KOSPI Steadies Ahead of Kevin Warsh's Jackson Hole Speech, Compounded by Nvidia's Paused Cloud Revenue-Sharing and Semiconductor Tariff Review

As of 12:02 PM, the broadcast's start time, the KOSPI was trading down about 1.1% around the 6,830 level, while the KOSDAQ hovered near 834 points, down a slight 0.3%. The volatility index gapped down for a second consecutive day, falling about 3% to 51 points—nearly half its intraday peak of 97 points last week—cited as a sign of stabilizing market conditions.

Foreign investors sold roughly 820 billion won of KOSPI stocks and 140 billion won of KOSDAQ stocks, and turned to net selling of 38 billion won in futures during the session. By the later close, the scale of foreign selling had widened further, with over 1 trillion won sold in KOSPI cash alone. Still, more than 480 KOSPI stocks and over 770 KOSDAQ stocks advanced, suggesting individual stock performance held up better than the index.

Overnight, Wall Street's story was Nvidia's earnings. Nvidia surged over 8% to close higher, reaffirming its status as the world's largest company by market cap, but only 136 of the S&P 500's 500 constituents rose, and the technology sector—Nvidia's own—was the only sector to gain. Amazon and Google, among others, closed lower, a pattern attributed to investors waiting on Fed Chair Kevin Warsh's remarks at the Jackson Hole meeting.

Toward the close, sector moves showed semiconductors taking a breather while defensive cosmetics stocks strengthened; oil-related names rose alongside firmer crude prices, and software names including Samsung SDS advanced. On the KOSDAQ, Alteogen turned positive intraday, COVID-related names moved on news of rising infections, and secondary battery themes ranked among the day's top gainers.

According to an exclusive Wall Street Journal report, Nvidia has paused its revenue-sharing arrangement, under which it received a portion of sales from AI cloud companies in exchange for supporting their chip supply. The move was reportedly driven by internal concern that becoming too involved in customers' business practices could invite antitrust scrutiny. Nvidia said it would keep the business model introduced last July but continue adjusting it to demand, a development seen as reigniting so-called circular-financing concerns that the market needs to monitor.

Samsung Biologics fell about 5.5% after announcing a 3 trillion won rights offering before the market open. The offering will increase shares outstanding by roughly 4.9%, with about 2.7 trillion won of the proceeds earmarked for acquiring Switzerland's PolyPeptide Group and the remaining roughly 300 billion won for expanding its second bio campus in Songdo, Incheon. PolyPeptide Group is a global CDMO specializing in the contract development and manufacturing of peptide active pharmaceutical ingredients, a key component of obesity treatments—seen as a move by Samsung Biologics, traditionally focused on antibody drugs, to expand into the GLP-1-based obesity and diabetes treatment value chain.

The issue price was set at 1,322,000 won, a substantial discount to the then-share price of 1,504,000 won. While share prices typically converge toward the issue price after a rights offering, the relatively modest size of this offering was seen as limiting downward pressure. Shinhan Investment Corp. commentary noted that Samsung affiliates would take up about 60% of the offering, with retail allocation at only around 20%, further limiting supply-demand strain.

Still, critical commentary followed regarding the recurring pattern of turning to rights offerings whenever large-scale funding is needed, questioning whether the company's shareholder return policy and efforts to build market trust have been sufficient. Nonetheless, the strategic direction of expanding its contract manufacturing portfolio into obesity treatments was viewed positively.

Salesforce jumped 22% in regular trading following an after-hours surge on its earnings, even though the results themselves merely met market expectations rather than surprising to the upside. The real driver of the rally was news of its partnership with Anthropic to unveil 'Claude for Salesforce,' integrating the entire Salesforce product suite into Claude so users can run workflows through Claude without opening the Salesforce interface. This was read as a case that, contrary to fears AI would displace software company jobs, showed a company adopting AI while maintaining solid earnings and even growing through AI use—fueling gains in domestic AX, SI, and security-related stocks.

AX (AI transformation) refers to applying AI across a company's operations and business to reshape existing workflows and business structures, while SI (systems integration) refers to designing, developing, and building the IT systems companies need—the two areas growing in tandem. Samsung SDS and LG CNS were cited as leading names, with SK Telecom also ramping up its data center business through SK Horizon. However, it was noted that Korea lacks as many large-cap software companies as the U.S.

While individual users already show high AI adoption, corporate AI adoption remains markedly low, suggesting a much larger opportunity ahead in AI adoption consulting and implementation services for enterprises. Security was flagged as an essential area to watch alongside AX and SI in this trend, with concerns raised that even Korea's most security-critical sectors—nuclear power, hospitals, finance—cannot confidently be called secure today.

Secondary battery stocks have shown a recent rebound, ranking first in gains among thematic indices. Samsung SDI extended its rally with another roughly 1% gain after surging 10% the previous day, driven by expectations for ESS (energy storage system) orders amid rising AI-driven energy demand. A Hana Securities report projected that solar and ESS installation logic, previously confined to the carbon-neutrality narrative, is now shifting toward addressing energy shortages, which should drive installation volumes higher.

Still, two key issues remain: resolving the EV market chasm and competing for market share with China. While ESS accounts for roughly 20% of revenue across companies, the timeline for it to meaningfully affect margins is being pulled forward from an expected five years to three to four years, seen as a positive. On the China competition front, with U.S. sanctions against China fluctuating and EV makers finding ways around them—such as through royalty payment arrangements—optimism was tempered, though it was noted that if President Trump's recent move to declare Chinese power-grid equipment a national emergency and exclude it extends to batteries, expectations could improve again.

The debate behind the Monetary Policy Board's recent rate hike, split evenly between hold and hike camps, was laid out. Those favoring a hold argued that after a long easing cycle, pivoting to hikes marks a major policy shift beyond a simple rate increase, that more time was needed to observe how the effects of one hike would spread, and that Korea could afford to move in step with U.S. and Japanese rate trends internationally.

Conversely, those favoring a hike pointed to record-strong exports—particularly semiconductors—alongside repeated upward revisions to this year's and next year's growth forecasts, arguing that persistently sticky inflation called for preemptive action. In particular, they noted that market rates were already trading above a level implying three rate hikes, risking a blunting of the policy rate's ability to steer market rates, and that the 30-year government bond yield sitting near record highs bolstered the case for a hike.

In the end, a hike was delivered, reflecting a policy judgment that holding would leave uncertainty over the timing of the next hike as an ongoing source of market noise, making it better to act preemptively while the market could absorb it. On the dot plot, 3.25% drew the most votes, interpreted as leaving one more hike ahead, and the Bank of Korea governor stressed a gradual hiking stance at the press conference. That guidance helped push three-year and ten-year Korean Treasury bond yields down 0.6bp and 1.24bp respectively, as markets took comfort in the gradual future path rather than reacting to the hike itself.

On the Jackson Hole meeting, with Fed Chair Kevin Warsh set to speak at 11 PM Korean time that night, the hosts' views on the likely tone diverged. One host leaned toward Warsh saying little on inflation or rates, given his past record as an advocate of a reduced Fed role and this year's Jackson Hole theme centered on cryptocurrency. The other host argued that given Warsh's personal ambition and the market's intense focus on the speech, he might instead lean toward remarks emphasizing economic growth.

Comments from hawkish Fed officials also circulated. Cleveland Fed President Beth Hammack said now is the time to act, while Kansas City Fed President Jeffrey Schmid said he does not view current monetary policy as restrictive on economic activity. Also drawing attention was Bank of Japan Governor Kazuo Ueda's decision to skip this year's Jackson Hole, interpreted as an attempt to avoid the fallout from Warsh's remarks given Japan is already under pressure for further rate hikes. Behind this lies a complex interplay involving the U.S. Treasury's handling of the fiscal deficit and bond yields, with Treasury Secretary Bessent's potential further remarks at the G20 finance ministers' meeting in the U.S. from August 31 to September 1 flagged as another variable.

According to a report from Politico, a Washington-focused outlet, the Trump administration is considering sweeping additional tariffs covering not only semiconductors but also laptops, personal computers, and data center servers. The plan reportedly includes tiered tariff-free allowances for semiconductors based on the scale of U.S. investment, and could scrap existing exemptions for data centers and R&D startups. Industry voices noted that expanding advanced chip manufacturing capacity in the U.S. takes more than five years, making implementation difficult, and raised concerns that Nvidia, AMD, and others reliant on TSMC's foundry services could face a heavier burden.

Around the same time, President Trump posted on Truth Social congratulating Nvidia on its strong earnings while emphasizing that its manufacturing was done entirely in the U.S., and reiterated Micron's earlier announcement of a $10 billion U.S. research facility to encourage domestic investment. The same day, SK Hynix held a groundbreaking ceremony for its Indiana plant, announcing an investment of over $4 billion with clean room operations targeted for October 2028 and HBM mass production for 2029.

Many assessments suggested this tariff review is unlikely to result in an actual levy. The reasoning is that if tariffs were imposed, companies importing semiconductors would ultimately bear the cost, which would simply pass through to higher prices for laptops, phones, and data centers, with little reshoring effect on chip manufacturing itself. It was also noted that with Samsung Electronics and SK Hynix already pursuing their own U.S. investment plans, there is limited room for them to commit to additional large-scale investment.

Some viewed the tariff review as a political move. With President Trump's approval rating stuck in the mid-30% range and Iran policy and inflation management cited as his weakest areas, the interpretation was that he is reviving his familiar rhetoric of returning tariff revenue to the public, this time applied to the semiconductor and AI sector. However, it was also noted that Korea, already facing pressure to expand investment under last year's investment agreement with the U.S., needs to watch for the risk that semiconductors could resurface as a bargaining chip in negotiations. Separately, an exclusive report noted that Korea and the U.S. remain at odds over how to allocate returns from Korea's U.S. investments, with Korea pushing for a profit-and-loss offset approach across projects and the U.S. insisting on project-by-project settlement.

Mirae Asset Chairman Park Hyeon-joo's remarks were introduced, in which he said the era of everyone making money from real estate must end, and that curbing rising real estate prices is necessary for the younger generation to live with hope. Park assessed the recent real estate tax reform as fairly strong, noting that some homeowners now face holding-tax bills of 100 million won, and said he personally believes real estate has peaked. He also said that had he invested 100 million won in Samsung Electronics when he started his business, it would now be worth 50 billion won, arguing that with industrial competitiveness—centered on semiconductors—having grown so much, capital should shift from real estate into more productive sectors.

Host Lee Kwang-soo said he felt both sadness and anger on hearing these remarks. His point was that a private company owner is the one raising a big-picture issue for future generations, while lawmakers and politicians who are supposed to represent the public cannot even raise an issue of this caliber. He cited the ruling Democratic Party's recent focus on peripheral disputes—such as distinguishing occupied versus unoccupied homes—in the debate over holding-tax reform as an example, criticizing that not a single politician stands out for articulating the bigger-picture direction of stabilizing the real estate market, as they remain trapped in vote-calculating minutiae.

Lee Kwang-soo noted that the core of this tax reform is ultimately about lowering expectations for real estate price appreciation and building a structure that frees the younger generation from excessive housing-cost burdens, arguing this discussion needs to become a matter of public debate within the political sphere as well. He closed by asking rhetorically whether those who claim to do politics for the people ought to show better thinking and language than a businessman running a company for private gain.