Monday, March 20, 2023 Summary News

Monday, March 20, 2023 Summary News

UBS Acquires $3.2 Billion Credit Suisse

Over the weekend, UBS agreed to buy Credit Suisse for $3.2 billion. The Fed and the Treasury Department expressed a positive stance, saying it was a deal to prevent the spread of the financial crisis, and the ECB also announced that the financial crisis had laid a calming foundation. The governor of the Swiss central bank also expressed a positive opinion that the merger between the two companies will calm the crisis. Concerns over bank stocks, which expanded market volatility over the weekend, eased over the weekend.

Stock markets touch U.S. FOMC in March, unlikely to take big steps

The most important schedule this week is also the FOMC rate decision. The local stock market is expected to pay attention to the U.S. central bank's rate decision. The interest rate decision is scheduled from March 21 (Tue) to March 22 (Wed) local time, and the results will be available at dawn on March 23 (Thu) in Korean time. According to the Chicago Mercantile Exchange FedWatch, market interest rates currently reflect the probability of a 25bp increase at the FOMC at 62.0% and freezing at 38.0%. Until a week or two ago, the possibility of a 50bp increase was high, but now it is expected to be a 25bp increase and the possibility of a freeze is being mentioned. With banks such as Credit Suisse and First Republic suffering from the SVB crisis, the FOMC, which can confirm the Fed's position, is the most important event to look at this week.

Bank of Korea pushes for 100% mortgage rate on bank difference payments

According to the financial sector on the 19th, the Bank of Korea plans to gradually increase the ratio of collateral securities to 100% at the end of 2024, which is currently 70%. The difference payment refers to a method of collecting and closing transactions over a certain period of time and calculating all the money to be exchanged to each financial institution and paying only the difference. The current 70% was originally scheduled to be raised to 80% by February this year, but the Bank of Korea pushed back the increase as the financial crunch worsened due to the Legoland crisis. The Bank of Korea is also rushing to introduce a real-time total payment system without credit risks.

China Sells U.S. Government Bonds, Net Selling $80 Billion in Six Months

China's China Day reported on the 18th that China's holdings of U.S. government bonds reached their lowest level in 12 years. China Day analyzed that the reason for the decrease in holdings reflects the trend of China, the world's second-largest economy, diversifying its portfolio and lowering the safety of dollar assets. According to the U.S. State Department, Belgium and Noxemburg among the top five U.S. government bond holders have reduced their holdings. Meanwhile, China is increasing its holdings of gold, another safe asset. Some point out that China's sale of U.S. government bonds has strategic implications for U.S.-China competition.

Samsung Electronics Forecasts Trillion Deficit in SK Hynix

Amid prolonged downturn in the semiconductor industry, Samsung Electronics' semiconductor division is expected to post quarterly losses for the first time in 14 years in the first quarter of this year. SK Hynix is also likely to suffer losses in the first quarter. The worsening performance is due to the sluggish semiconductor business, which is Samsung Electronics' main focus. Stock industry sources predict that Samsung Electronics' DS division performance will record a deficit in the first quarter amid sluggish main businesses such as memory semiconductors. Analysts say that SK Hynix, which posted a deficit in the fourth quarter of last year, will see a bigger deficit in the first quarter.

Kakao Unveils Korean GPT

The creation-type artificial intelligence service in the form of a chatbot, which Kakao announced to release, will be unveiled. Kakao Brain is next. It has been confirmed that it has launched an open beta chatbot service. Kakao Brain started recruiting open beta users after the AI chatbot service on the 19th. The service is currently available through the chat room by adding friends to the Daum Kakao Talk channel. As Kakao Brain previously unveiled CoGPT based on Open AI's GPT-3 in 2021, it aims to quickly implement Korean-style specialized services to respond to market changes. CoGPT is an ultra-large AI language model that shows the results that users want by understanding Korean dictionary and contextually.

Coupang Expands Global E-Commerce to Taiwan Instead of Japan

According to Coupang on the 19th, Coupang Japan entered the Japanese market in June 2021 and decided to withdraw in less than two years. Around the same time, in 2021, Coupang entered the Taiwanese market by introducing an e-commerce pilot service, but in June last year, it expanded its business to the form of rocket delivery, Coupang's flagship service. Coupang chose to focus on its Taiwanese business with a quick decision to withdraw from Japan. Taiwan's Internet usage rate is high at 89% as of 2020, and the e-commerce market has a similar structure to that of Korea, with rapid growth. In addition, the high population density like Korea is one of the reasons why it is trying to advance into Taiwan.