▲ 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]
■ The Hormuz sea lane: Despite Iran's military threats, Gulf oil producers are keeping exports running by sending very large crude carriers inside the strait and transferring crude to vessels waiting outside, a method known as ship-to-ship transfer. Even with charter rates and labor costs inflated by risk premiums, shipment volumes have partly recovered to pre-war levels, and with the Red Sea front widening, the concentration on Hormuz looks set to intensify for some time.
■ Nvidia shareholder returns: Nvidia raised its share buyback authorization by $150 billion in a single move, surpassing the record Apple set in 2024. The step signals a shift in character from a fast-growing company to one returning its earnings to shareholders, though the pace at which accounts receivable convert into cash is seen as the variable that will determine how fast those returns can proceed.
■ Support under the won: The won-dollar exchange rate fell for a third consecutive session but narrowed its losses in the low 1,340s, pausing for breath. The move looks largely like a correction following a short-term plunge after the holiday, with exporters' dollar-selling orders squaring off against settlement demand, while broad dollar strength and foreign selling of Korean stocks are blocking further declines.
[News of Interest to Global Investors]
1. Gulf States Run Crude Shuttle Exports as Hormuz Volumes Partly Recover
- Key summary: Gulf oil producers including Saudi Arabia are keeping exports flowing by sending very large crude carriers (VLCCs) to ports inside the Strait of Hormuz, loading crude and transferring it to vessels waiting outside the strait, a method known as ship-to-ship transfer (STS). Each shuttle voyage is said to cost $30 million to $40 million (about 40.3 billion to 53.7 billion won) because of charter rates and labor costs that reflect risk premiums, and one crewing firm has offered bonuses of up to $25,000 (about 34 million won) for a round-trip voyage. According to the United Kingdom Maritime Trade Operations (UKMTO) and other sources, seven vessels have been attacked near the strait since the 28th of last month, underscoring the danger on the ground. Even so, the seven-day average of crude exports stood at 18.3 million barrels a day as of the 30th of last month, according to ship-tracking firm Kpler, above the pre-war average of 18 million barrels. Brent crude for December delivery settled 1.89% lower at $100.32 a barrel, while West Texas Intermediate (WTI) for November delivery fell 1.84% to $89.43.
2. [Investment Window] Why Nvidia Is Running Its Largest-Ever Buyback
- Key summary: Nvidia raised its share buyback authorization by $150 billion in one move, a record that exceeds the $110 billion Apple set in 2024. The remaining authorization stands at $235 billion, to be executed by January 2028. Because the increase comes just four months after an $80 billion addition, the company will have to buy back shares at more than twice the pace of the first half of this year. Using the full authorization would lift earnings per share by only 2% to 3%, but return on equity — the ratio of profit a company generates from its own capital — is expected to rise from 71% to around 80%. Accounts receivable for chips delivered to customers but not yet paid for swelled from $38.5 billion to $63.1 billion in half a year, however, and cash inflows accounted for only 40% of book profit last quarter, leaving the speed of collection as the variable seen determining how fast returns can proceed.
- Key summary: In the Seoul foreign exchange market on the 6th, the won-dollar rate closed at 1,343.6 won, down 0.4 won from the previous session and the lowest closing level since the 10th of last month (1,339.2 won). The rate moved in a narrow range during the session, rising as high as 1,346.7 won before slipping to 1,341.0 won. The move looked largely like a correction after a short-term plunge over the three-day holiday, with exporters' dollar-selling orders squaring off against settlement demand. Broad dollar strength limited the won's gains, as the dollar index (DXY), which measures the dollar against six major currencies, hovered around 102 and the dollar-yen rate climbed to about 158 yen, while the U.S. 10-year Treasury yield rose overnight to 5.34%, its highest since 2002. Foreign selling of Korean stocks also supported the floor under the rate. Market participants largely expect settlement demand to emerge in the 1,330s to block further declines, with the upside capped near 1,380 won.
[Reference News for Global Investors]
4. [Dawn] The Manufacturing Strength the U.S. Let Slip
- Key summary: The seeds of extreme ultraviolet (EUV) lithography equipment, essential to the most advanced semiconductor processes, were planted by a U.S. consortium formed in 1997 by Intel, AMD, Motorola and a national laboratory under the U.S. Department of Energy. But after Intel, prioritizing mass-production capability, brought in the Netherlands' ASML in 1999, Silicon Valley Group (SVG), the U.S. company that held the optical technology, was acquired by ASML in 2001. ASML absorbed Silicon Valley Group's equipment, customer base and engineers, then joined forces with European component makers and Taiwanese foundries — contract chip manufacturers — to become a dominant supplier. Even Intel, which spent $4.1 billion in 2012 to buy a 15% stake, failed to take the lead. The Center for Technology and Statecraft (CTS), a think tank founded by former U.S. administration officials, estimated in a September report that China has brought in about 343 of ASML's immersion deep ultraviolet (DUV) machines, noting that Huawei could use some of them to produce 7-nanometer logic chips.
- Key summary: Elice Group, an artificial intelligence full-stack company pursuing a KOSDAQ initial public offering (IPO), set its final offering price at 90,500 won, the top of its indicative range of 70,400 to 90,500 won, putting its market capitalization at an estimated 1.0054 trillion won based on shares to be listed. In institutional book-building conducted from the 23rd of last month through the 1st of this month, 97.8% of the 647,998,700 shares bid for were priced at or above the top of the range, while only 0.3% came in below the top. The 201.1 billion won in proceeds will be used to expand AI infrastructure in the Seoul metropolitan area and at regional hubs, and to build advanced infrastructure dedicated to next-generation graphics processing units (GPUs). It is also the first time in about 10 months, since Livsmed in December last year, that a company with a market capitalization of 1 trillion won or more based on its final offering price has listed on the KOSDAQ. The company plans to conduct its retail subscription on the 7th and 8th and to list in late October.
6. French Protests Over Public Education Budget Intensify; 87% of 5,060 Arrested Are Minors
- Key summary: Protests by high school students demanding more teaching staff and a larger education budget are intensifying across France, in response to chronic teacher shortages, overcrowded classes and aging school facilities. So far, 24 schools have suffered fires, damage or looting, at least 190 students and 78 school employees have been injured, and 87% of the 5,060 people arrested were minors, prompting human rights groups to criticize the use of batons and tear gas as excessive. For a government that must reduce its fiscal deficit, adding teaching staff and expanding the budget would require further spending, deepening its dilemma, and amid spreading concern over deteriorating finances, France's 10-year government bond yield has recently surged to around 5%. Meanwhile, President Emmanuel Macron's government and National Rally (RN) lawmaker Marine Le Pen have accused far-left forces of fueling the protests, while La France Insoumise (LFI) has countered that the government is ignoring the demands and exploiting the issue politically.
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