Weak won lifts exporter stocks, weighs on import-reliant firms in stock market

Cars are queued for export at Pyeongtaek Port in Gyeonggi Province, April 9. Yonhap

An increasingly weak won is expected to split the stock market, boosting exporters who earn more from stronger dollars while squeezing manufacturers that rely on imported raw materials and therefore face lower margins, analysts said Sunday.

They forecast that stocks in semiconductors, automobiles, shipbuilding, defense and other export-oriented sectors are likely to benefit as the Korean currency remains in the 1,400-won range per dollar, a key psychological threshold.

The won closed at a seven-month low of 1,475.6 per dollar on Friday.

In semiconductors, beneficiaries include Samsung Electronics and SK hynix, which together account for more than one-fourth of the benchmark KOSPI’s market capitalization and earn about 80 to 90 percent of their revenue overseas.

Their profits are expected to remain strong as global demand for DRAM and NAND flash stays robust through the fourth quarter.

Automakers Hyundai Motor and its sister company Kia also face a favorable outlook for currency-driven revenue growth.

“For every 10-won increase in the annual average exchange rate, combined operating profits of Hyundai Motor and Kia rise by around 500 billion won ($339.67 million),” said Hwang Seung-taek, head of research at Hana Securities.

The shipbuilding sector is expected to benefit as most payments for vessel orders are received in dollars.

The defense industry, supported by a rising share of overseas arms exports, is likewise seen as a winner.

K-content–driven cosmetics companies are poised to gain from expanding global market presence, while entertainment firms such as HYBE — now staging more concerts in North America and Europe — are likely to secure sizable gains from a stronger dollar.

Conversely, steelmakers, airlines and energy companies face a bleak outlook as they rely heavily on imported raw materials such as crude oil for production and operations.

POSCO and other steel manufacturers are expected to shoulder greater cost burdens as they import raw materials in dollars.

The airline sector is considered one of the most vulnerable to a strong dollar, with profitability likely to deteriorate.

Most airline revenue is generated in won, while more than half of their expenses — including jet fuel purchases, the single largest cost item — are dollar-denominated.

State-run energy companies supplying electricity and gas are expected to suffer direct hits due to structurally high levels of foreign currency debt.

Domestic demand-driven sectors such as travel and retail are likewise expected to be negatively affected, as higher import prices weaken consumer sentiment and ultimately reduce demand.

In the refining and petrochemical sector, companies are expected to gain short-term benefits from higher exchange rates through increased inventory valuation gains.

Analysts, however, caution that if the strong dollar trend persists, rising import costs could erode profitability, highlighting the need for careful risk management.