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| A screen shows the foreign exchange rate between the U.S. dollar and Korean won in a dealing room at Hana Bank in Seoul, Nov. 5. AP-Yonhap |
By Kim Yoo-chul
The relief rally over Joe Biden's victory in the U.S. presidential election is expected to continue, benefiting battery, clean energy and eco-friendly stocks as investors act on higher expectations for multi-trillion-dollar spending in the next few years.
There are thoughts that the "green wave" of investment will provide a possible rally in large-cap and big technology stocks such as Samsung, LG and Hyundai tech affiliates.
But the flipside is that a stronger Korean won against the dollar may hurt the price competitiveness of leading Korean exporters that are competing with Japanese and Chinese rivals in Europe and the United States, according to economists and currency dealers.
The basic rationale behind this view is that President-elect Biden is a big supporter of spending and stimulus policies, which may weaken the dollar.
Local currency dealers said the won was trading below the 1,120 level against the U.S. dollar and has been strengthening. The won-dollar exchange rate closed at 1,113.9 won, down 6.5 won from the previous close.
Samsung Electronics officials said the company is "reviewing every possible option" regarding the effects of the strengthening won.
"The widely coordinated, detailed actions of the U.S. Federal Reserve and central banks in other developed countries to consistently supply dollar liquidity are already affecting Samsung's core businesses," an official said. "If the won adds 100 won (about nine cents) against the dollar, then it costs millions of dollars in terms of profit. But Samsung is quite stable as we've already diversified currency-hedging channels."
Hyundai Motor Group, the country's largest carmaker, is taking the "currency issue" seriously, according to officials, but it did not elaborate. The company said it has been in talks with top currency dealers to discover the "best possible measures" to protect its profitability.
"For Hyundai, because Washington may ease its stance toward China in terms of tariff increases, investors are betting on riskier assets, causing currencies in developing countries to become stronger."
Kim Sang-kyu, an emeritus professor at Seoul's Dongguk University, said he did not rule out the won-dollar rate soon trading around the early 1,000 won-level.
"But I don't think big tech stocks will lose their value just because of the strengthening won against the U.S. dollar, as Korea's top semiconductor and battery manufacturers are serious suppliers in the entire global supply chain," he said.
But unlike some challenging factors facing top tech companies, the strengthening won will help Korean shipbuilders win more orders as ship owners will hasten their possible purchases before the won-denominated vessel prices soar further.
"Because of the strengthening won, major ship owners could place ship orders before vessel prices rise further," an official at Samsung Heavy Industries said.
On Monday, the country's top shipbuilders that include Samsung Heavy and DSME saw their stock prices soar by more than 5 percent on the KOSPI.
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