TD Securities: Funds Related to SK Hynix ADR Listing Provide a Boost, But the Korean Won Is Likely to Remain Weak

Glonghui, July 9th｜TD Securities stated that despite SK Hynix’s record-breaking ADR listing boosting the Korean won this week, the won may remain weak given the overall strength of the US dollar. TD Securities strategists including Howard Du wrote in a report that the US dollar is expected to stay strong until US economic data weaken and the market downplays the prospect of further rate hikes by the Federal Reserve; recent trends suggest that any meaningful rebound of the won only occurs against a backdrop of broad US dollar weakness. The report noted that net portfolio flows have fled from Korea to the US, which has been a factor weighing on the won this year, but this trend seems to have stabilized in recent weeks, allowing the won to rebound in July. The USD/KRW level of 1,493-1,494 is a critical level to watch; if the spot rate remains above this level over the coming week, investors expecting a continued US dollar uptrend should consider buying near this level again.