being pursued in sizes of $10 billion and 1 billion euros, and that it would be the largest ever by a single company excluding distressed debt exchanges by companies at risk of default. The proceeds will first go toward the $10 billion third tranche of follow-on investment in OpenAI, which must be paid in by Oct. 1. Meanwhile, as U.S. Treasury yields have risen, the yield on SoftBank's dollar bonds maturing in 2031 has climbed to 8.2% this month from a low of 6.7% in January, while the cost of insuring its debt against default has reached its highest level in three years.
2. 15% of French Gas Stations Run Dry; U.S. Diesel Tops $6.5 a Gallon for First Time
- Key points: As the energy supply shock originating in the Middle East drags on, fuel shortages are emerging around the world. In France, 15% of roughly 9,900 gas stations nationwide were out of at least one of gasoline or diesel as of the 20th, and European diesel prices set a new high at 2.39 euros per liter. In the United States, diesel prices topped $6.5 a gallon for the first time, while the price of Group III base oil, a feedstock for fully synthetic motor oil, rose to $12.45 a gallon, quadrupling since February this year. According to International Energy Agency data, the number of countries providing direct fuel subsidies has risen to 38 from 16 in four months, and those that cut energy taxes have increased to 57 from 40.
3. Average Return of -5.9% This Year: U.S. Long-Bond ETF Investors on Edge
- Full article: https://www.sedaily.com/article/20093615
- Key points: Losses are dragging on for investors in domestically listed ETFs tracking long-dated U.S. Treasurys. According to ETF CHECK on the 21st, 14 ETFs based on 30-year U.S. Treasurys returned minus 5.9% year to date, with the unhedged RISE US 30-Year Treasury Active posting the weakest performance at minus 10.82%. The 30-year U.S. Treasury yield has broken above 5.3% this month from 4.616% at the end of February last year, and the longer the maturity, the steeper the price decline. Park Jun-woo, an analyst at Hana Securities, said the decline in yields after last week's Federal Open Market Committee meeting was driven largely by falling oil prices, cautioning that a downward trend in yields cannot be expected on the basis of oil prices alone and that uncertainty over the terminal rate is instead increasing.
[Reference News for Global Investors]
4. With Concentration Eased, Will the Chip Duo Lead an Escape From the Boxed-In KOSPI?
- Key points: The KOSPI closed at 7,007.72 on the 21st, up 113.49 points, or 1.65%, from the previous session, returning above the 7,000 line for the first time in seven trading sessions. Samsung Electronics (005930.KS) jumped 4.98% to 274,000 won, while SK hynix (000660.KS) and SK Square also rose, with semiconductor-related shares broadly strong. The combined weighting of Samsung Electronics and SK hynix in the KOSPI's market capitalization fell to 45.86% on Aug. 10 from 57.11% on June 25 before recording 51.28% on the day, prompting assessments that concentration has eased. The Korea Customs Service also said memory chip exports totaled $21.50108 billion during Sept. 1-20, surging 350.7% from a year earlier, and Goldman Sachs set a target price of 490,000 won for Samsung Electronics.
5. Global Active ETF Share to Rise to 20% by 2030
- Key points: Active ETFs, which account for about 12% of the global ETF market at $2.8 trillion, are forecast to expand to 20%, or $6 trillion, by 2030. Philippe El-Asmar, head of ETFs for Asia-Pacific at J.P. Morgan, said in an interview with Seoul Economic Daily on the 20th that active ETFs can pursue alpha returns above an index and cover a wider range of investable assets. He explained that fixed-income active ETFs can hold assets that passive ETFs find difficult to access, including mortgage-backed securities, high-yield bonds and loans. Of South Korea's $330 billion in ETF assets under management as of the end of June this year, active ETFs accounted for $70 billion, or about 21%, ranking first in the Asia-Pacific region and second globally.
6. From 256 GPUs to Two as Funding Ends: AI Model Research With Results Faces Halt
- Key points: Domestic artificial intelligence model research that had produced results is at risk of being halted as government funding ends. K-Fold, a bio AI model developed by researchers at the Korea Advanced Institute of Science and Technology (KAIST), received 256 B200 graphics processing units for about 10 months through a Ministry of Science and ICT project, but the project ended on the 9th of this month and the model is now running on two GPUs. The government decided to secure 13,136 advanced GPUs through public-private cooperation using last year's supplementary budget and other means, but critics say short project periods make it difficult to carry the work through to retraining and performance upgrades. KAIST has decided to build an AI data center at its main campus in Daejeon, and Sungkyunkwan University plans to add 24 B300 units with 3.5 billion to 4 billion won of its own budget.
