South Korean chip stocks suffer collateral damage in the war? Top-performing fund manager: Now is the time to buy quickly

Ask AI · What is the basis for Jayaraman’s optimistic view on chip stocks in a declining market?

Cailian Press, April 2 (Editor Liu Rui) During the recent Iran conflict, South Korean memory chip stocks were heavily affected, resulting in these stocks remaining relatively undervalued even after recent gains. However, once signs of easing in the Middle East situation appear, leading chip stocks like Samsung Electronics and SK Hynix are likely to become some of the biggest gainers.

This is the view of Arjun Jayaraman, fund manager at Causeway Capital Management. The $3.4 billion emerging markets fund he manages has outperformed 96% of its peers over the past three years.

Jayaraman’s optimistic outlook on South Korean memory chip manufacturers contrasts sharply with some other investors’ views—during the Iran outbreak last month, many fund managers reduced their holdings in Korean stocks.

In March this year, overseas investors net sold $17 billion worth of Samsung Electronics and SK Hynix stocks. This caused Samsung’s stock price to fall 23% that month, and SK Hynix’s stock price to fall 24%, marking the largest monthly decline since at least 2008.

Samsung Electronics and SK Hynix record their largest monthly decline since 2008

Jayaraman believes that when the situation in the Middle East “normalizes to some extent,” foreign capital “will definitely” return.

He said, “We believe this sell-off is actually a good buying opportunity, so we have not sold any related stocks… For Korean stocks, especially stocks like SK Hynix, this sell-off has provided a very good buying opportunity.”

Jayaraman’s fund has increased holdings in some energy stocks, such as China National Petroleum, over the past month to hedge against risks in Asian technology investments.

“In the long run, we remain very optimistic about the artificial intelligence theme. We believe this sell-off is more of a buying opportunity, so we have not sold any of these stocks,” he said.

(Cailian Press, Liu Rui)