New York Fed Chief Sees No Rush on Rate Hike, Cooling October Bets

* 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 delivers six news items tailored to each reader type.

1. Fed's No. 2 Says Hike Not Imminent, Tilting Odds Toward October Hold

- Key points: New York Federal Reserve President John Williams raised the possibility of another rate increase this year but said there was no reason to rush, shifting the weight toward December rather than October. The Fed raised its benchmark rate by 0.25 percentage point on Sept. 17, the first increase since 2023. Immediately after his remarks, the probability of a hike at the Oct. 27-28 meeting fell to about 50% from roughly 70% in the federal funds futures market. The case for a hold also gained strength as the September consumer confidence index came in at 81.9, the lowest since April 2014, and August job openings totaled 7.079 million, below market forecasts.

2. "Cutting Deficit Bond Issuance by More Than 10 Trillion Won Would Signal Yield Stability"

- Key points: With national tax revenue surging by more than 63 trillion won this year, attention has turned to how the surplus will be used. Cumulative treasury bond issuance from January through September stood at 179.7 trillion won, or 79.6% of the 225.7 trillion won annual plan, 5.9 percentage points below the average pace of the past five years. Cho Yong-gu, a senior researcher at Shinyoung Securities (001720), said conditions allow issuance over the remaining period to be reduced by at least 10 trillion won and by as much as 12 trillion to 13 trillion won. He said a cut of at least 10 trillion won would be needed for the market to regard the step as meaningful. On the day the issuance reduction became known, the three-year yield closed lower at 4.011% and the 10-year yield at 4.407%.

3. Cosmetics Shares Shaken by Stronger Won; APR (278470) Down 21% in a Month

- Key points: Cosmetics shares weakened on concerns that a stronger won would slow export earnings. Over the past month, APR shares fell 21.21% to 366,000 won from 464,500 won, while d'Alba Global and LG H&H (051900) dropped 15.18% and 14.06%, respectively. The weakness in individual names spread to thematic exchange-traded funds, with TIGER Cosmetics down 18.19% over the same period. Lee Hae-ni, an analyst at Eugene Investment & Securities, said she prefers ODM companies over brand owners because they capture the full benefit of industry growth while facing limited earnings volatility from currency moves.

4. Japan-Focused Retail Investors Turn Buyers After Four Months, Favoring Index ETFs

- Key points: Korean investors in Japanese equities broke a three-month selling streak and turned net buyers in September. According to the Korea Securities Depository, domestic investors bought a net $8.12 million (about 11 billion won) of Japanese stocks through Sept. 29. Analysts attribute the shift to the market absorbing tightening relatively smoothly: the Bank of Japan raised its benchmark rate to 1.25%, a 31-year high, in September, yet signaled little about further increases. The yen-dollar rate also held at 157 yen to the dollar, supporting earnings expectations for exporters, and buying concentrated in index products such as the Global X Nikkei 225 ETF.

5. MSCI Review Countdown: No Addition Candidates Amid Weak Market

- Key points: With the domestic stock market's slump continuing, no stock qualifies for addition in the November regular review of the MSCI Korea Index. Seven names were seen as potential candidates — GS (078930), Samsung E&A (028050), LS (006260), Jusung Engineering (036930), ISU Petasys (007660), Samsung Securities and Coway (021240) — but all fell short of the 13.3259 trillion won market capitalization cutoff for inclusion by between 22.6% and 46.1%. LG Uplus (032640) and Yuhan (000100), by contrast, entered the danger zone for deletion, while HYBE exceeded the thresholds for both total and free-float market capitalization, pointing to its retention. The review will use one day among the last 10 trading days of October as its reference date, with rebalancing on Nov. 30 and application from Dec. 1.

6. LS Cable & System Sets Up Rare Earth Units in Korea, Vietnam With 161.6 Billion Won

- Key points: LS Cable & System is investing a combined 161.6 billion won in Korea and Vietnam to build a permanent magnet supply chain for rare earths, including 150 billion won in Korea Motion Works, a wholly owned unit established this month, to construct a domestic permanent magnet plant. Subsidiary LS Eco Energy is also setting up Global SHRE Metal (GSHM), a samarium metal manufacturing and sales company in Vietnam, investing 11.6 billion won for a 58% stake. LS Eco Energy plans to build annual production capacity of 240 tons at the LSCV site in Ho Chi Minh City and begin pilot production in December. The moves complete a value chain running from raw material supply by Australia's Lynas through samarium metal production in Vietnam to permanent magnet manufacturing in Korea.