Foreign Investors Offload $17 Billion in March, But This Fund Sees Opportunity: Korean Chip Stocks Offer "Excellent Buying Window"

A top-performing fund manager indicates that despite a recent rebound, South Korean memory chip stocks remain attractively valued and are poised to lead a market recovery if tensions in the Middle East continue to ease. Arjun Jayaraman, a portfolio manager at Causeway Capital Management, stated that leading chipmakers like Samsung Electronics and SK Hynix stand to benefit significantly as the situation with Iran de-escalates. His $3.4 billion emerging markets fund has outperformed 96% of its peers over the past three years. In an interview, Jayaraman remarked, "The technology sector, particularly tech stocks in South Korea and Taiwan, which were previously hit hard, are now positioned for a rebound as global conditions stabilize." He noted that although these stocks rose on Wednesday following an announcement by former President Trump that the U.S. would withdraw from Iran within two to three weeks, their valuations remain "very attractive." Jayaraman's optimistic outlook on South Korean memory chip manufacturers contrasts with the stance of some investors who reduced their holdings in South Korean stocks during the Iran conflict. In March alone, overseas investors were net sellers of Samsung Electronics and SK Hynix shares to the tune of $17 billion, contributing to monthly declines of 23% and 24% respectively—their largest single-month drops since at least 2008. Jayaraman asserted that foreign capital will "undoubtedly" return once the Middle East situation "returns to some form of normality." "We view this sell-off more as a buying opportunity and have therefore not sold any of these stocks," he explained. "For South Korean stocks, especially SK Hynix, this sell-off has provided a very good buying window." To hedge exposure to the Asian tech sector, which is largely concentrated in energy-importing countries, Jayaraman's fund has also increased its holdings in certain energy stocks, such as PETROCHINA, over the past month. He added, "Long-term, we remain very bullish on the AI theme. We consider this sell-off more of a buying chance, which is why we have not reduced any related positions."