Name: Another rate hike? Already priced into the market… What should the market watch after September volatility? | Sung Sang-hyun, Senior Managing Director at ABP Asset Management [Global Interview]
Uploaded: 2026-09-16T23:00:59+00:00
Duration: 2082 s

Speakers

Sung Sang-hyun — Deputy Head of Investment Strategy Office, Korea Federation of SMEs

Summary

Sung Sang-hyun, Senior Managing Director at ABP Asset Management, argues the Fed's latest rate hike was largely priced and inflation expectations remain anchored. He sees September liquidity weakness as a buying opportunity for risk assets, expects government liquidity and bank deregulation to support markets, and favors quality companies, hyperscalers, and AI infrastructure. He also flags a coming high-yield refinancing wall and expects long-term yields to fall to ease it.

Fed hiked rates; expected inflation remains anchored.
September tax-related liquidity drain may increase volatility.
Government TGA releases and bank deregulation are seen as market supports.
High rates favor quality companies and cash-rich hyperscalers.
AI data-center capex continues; later AI productivity adoption is the next phase.
High-yield borrowers face a 2028 refinancing wall if rates stay high.
Global government-led investment supercycle is expanding, including Canada.
Investors should monitor breakeven inflation and liquidity indicators.

Ideas

Sung Sang-hyun Deputy Head of Investment Strategy Office, Korea Federation of SMEs 17:54

AI data-center capex cycle remains strong.

AI data-center and infrastructure investment is a massive capex cycle that can continue through one more Fed hike; it will not be stopped by modest tightening. Government tax and subsidy support plus big tech spending keep the buildout going, even if it initially looks more like construction than productivity.

Sung Sang-hyun Deputy Head of Investment Strategy Office, Korea Federation of SMEs 18:05

AI adopters will drive productivity gains.

Once the data-center buildout is complete, the next phase is companies using AI to reduce costs and improve productivity; that adoption cycle can drive earnings and eventually disinflation, making AI productivity beneficiaries a key later-stage theme.

Sung Sang-hyun Deputy Head of Investment Strategy Office, Korea Federation of SMEs 19:20

Favor quality firms resilient to high rates.

With high rates likely to persist rather than return to ultra-low levels, investors should not simply hunt for cheap valuations. The better strategy is to own quality companies that can keep investing and generating stable earnings even under high rates; these companies are more likely to recover if they draw down.

Sung Sang-hyun Deputy Head of Investment Strategy Office, Korea Federation of SMEs 19:50

Hyperscalers can fund AI capex despite rates.

Hyperscalers are cash-rich and can continue large AI data-center capex even in a high-rate environment, unlike smaller companies. Market funds have already favored some of them, and their spending is central to the coming AI productivity cycle.

Sung Sang-hyun Deputy Head of Investment Strategy Office, Korea Federation of SMEs 21:38

Bank deregulation supports lending and credit.

The administration is pushing bank regulatory reform that would let banks lend more instead of holding excess cash. That should support credit creation and broad money growth, a positive catalyst for banks and the liquidity cycle.

Sung Sang-hyun Deputy Head of Investment Strategy Office, Korea Federation of SMEs 26:52

Avoid high-yield credit refinancing wall.

Many junk-rated companies borrowed at very low rates during Covid and face large refinancing needs from 2028. If rates stay high, smaller and weaker borrowers may struggle to refinance, making high-yield corporate credit risky unless long-term yields fall.

Sung Sang-hyun Deputy Head of Investment Strategy Office, Korea Federation of SMEs 27:12

Long-term yields likely need to fall.

High rates are squeezing small and mid-sized companies, and a wave of junk debt refinancing from Covid-era low rates approaches in 2028. Policymakers likely need to push long-term yields lower, especially below the policy rate, by 2027 to keep refinancing manageable, which supports long-duration Treasuries.

Sung Sang-hyun Deputy Head of Investment Strategy Office, Korea Federation of SMEs 30:11

Global government-led investment supercycle benefits capex firms.

The world is entering a government-led age of big investment, with the US and now Canada committing large multi-year infrastructure programs. This should draw excess savings into investment and benefit companies receiving that capital spending.

Another rate hike? Already priced into the market… What should the market watch after September volatility? | Sung Sang-hyun, Senior Managing Director at ABP Asset Management

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