The Zhitong Finance App learned that a hedge fund that successfully avoided the wave of sharp stock price declines in South Korea's chip giants since last week is shifting its focus to export-oriented automobile manufacturers, betting that the weakening of the Korean won exchange rate will provide strong support for electric vehicle makers' stock prices. As early as last week, Fibonacci Asset Management withdrew its positions with Samsung Electronics and SK Hynix due to risk factors such as falling stock prices, and anticipated that the depreciation trend of the won would be beneficial to South Korea's export automobile manufacturers such as Hyundai Motor and Kia Motors. The hedge fund, which accurately predicted when the South Korean chip giant's stock price plummeted, emphasized that these automakers may be one of the “strong dollar” beneficiaries.

According to information, the Philadelphia Semiconductor Index (which covers top chip companies such as Nvidia, AMD, and Qualcomm), which can be called the “global chip stock weather vane”, fell as high as 1.5% last week, and has fallen nearly 1% since this week, mainly because the stock price trends of chip companies that focus on R&D are extremely sensitive to interest rate expectations, and the market's expectations for the Fed to cut interest rates have cooled sharply since the US CPI was released last week. In the Korean stock market, the two major major stocks, Samsung Electronics and SK Hynix, were also unable to escape the decline. The adjustment over the same period far exceeded that of the Philadelphia Semiconductor Index.

Recently, the interest rate futures market's bet on the Fed's interest rate cut was once as low as 25 basis points, far different from the 150 basis point forecast at the beginning of the year and the 75 basis points before the CPI was announced last week, and the timing of the market's first interest rate cut was drastically delayed from March to November. Against the backdrop of interest rate cuts betting on a broad decline, US bond yields of various maturities have continued to rise, spurring a sharp rise in the exchange rate of the US dollar against almost all national currencies. Among them, the Korean won depreciated by more than 3% against the US dollar since last week.

Jung In Yun, CEO of Fibonacci Asset Management Global in Singapore, said this month and next may be a “very painful period” for traders in the Asian stock market. Although the weakening of the Korean won may trigger an outflow of capital, the fund manager chose to buck the trend and increase his stock holdings of Korean automobile manufacturing giants because he believes that a stronger dollar trend will boost the export profits of these companies.

Jung In Yun said that Kia Corp. (Kia Corp.) will probably benefit the most from the depreciation trend of the Korean won because the company is competing with Japanese automakers for the cheap car market in developed markets such as the US, and the won has been weak against the yen since April.

According to information, Yun manages hedge funds up to 100 billion won (about 72 million US dollars), and one of these funds achieved an investment return of up to 38% in 2023. The fund manager advised investors last week to sell Kospi stock index futures, the benchmark index of the Korean stock market, to maintain a defensive position.

The investment strategy proposed by Yun reflects the unexpected strength of the US dollar, as steady US economic data and high inflation spurred the rise in US bond yields and greatly delayed market expectations for the Fed to cut interest rates. The won recently fell to its lowest level since 2022, triggering verbal foreign exchange intervention warnings from South Korean fiscal officials. According to a statement from South Korea's Ministry of Finance (on the sidelines of the G20 G20 Spring Meeting), South Korea's Finance Minister Choi Sang-moo met with Japanese Finance Minister Suzuki Shunichi on Wednesday and were all worried about the weakening of the Korean won and yen; both officials mentioned that they may take action against erratic exchange rate fluctuations.

According to the data, the two major Korean automobile manufacturing giants, Kia (Kia) and Hyundai Motor Co. (Hyundai Motor Co.), performed well in the past two stock trading days and achieved an increase even though the Korean stock market benchmark index, the Kospi Index, fell 2.7%.

“When there are signs that the dollar is stabilizing, foreign investors will likely make a comeback, but this is unlikely to happen anytime soon.” Yun displayed. He added that this will require very poor US economic indicators. The ECB will reconsider its interest rate cut plan, or if geopolitical risks are fully mitigated before it can be achieved.

The fund manager's move to leave shares in South Korean memory chip giants Samsung Electronics Co. (Samsung Electronics Co.) and SK Hynix Inc. (SK Hynix Inc.) as early as the beginning of last week can be described as very prescient. As investors are concerned about the recovery of South Korea's exports and the fanatical wave of artificial intelligence in global corporate layout, the stock price of the chip giant has recently soared, the stock price of Samsung Electronics has risen to a three-year high, and the stock price of SK Hynix (SK Hynix) has risen to a historically high level not seen in 24 years. In Yun's view, such extreme levels seem unsustainable in the short term, so he chose to sell these chip stocks to reach a profit settlement.

Currently, stimulated by the Federal Reserve's interest rate cut expectations, Samsung Electronics has just experienced the biggest two-day decline since the beginning of 2023, while SK Hynix (SK Hynix) stock price fell nearly 5% on Tuesday. “Chip profit margins will decline due to increased competition.” Yun displayed. “Their sharp rebound in stock prices is completely ahead of the market.”