Chip Stocks Defy Dollar Strength Amid Strong Demand
Asian chip stocks have bucked the trend of emerging-market currencies being pressured by a strong US dollar. Despite traders pricing in a high chance of a quarter-point Federal Reserve interest-rate hike, these stocks have seen significant gains.
The South Korean won fell as much as 0.8% to 1,372.80 per dollar, which can help exporters like Samsung Electronics and SK Hynix. ACCM, an asset manager, notes that demand for AI-related memory chips has remained strong, and a softer currency can boost headline revenue and profits.
A weaker South Korean won acts as a cushion for the country's biggest exporters, making their products appear cheaper to rivals and lifting reported earnings when dollar-linked revenue is translated back into local currency. This phenomenon contributes to South Korea's KOSPI sometimes rising even when the dollar is firm and other emerging-market currencies look shaky.