The AI chip boom drives housing prices to soar! South Korea's economy welcomes a "dual super cycle of chips and real estate."

Nomura Securities pointed out in a report: South Korea is experiencing a macro feast driven by AI, earning dollars through exports, which are then converted into domestic liquidity, ultimately taken over by the real estate and stock markets.

According to the Chasing Wind Trading Desk, on November 20, Nomura reported that South Korea and the global economy are facing a complex situation, with South Korea undergoing two "mutually reinforcing super cycles": one is the semiconductor super cycle driven by the global AI revolution, and the other is the real estate super cycle driven by domestic structural supply shortages.

What does this mean for investors?

1. Forget about further rate cuts: Nomura maintains a "non-consensus" view, believing that the Bank of Korea will remain inactive at a terminal rate of 2.50% for the long term.
2. GDP forecast raised: The wealth effect is gaining momentum, and Nomura has significantly raised its 2026 GDP growth forecast for South Korea from 1.9% to 2.3% (above market consensus).
3. Liquidity flood: The massive trade surplus from chip exports is directly translating into skyrocketing prices across various asset classes through a surge in M1 money supply.

Semiconductor Super Cycle: External Engine Fully Reignited

This is not just a cyclical rebound; it is a structural leap.

Nomura's data shows that the global semiconductor industry has entered a structurally rising phase driven by AI computing and cloud infrastructure. Unlike the memory boom of 2017-2018, the protagonist this time is AI. The supply of HBM (High Bandwidth Memory) and high-end DRAM remains structurally constrained, which not only supports prices but also extends the life of the cycle.

• Explosive export data: Nomura expects the chip export growth rate to soar from about 25% in 2025 to 50-60% in 2026.

• Three scenario forecasts:

  • Baseline scenario: Broad demand expansion + supply shortages, with export growth of 50-60% in 2026.

  • Bull market scenario: Intensified supply shortages + soaring NAND prices, with exports surging 60-80%. This also means that the chip trade surplus alone could exceed $120 billion in 2026 (estimated at about $90 billion in 2025).

• Bear market scenario: Oversupply in China or global tightening, with growth slowing to 15-25%.

Even traditional cyclical analysis models indicate that this AI-driven rising cycle will surpass the past in both duration and resilience

Real Estate Super Cycle: FOMO Emotion Returns

As chips conquer overseas markets, the domestic real estate market in South Korea is quietly taking off. The Seoul apartment price index has surpassed its previous high, and Nomura bluntly states: The real estate market has entered a new super cycle.

The logic behind this is simple and straightforward:

1. Supply Cliff: Since 2022, the number of new housing starts in South Korea has plummeted by nearly 40%.

2. Price Desensitization: Although nominal housing prices are high, due to loose financial conditions (thanks to rising stock prices and low interest rates), buyers are entering the market in a panic (FOMO).

3. Data Validation: From the beginning of this year to now, Seoul apartment prices have risen by 7.2%, far exceeding the national increase of 0.5%.

Nomura's model shows that although valuations appear "tight" from the price-to-income (P/I) ratio perspective, extremely low real borrowing costs and accumulated savings buffers are offsetting income resistance. As long as real interest rates remain low, this "overvaluation" is sustainable.

"Liquidity-Wealth" Feedback Loop: A Self-Reinforcing Macro Economy

This is the core logical chain in Nomura's report: The global AI story is evolving into a domestic asset story.

1. Dual Circulation: The external surplus of the semiconductor cycle (expected to expand the current account surplus to $164 billion by 2026, accounting for 7.6% of GDP) directly drives the growth of domestic money supply (M1).

2. Wealth Effect: Soaring corporate profits and rising household assets (real estate + stocks) are repairing household balance sheets. Nomura estimates that this wealth effect will boost consumption growth by 0.6-0.8 percentage points in 2026.

3. Consumption Recovery: Consumers feel wealthier, which will drive increases in spending on durable goods, education, and travel.

This is the core reason why Nomura dares to raise its GDP growth forecast for 2026 to 2.3% (above the potential growth rate).

Policy Dilemma and Investment Strategy: Long on AI Chain, Short on Rate Cut Expectations

Against this backdrop, the Bank of Korea (BOK) finds itself in a dilemma: strong economic growth and soaring asset prices have left it with little room for further rate cuts.

Monetary Policy Outlook:

• Nomura believes that the BOK's easing cycle has ended.

• It is expected that the policy rate will remain unchanged at 2.50% by the end of 2026.

• Macroprudential policies will replace interest rate policies as the main tool for controlling the real estate market.

Investment Strategy Recommendations (Based on Benchmark Scenario):

• Interest Rate Strategy: Although the market still has expectations for interest rate cuts, Nomura recommends receiving fixed rate trades on the 7-year NDIRS (Non-Deliverable Interest Rate Swap) (confidence level 3/5). The reason is that while there will be no rate cuts, improvements in fiscal conditions and inflows from the inclusion of the WGBI (World Government Bond Index) (expected to bring in USD 7-8 billion monthly starting in April next year) will limit the upward space for long-term rates.

• Equity Strategy:

  • AI and Capital Expenditure Theme: Strongly optimistic about capital-intensive technology stocks (especially semiconductors) and the AI value chain (power equipment, energy storage batteries, nuclear/LNG).

  • Automobile Sector: Benefiting from consumption recovery and the recently reached US-Korea tariff agreement (tariffs reduced from 25% to 15%), the automobile and parts sector is expected to gain support.

Nomura's conclusion is very clear: If you are still waiting for interest rate cuts brought about by an economic recession, you may have already missed this capital feast driven by AI and real estate.