South Korean Won nears four-month highs despite the KOSPI index selloff
- USD/KRW approaches four-month lows at 1,438, set for a 6-5% monthly decline.
- Strong Korean data and a hawkish BoK are offsetting the negative impact of the stock market rout.
- The KOSPI Index has dropped about 35% so far in July amid a sharp correction in AI-related stocks.
The South Korean Won (KRW) extends gains for the second consecutive day against the US Dollar (USD), and is set for a 6.5% monthly rally. Strong South Korean macroeconomic data and market expectations of monetary tightening by the Bank of Korea have offset the KOSPI Index’s sell-off.
South Korean KOSPI dropped more than 12% during Wednesday’s session, following a 10% decline on Tuesday, which prompted authorities to halt trading for 20 minutes for the second consecutive day. The Index is 6.4% down at 5,638 at the time of writing, and about 35% down in July, as concerns about overinvestment in Artificial Intelligence (AI) have triggered a sharp correction in tech stocks.
Finance Minister Koo Yun-cheol has pledged new market stabilisation measures, including regulation related to single-stock leveraged ETFs, as experts raised their voices about the exacerbated market volatility caused by some financial products.
The KRW, however, is coping surprisingly well with the stocks' rout. South Korean Gross Domestic Product (GDP) beat expectations with a 0.6% growth in the second quarter while inflation surged to a 30-year high of 3.2% in June. In this context, the Governor of the Bank of Korea (BoK), Shin Hyun-song, has reaffirmed his commitment to further monetary tightening, which is underpinning the recent Won rally.
Semiconductor stocks FAQs
A semiconductor is a term for various types of computer chips. Officially called semiconductor devices, these computer chips rely on semiconductor materials like silicon and gallium arsenide to process the electrical current that produces the modern world of computing. They come in many shapes, sizes, enhancements and configurations such as diodes, transistors and integrated circuits to more complicated applications like DRAM memory, simple processors and even GPUs.
First, there are the pure chip designers, such as Nvidia, AMD, Broadcom and Qualcomm. These companies use sophisticated software to design and test chips. Second, there are the equipment manufacturers that provide the machines necessary to build computer chips. These include ASML and Lam Research. Then, there are foundries that manufacture the chips. These include Taiwan Semiconductor and GlobalFoundries. Last of all are the integrated device manufacturers who design their own chips and additionally manufacture themselves. These include Samsung and Intel.
It is the observation that the number of transistors in an integrated circuit doubles every two years. The “law” is named after Gordon Moore, who founded Fairchild Semiconductor and later Intel. The doubling is possible due to the shrinking size of process nodes or parts in the computer chip. In 1971 the advanced commercial manufacturing had reached 10 microns in width. In 1987 semiconductor technology had advanced to 800 nanometers in width. By 1999, this process had moved to 180 nanometers. By 2007, the size had dropped to 32 nanometers, and this fell all the way to 3 nanometers in 2022, which is close to the size of human DNA.
In 2022, the global semiconductor industry had revenues just under $600 billion. In total, the industry shipped 1.15 trillion semiconductor units in 2021. The leading nations involved in the semiconductor supply chain are Taiwan, the United States, China, the Netherlands, South Korea, Japan and Israel.
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