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Bank of America said the selloff in AI stocks led to weakness in the Taiwan dollar and the South Korean won, but both countries’ current account surpluses remained strong support. The current price is suitable for establishing long positions, and the strength of the US dollar may also weaken.
Bank of America (BofA) believes there are buying opportunities in the Taiwan dollar and South Korean won after a selloff in artificial intelligence (AI) concept stocks.
Claudio Piron, head of Asia foreign exchange strategy at Bank of America’s global research department, said the Taiwan dollar and South Korean won have weakened recently along with AI stocks, but Taiwan andsouth korea The size of the current account surplus provides “considerable” support for investors to establish long positions.
“This factor will come into play,” Pilon said in an interview on Bloomberg TV. “I think the current price levels provide an opportunity for investors to establish long positions in the Korean won and the Taiwan dollar.”
He mentioned that the Taiwan dollar is the currency with the highest correlation with AI ETFs among Asian currencies. The recent devaluation of the Taiwan dollar is primarily due to position losses rather than a deterioration in fundamentals.
As far as the dollar is concerned, Pilon believes that the “American exceptionalism” that boosted the dollar’s strength has faded. He predicted that the US dollar-South Korean won exchange rate would fall to 1,330 Korean won per US dollar by the end of this year, and fall to 1,300 won in the next quarter.
Peter S., global strategist at KB Financial Group, about the South Korean stock market. Kim said the collapse of the Korean stock market has created a buying opportunity for investors willing to wait. He believes this is one of the best buying opportunities for institutional investors in their careers. South Korea’s KOSPI index fell 6% last Friday (the sixth), led by chip stocks due to a sharp decline in US technology stocks.
Summary FAQ
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Because the Taiwan dollar and the South Korean won have recently fallen along with AI Concept shares, the current account surplus between Taiwan and South Korea is still strong, which may provide support for the exchange rate; Bank of America believes the current price is attractive enough to establish a long position.
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Bank of America believes that the Taiwan dollar’s depreciation is more due to damage to market conditions and the simultaneous withdrawal of funds from AI-related assets rather than a significant decline in fundamentals; The Taiwan dollar is also considered to be the Asian currency with the highest correlation with AI ETFs.
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Bank of America believes that the “American exceptionalism” supporting the dollar has weakened, and predicts that the dollar will reach 1,330 against the Korean won by the end of the year and 1,300 in the next quarter. Another strategist believes that after the decline in the Korean stock market, investors who are willing to wait have seen buying.
