Nvidia’s Strong Earnings Could Boost Korean Won, SK Hynix: Will Exports Soar?
AI chipmaker Nvidia Corp. has exceeded expectations with its recent earnings announcement, potentially providing a much-needed boost for the tech-reliant Korean won. The Korean currency has experienced a difficult month, becoming Asia’s worst-performing currency due to declining exports, disappointing Chinese growth, and higher US yields. With the hope that Nvidia’s impressive sales forecast indicates a broader demand for AI processors, the industry’s suppliers, such as SK Hynix Inc., could experience a surge in exports.
Following Nvidia’s positive results, the Korean won strengthened by 1.3% against the dollar, while SK Hynix’s shares increased by 4.2%. Investors are now eagerly awaiting Korea’s trade data for August to gauge the impact on the country’s economy. Preliminary figures from the first twenty days of the month indicate a 16.5% decline compared to the previous year.
The correlation between the stock price of Korean chipmakers and the dollar-won exchange rate is seen as negative by experts. Min Joo Kang, a senior economist at ING Bank NV in Seoul, suggests that Nvidia’s performance will have a short-term impact on the currency until there is either disappointing data or news about China’s economic slowdown.
Kang predicts that the Korean won will rise to 1,300 against the dollar by the end of the third quarter. However, the currency still faces challenges due to China’s slowing economy, which is Korea’s largest export market. If China’s manufacturing PMI for August remains in contractionary territory for a fifth consecutive month, pressure on the won could resurface as early as this week.
Despite positive signs after Nvidia’s earnings announcement, the won’s progress may be hindered by China’s economic and debt problems, which are yet to be resolved. Irene Cheung, an FX strategist at ANZ Banking Group in Singapore, believes that global semiconductors may have reached their lowest point, but the won still faces headwinds.
Key Asian economic data due this week will shed further light on the region’s economic performance and the impact on currencies such as the Korean won.
In conclusion, Nvidia’s strong earnings have the potential to boost the Korean won and benefit companies like SK Hynix. However, the currency still faces challenges posed by China’s slowing economy. Investors and analysts will closely monitor trade data and China’s manufacturing PMI for further insights into the currency’s performance.
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