Traders braced for won volatility after blockbuster SK Hynix listing

{"text":[[{"start":9.95,"text":"Traders are braced for choppy won trading, as a rare wave of dollar inflows from SK Hynix’s blockbuster US listing is expected to give a strong but shortlived boost to one of Asia’s weakest currencies this year."}],[{"start":23.25,"text":"South Korea’s won strengthened sharply from a 17-year low against the dollar last week to Won1,505, as banks arranging the memory chip group’s American depositary receipt offering sold dollars forward ahead of the listing last Friday."}],[{"start":37.75,"text":"SK Hynix is set to repatriate more than $26bn from the share sale — the biggest US listing by a foreign company — to finance the construction of plants that manufacture the memory chips used to power AI."}],[{"start":51.75,"text":"The South Korean chipmaker was expected to move about $1bn a day in the month following the ADR sale’s settlement on Tuesday, said Wi Jae-hyun, a foreign exchange analyst at Kyobo Securities in Seoul, giving the ailing won a brief respite."}],[{"start":67.5,"text":"“The ADR listing and resulting demand to exchange dollars into won could certainly become a temporary factor,” said Wi. “But I remain sceptical that it is sufficient to reverse the overall direction of the exchange rate.”"}],[{"start":80.9,"text":"SK Hynix declined to comment. Its South Korea-listed shares fell more than 8 per cent on Monday after its ADRs closed 13 per cent higher on Friday."}],[{"start":91,"text":"Most analysts and traders agreed that the inflows would boost the won in the short term. SK Hynix’s proceeds would account for about 1 per cent of the $102.7bn in average daily foreign exchange turnover by South Korean forex banks in the first quarter, according to Bank of Korea data — enough to make a notable dent in the exchange rate, analysts said."}],[{"start":113.85,"text":"But in the long run, they will not counteract the outflows that have made the won one of Asia’s worst-performing currencies this year, ahead of only the Philippine peso, Thai baht, Indian rupee and Indonesian rupiah."}],[{"start":126.89999999999999,"text":"“In the grand scheme of things, it doesn’t change the broad picture,” said Mitul Kotecha, Barclays’ head of Asia emerging markets macro strategy."}],[{"start":null,"text":"

"}],[{"start":135,"text":"The won is plumbing lows last seen during the 2008-09 financial crisis, weakening more than 10 per cent against the dollar in the past year, even as the country’s stock market is soaring to record highs on the back of enthusiasm for its AI chipmakers."}],[{"start":150.35,"text":"SK Hynix and its peer Samsung Electronics have helped the Kospi triple in value since the start of 2025, but their domination of the index has raised concerns about over-concentration."}],[{"start":163.9,"text":"Foreign investors have sold more than $100bn of South Korean equities this year, much of it driven by profit-taking and portfolio rebalancing. In just the first eight days of July, foreign investors sold a net $7.5bn of stocks, according to Kotecha."}],[{"start":180.35,"text":"Such sales have continued to put pressure on the won despite South Korea’s record $141.3bn current account surplus over the first five months of the year, more than four times the level a year earlier."}],[{"start":194.15,"text":"Export surpluses normally translate into currency strength. But Bank of Korea economists said in a research paper last month that the relationship between the current account surplus and exchange rate had shifted as South Korean households, pension funds and companies accumulated more overseas assets."}],[{"start":211.55,"text":"More than 40 per cent of South Korea’s foreign-denominated assets are now held by private investors and companies, while the central bank’s foreign exchange reserves comprise just under 15 per cent."}],[{"start":223.70000000000002,"text":"East Asian exporters were also increasingly retaining earnings offshore rather than repatriating them, said Kotecha, creating “phantom surpluses” that provide no lift to their home currencies."}],[{"start":236.10000000000002,"text":"Julio Callegari, lead portfolio manager for Asia rates and foreign exchange at JPMorgan Asset Management, said he saw “scope” for won appreciation “over time”, as its weakness had been driven by foreign selling of equities and buying of US stocks by South Korean retail investors."}],[{"start":255.70000000000002,"text":"“If there is a slowdown in US equities, it would likely reduce these outflows and help support a recovery,” he said."}],[{"start":271.55,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1783913314_6353.mp3"}