[Seoul Economy]
Due to the burden of currency exchange due to the high exchange rate, domestic investors have halved their purchases of U.S. stocks in the past week. However, the trend is temporary and there are predictions that purchases could increase again as the U.S. Federal Reserve (Fed) is likely to cut interest rates next year.
According to the Korea Securities Depository on the 6th, domestic investors have made net purchases of U.S. stocks for the past week (November 28th to December 4th).
This is a decrease of nearly half compared to the amount of net purchases of about $1.51 billion in the previous week (November 21-27).
As the won/dollar exchange rate continues to rise, the amount of U.S. stock investment by domestic investors who felt burdened by buying dollars through currency exchange has decreased.
The securities industry predicted that the "Santa Rally" from the U.S. could begin in earnest as U.S. President Donald Trump plans to nominate the next Fed chairman who is in line with him. Kevin Hessitt, chairman of the National Economic Council (NEC), who is known to be the next Fed chairman, has taken the position that inflation (high prices) can also be managed if he drives growth by boosting corporate investment with tax cuts and low interest rates.
According to the Chicago Mercantile Exchange (CME) FedWatch, the interest rate futures market sees an 87.0% chance of the Fed's rate cut as of the 4th (local time).
Moon Nam-joong, a researcher at Daishin Securities, said, "There seems to be some hesitancy because it is the first time we have experienced the won/dollar exchange rate," adding, "If investors start to accept the current exchange rate as a new normal (new standard), the net purchase amount of U.S. stocks could increase again."
"Except for the exchange rate burden, the preference for U.S. stocks has continued this year and demand for U.S. stocks will continue to rise in the future," he said, pointing to the increase in U.S. companies' performance, artificial intelligence (AI) revolution-led trends, and the U.S. Fed's rate cut next year.
Reporter Lim Se-won ([email protected] )
There were officials who appeared to blame retail investors in overseas markets as a factor behind the rise in exchange rates.
This is a profoundly misguided attitude.
It is uncertain whether there is even a causal relationship, and the amounts involved are negligible in proportion, yet they exaggerate it as if it were a major cause.
Economic bureaucrats in our country are far too fond of this kind of easy blame.
They use individuals as a convenient tool to conceal their own incompetence.
I worry about when the liquidation and reform of these people will finally take place.