[In-Depth Analysis] Prolonged KRW/USD Exchange Rate Surge: Stock Portfolio Strategies Beyond Traditional Formulas

Macroeconomic Environment: Persistent Strong Dollar and Weak Won

One of the dominant macroeconomic indicators shaping the first half of 2026 is undoubtedly the surge in the KRW/USD exchange rate. As the global strong dollar trend shows little sign of waning, the exchange rate continues to exhibit high volatility. This extends beyond a mere foreign exchange market issue, directly impacting the fundamentals of both export and domestic stocks across the KOSPI and KOSDAQ markets.

The Collapse of the 'High Exchange Rate = Export Boon' Formula

Historically in the stock market, an intuitive formula dictated that a rising KRW/USD exchange rate would boost the price competitiveness of export companies and improve their earnings when converted to Korean Won. However, in the current market environment, this formula can no longer be applied mechanically.

• Increased Raw Material Import Costs: Many domestic exporters rely on a structure where they import parts and raw materials using US dollars, process them, and then re-export. A rising exchange rate exacerbates the burden of import costs, putting pressure on actual operating profit margins.
• Concerns Over Global Demand Slowdown: Given that the high exchange rate is a byproduct of global inflation and sustained high interest rates, if accompanied by a contraction in global consumer markets, the damage from reduced sales volume may far outweigh any benefits from lower pricing.
• Complex Global Supply Chains: Because the level of currency hedging strategies and the proportion of overseas local production vary by company, clear deviations in earnings performance due to exchange rate fluctuations are evident even within the same sector.

The Double Whammy for Domestic Stocks: Inflation and Consumption Contraction

While export stocks face complex impacts, domestic stocks are experiencing clear downward pressure due to the rising exchange rate. Domestic-focused sectors such as food and beverage, retail, and airlines have high reliance on raw material imports, bringing them face-to-face with rising cost of goods sold driven by the strong dollar.

Furthermore, when companies attempt to pass these increased costs onto consumer prices, it triggers a vicious cycle that further dampens the consumer sentiment of households already weary from inflation. This leads to downward revisions in earnings estimates for domestic stocks as a whole, acting as a primary factor suppressing stock price rebounds.

Portfolio Strategies for Investors

At a time when exchange rate volatility is maximized, investors must adopt a selective approach based on corporate fundamentals rather than blind thematic investing.

1. Precise Analysis of Overseas Revenue Share and Cost Structure

Moving beyond the simple category of 'export stocks,' attention should be paid to high value-added industries (e.g., specific IT hardware, biosimilars) where the proportion of raw material imports relative to revenue is low, and the won-converted profit can overwhelm the increase in costs.

2. Selecting Companies with Pricing Power

Companies with strong brand power and monopolistic qualities that can maintain market share even when passing increased costs onto product prices can secure stable margins even in a high exchange rate environment.

3. Beware of the Optical Illusion of Exchange Rate Benefits

Investors should be cautious of companies whose operating profits are artificially inflated by short-term foreign exchange gains. It is essential to verify actual sales volume growth (Q growth) and structural earnings capacity with the exchange rate effect removed.

Macroeconomic uncertainty is always inherent in the market. Rather than attempting to predict the direction of the exchange rate, a valid strategy is to compress one's portfolio into companies possessing robust business models capable of withstanding the stress tests of the current high exchange rate environment.