Amid High Oil Prices, High Rates, and AI Pace Fears, KOSPI Holds the 6,700 Line

KOSPI opened lower but recovered its losses during the session to reclaim the 6,700 line. KOSDAQ rose as much as 1.8% at one point, touching the 821 level. The won-dollar exchange rate edged up to around 1,353 won ahead of the FOMC meeting and rate decision.

On the flow side, worrying signals persisted. Foreign investors posted net sell-offs on the KOSPI exchange for a fifth consecutive trading day, with selling over the past four sessions alone exceeding 2.4 trillion won. Foreign selling was also observed in the futures market for four consecutive sessions. In the afternoon, however, KOSDAQ saw a modest shift to foreign net buying (about 7.3 billion won).

The hosts assessed that this selling likely reflects existing foreign holders trimming positions rather than an exodus of recently inflowed capital. While a clear reason for the selling is hard to pin down, they interpreted it as risk-off positioning ahead of this week's US rate decision. They also noted that, viewed as KOSPI fluctuating around 7,000 as the upper bound of a range, there is no cause for discouragement.

They also noted a shift in the character of the market's advance. While semiconductors led the rally from 5,000 to 9,000, in the recovery from 5,500 back to 7,000 following the correction from 9,000 to 5,500, sectors outside semiconductors recovered faster. The hosts offered a conditional outlook: absent major changes in the macro environment, this rotational pattern is likely to continue, and if the pace of rate hikes slows and US Treasury yields begin falling again, semiconductors and other former leading sectors could regain prominence.

Robotics stocks stood out on KOSDAQ. Samhyun held its upper limit, while Hyzen and R&M hit their upper limits intraday before extending gains to around 20%. Robotis climbed to 12th place by KOSDAQ market capitalization. The hosts noted the importance of continually monitoring the top market-cap names on both KOSPI and KOSDAQ, since a new entrant into the top ranks itself signals growing market interest in that sector.

Despite the AI pace-slowdown debate, domestic brokerages continued raising price targets for Samsung Electronics and SK Hynix. KB Securities and others lifted their targets, while Citi raised its 2027 and 2028 operating profit estimates by 6% and 9%, respectively.

BNK Investment & Securities, however, issued a report arguing memory prices have reached roughly half the price of finished PCs and smartphones, prompting mid- and low-tier OEMs to cut memory content, and recommended maintaining a range-bound stance with a target of 270,000 won for Samsung Electronics and 1.48 million won for SK Hynix, citing weakening demand.

Park Sidong pushed back, calling the report's basis weak. He argued that the root cause of price increases lies not only in rising demand but also in supply shortages, and that because capacity expansion takes considerable time, prices and earnings are unlikely to turn down in the short term. He described the report as one that keeps repeating a forecast until it eventually comes true, contrasting it with the broader consensus among domestic and international reports that the semiconductor industry faces no issues through 2028.

Meanwhile, BlackRock upgraded its investment view on Korean and Taiwanese equities from neutral to overweight, citing their possession of scarce resources — memory and semiconductor supply chains — needed for the AI boom, along with solid corporate earnings. The hosts noted that BlackRock's downgrade to underweight last June had proven well-timed, and interpreted this latest upgrade as centered on companies such as TSMC, Samsung Electronics, and SK Hynix that can sustain earnings in a high-rate environment.

Reports emerged suggesting Boston Dynamics' initial public offering may remain uncertain even through 2027. Citing an anonymous senior executive, the report's central point is that mass production of the humanoid robot Atlas is being delayed. Since large-scale production and monetization are prerequisites for going public at a valuation-maximizing point, this pushes the likely IPO timeline to 2027 or later.

Tesla's Optimus is also reportedly seeing slower-than-expected mass-production progress, contrary to Elon Musk's optimistic projections, lending weight to the view that commercialization of humanoid robots is not proceeding smoothly.

The hosts raised concerns that, given Hyundai Motor's heavy promotion of Boston Dynamics through its Investor Day and World Cup advertising, news of delays surfacing through an anonymous senior executive's remarks is problematic. They noted that lowering expectations via anonymous interviews, without a clear company-level roadmap announcement, could undermine investor trust, and argued that a company that has raised funds on the premise of an eventual listing bears a corresponding responsibility to provide clear explanations.

Biotech stocks rallied despite the high-rate environment. G2GBio surged over 14% after news that Novo Nordisk and Ascendis Pharma are collaborating on a once-monthly obesity treatment, which drew reflexive interest toward domestic companies holding long-acting drug delivery technology. Yuhan Onsia hit its upper limit on news that regulatory approval was granted for a change to the clinical trial plan for its new cancer drug candidate.

Park Sidong noted, however, that the grounds for such a large upper-limit move appear weak. Whether Novo Nordisk actually changed collaboration partners, and any connection to domestic companies, remains unconfirmed speculation at this stage. Still, he interpreted the moves as a delayed catch-up reflecting several pieces of good news that had gone unpriced amid the recent weak market, now being absorbed all at once, warming sentiment across KOSDAQ broadly.

The same day brought news that a joint investigation unit is conducting a search and seizure at a biotech company (reportedly ABL Bio) on suspicion of insider trading. The alleged scheme involves insiders buying shares ahead of a disclosure announcement and then selling into the resulting price rise. The hosts stressed that such cases should not end with a single company being caught, but should prompt a full investigation into past conduct as well, calling for strong institutional penalties to restore market trust.

Over the weekend, Anthropic CEO Dario Amodei's remarks calling for a slower pace of AI development weighed on US markets, sending the Philadelphia Semiconductor Index tumbling 5.8%. AI, memory, server rack, and optical communications stocks fell in tandem, while Salesforce CEO Marc Benioff also posted a lengthy statement suggesting the need for a more measured pace.

The same day drew attention when President Trump placed a live phone call to an AI summit event attended by Nvidia's Jensen Huang, declaring that claims AI threatens humanity are fabricated and that AI represents a greater growth driver than oil, gold, diamonds, or the internet. It was also confirmed that the phone Jensen Huang used during the call was Samsung's latest Galaxy Fold, prompting domestic reactions describing it as a form of free promotion for the company.

The hosts laid out three counterarguments to the pace-slowdown thesis. First, that frontrunners OpenAI and Anthropic are using regulation to kick away the ladder and block followers from catching up. Second, that with Anthropic preparing for an IPO this year, warning that the AI it built is powerful and dangerous amounts to an ironic form of fear marketing. Third, that the argument frames a lack of confidence in the pace of improvement in upcoming models as a matter of safety.

Indeed, Anthropic reportedly signed a $13 billion computing infrastructure procurement deal with Lambda Group and continues to pursue fundraising ahead of a planned Nasdaq listing. Elon Musk also teased the unveiling of Grok 4.8, while China's state-run Global Times criticized Amodei's remarks as a Cold War-style tool aimed at securing US dominance over AI.

Despite the controversy, KOSPI absorbed the pace-slowdown debate as noise on the day, with Samsung Electronics and SK Hynix rebounding 0.8% and roughly 1%, respectively. The hosts assessed that the rebound in Korean semiconductor stocks could, in turn, feed back into that night's US market, forming a reciprocal dynamic between the two markets.

The US 10-year Treasury yield approached the psychologically significant 5% threshold. On a closing basis it hit 4.998%, the highest level in roughly three years, since October 2023. By the time of the broadcast, the yield had already crossed 5.01% in Asian trading, while the 20-year yield surged to 5.407%.

The rise in yields has a clear cause. As CPI, PPI, and other inflation gauges turned higher again, the probability of a Fed rate hike in September, per the CME FedWatch tool, climbed to 92%. The hosts noted that at this probability level, markets would actually be surprised by a hold rather than a hike.

Park Sidong assessed that a rate hike at this Thursday's (September 18) FOMC meeting is effectively a foregone conclusion, with the real question being the Fed's messaging afterward. In his view, if left unchecked, Treasury yields could climb as high as 5.5%, but markets can absorb levels up to around 5%; once yields reach 5.5%, concerns shift toward consecutive hikes.

He also noted that if Japan, the UK, the eurozone, and other major economies move toward rate hikes in sequence, global Treasury yields could simultaneously stabilize. Still, he flagged a dense calendar of remaining variables for the second half of the year — Middle East tensions, third-quarter earnings season in October, the October 28 FOMC meeting, the November 3 US midterm elections, and the December 9 FOMC meeting — meaning the market will need to weather a Fed blackout period through October.

The market currently expects the Fed to raise the terminal rate to 4.5%–4.75% by the first half of next year, reflecting roughly three to four additional hikes ahead, the hosts explained. They added that this is merely a projection subject to change depending on shifts in oil prices and inflation data.

The broadcast opened with the hosts' commentary on recursive self-improvement (RSI, the stage at which AI trains AI and evolves on its own). Lee Kwangsoo questioned why this discussion has surfaced now in particular, noting that AGI's risks are already well known and that the timing behind their renewed prominence deserves scrutiny.

Park Sidong cited the failure of nuclear non-proliferation agreements as evidence that verbal accords between nations cannot contain AI risk. He argued that the most realistic way to stop bad AI is to develop better AI, and reiterated his investment hint from last week to watch security-related companies.

The two hosts contrasted nuclear proliferation, which was restrained by the overwhelming deterrence of the US and Soviet Union controlling latecomers, with human embryonic stem cell research, which was self-regulated through globally shared ethical norms. They concluded that AI regulation fits neither model cleanly, leaving the question of an international framework unresolved for now.