◆Aju Economy Major News
- The 'Redchip' shock, stemming from developments in Chinese semiconductors, has hit the South Korean stock market hard. Following the announcement that China's Changxin Memory Technologies (CXMT) will launch next-generation server DRAM this year, shares of Samsung Electronics and SK Hynix plummeted, causing the KOSPI to fall below the 6000 mark during trading. The KOSPI's market capitalization evaporated by 289 trillion won, dropping below 5000 trillion won for the first time in two and a half months. Market experts expressed concerns that ongoing issues such as foreign investor withdrawals will continue to create uncertainty.
- According to the Korea Exchange, the KOSPI closed at 6035.35, down 348.89 points (5.46%) from the previous trading day. This decline marks the largest drop since August 19. The index fell as low as 5911.11 (-7.41%) during the day but managed to recover slightly above 6000 by the end of trading.
- The sharp decline in the stock market was influenced by concerns over the profitability of AI companies, coinciding with news of CXMT's technological advancements. The announcement of CXMT's upcoming release of next-generation server DRAM hit semiconductor stocks hard.
- The KOSPI's market capitalization also saw a significant decrease, falling to 4979 trillion won, dipping below 5000 trillion won for the first time since July 30.
◆Major Reports
AI demand, investment, and debt ratios suggest a Mid-Cycle assessment
- AI demand (with token spending for large language models doubling over two months and East Asian memory semiconductor exports tripling over the past year) continues to grow steadily. During the 1990s internet investment period, hardware and software alternated in increasing investment amounts.
- Over the past 40 years, real interest rates in advanced countries have moved similarly to Capex/depreciation ratios. Currently, the growth rate of IT investment in the U.S. is higher than in the 1990s. This increase in investment has contributed to rising interest rates. Considering AI-related demand, South Korea's growth rate is projected at 3.5% this year and 3.0% next year.
- When it is confirmed that investment raises potential growth rates (as seen in 1999 when the Fed raised rates from 4.75% to 6%) or if it is clearly deemed a bubble (as in 1989 when the BOJ raised rates from 2.5% to 6%), central banks tend to raise benchmark interest rates significantly, leading to subsequent declines in stock prices and investment. If a clear increase in potential growth rates occurs, the Fed may raise rates significantly, but the current situation is different.
- The increase in investment has resulted in rising interest rates. Investment growth influences interest rates through two main channels. First, higher growth rates create upward pressure on interest rates. As investment increases, GDP growth rates rise (GDP = consumption + investment + government spending + net exports), and long-term interest rates converge with the sum of growth and inflation rates. If investments succeed in raising potential growth rates, there will be additional room for higher interest rates.
◆Major Disclosures After Market Close (October 13)
▷Ascendio, results of capital increase or issuance of convertible bonds (self-disclosure)
▷Shinyoung Securities, investment prospectus (bulk report)
▷Samsung Electronics, report on changes in major shareholder ownership
◆Fund Trends (as of October 12, excluding ETFs)
▷Domestic equity: -2.8444 trillion won
▷Overseas equity: -138.1 billion won
◆Key Schedule for Today (October 14)
▷United States: Consumer Price Index (MoM) (September)
- The 'Redchip' shock, stemming from developments in Chinese semiconductors, has hit the South Korean stock market hard. Following the announcement that China's Changxin Memory Technologies (CXMT) will launch next-generation server DRAM this year, shares of Samsung Electronics and SK Hynix plummeted, causing the KOSPI to fall below the 6000 mark during trading. The KOSPI's market capitalization evaporated by 289 trillion won, dropping below 5000 trillion won for the first time in two and a half months. Market experts expressed concerns that ongoing issues such as foreign investor withdrawals will continue to create uncertainty.
- According to the Korea Exchange, the KOSPI closed at 6035.35, down 348.89 points (5.46%) from the previous trading day. This decline marks the largest drop since August 19. The index fell as low as 5911.11 (-7.41%) during the day but managed to recover slightly above 6000 by the end of trading.
- The sharp decline in the stock market was influenced by concerns over the profitability of AI companies, coinciding with news of CXMT's technological advancements. The announcement of CXMT's upcoming release of next-generation server DRAM hit semiconductor stocks hard.
- The KOSPI's market capitalization also saw a significant decrease, falling to 4979 trillion won, dipping below 5000 trillion won for the first time since July 30.
◆Major Reports
AI demand, investment, and debt ratios suggest a Mid-Cycle assessment
- AI demand (with token spending for large language models doubling over two months and East Asian memory semiconductor exports tripling over the past year) continues to grow steadily. During the 1990s internet investment period, hardware and software alternated in increasing investment amounts.
- Over the past 40 years, real interest rates in advanced countries have moved similarly to Capex/depreciation ratios. Currently, the growth rate of IT investment in the U.S. is higher than in the 1990s. This increase in investment has contributed to rising interest rates. Considering AI-related demand, South Korea's growth rate is projected at 3.5% this year and 3.0% next year.
- When it is confirmed that investment raises potential growth rates (as seen in 1999 when the Fed raised rates from 4.75% to 6%) or if it is clearly deemed a bubble (as in 1989 when the BOJ raised rates from 2.5% to 6%), central banks tend to raise benchmark interest rates significantly, leading to subsequent declines in stock prices and investment. If a clear increase in potential growth rates occurs, the Fed may raise rates significantly, but the current situation is different.
- The increase in investment has resulted in rising interest rates. Investment growth influences interest rates through two main channels. First, higher growth rates create upward pressure on interest rates. As investment increases, GDP growth rates rise (GDP = consumption + investment + government spending + net exports), and long-term interest rates converge with the sum of growth and inflation rates. If investments succeed in raising potential growth rates, there will be additional room for higher interest rates.
◆Major Disclosures After Market Close (October 13)
▷Ascendio, results of capital increase or issuance of convertible bonds (self-disclosure)
▷Shinyoung Securities, investment prospectus (bulk report)
▷Samsung Electronics, report on changes in major shareholder ownership
◆Fund Trends (as of October 12, excluding ETFs)
▷Domestic equity: -2.8444 trillion won
▷Overseas equity: -138.1 billion won
◆Key Schedule for Today (October 14)
▷United States: Consumer Price Index (MoM) (September)
* This article has been translated by AI.
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