On July 21, Korea Investment & Securities suggested that the rise in the dollar-won exchange rate could become a burden on the domestic stock market's supply and demand, and recommended paying attention to stocks that are currently being purchased by foreign investors.
Kim Daejun, a researcher at Korea Investment & Securities, stated in a report released on this day, "The recent key issue in the market is the exchange rate." He explained, "As the global dollar has shifted to a strong trend, the value of currencies in each country has declined. Among them, the depreciation of the won has been greater than that of other countries." He predicted, "The strong dollar may continue."
He also noted, "Short positions on the dollar in the futures market are also being reduced. This can be interpreted as an indication that the dollar is not expected to weaken in the near term." As the reasons, he cited the activation of stablecoins and strong U.S. economic indicators.
Kim stated, "Generally, when the dollar-won exchange rate rises, foreign investor buying tends to weaken." He added, "Currently, the exchange rate is in the upper 1,300 won range per dollar, and the direction is expected to be upward. There may be continued pressure for net selling by foreign investors."
He continued, "In this situation, the best response is not to go against foreign investor trading, which is characterized by strong concentration of investment funds." He emphasized, "If there is strong earnings momentum and attractive valuations, selective inflows of foreign buying can occur. Stocks related to these factors should be considered as investment targets."
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