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July 10, 2024, 7:38 p.m.
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Brief news summary

Hedge funds are increasingly turning to South Korean chipmakers, including SK Hynix and Samsung Electronics, for their investments in artificial intelligence (AI). These funds see potential in the growing demand for high-end memory chips and the government's support for the industry. Comparatively undervalued, South Korean chipmakers are gaining attention as companies in the AI race seek high-bandwidth memory chips manufactured by Hynix, Samsung, and Micron Technology. Moreover, the South Korean government's support package and efforts to improve shareholder returns are providing favorable conditions. This surge in hedge fund investment has propelled the KOSPI index to its highest level in seven months and attracted significant inflows to South Korean stocks. Despite risks posed by the depreciating Korean won and short-selling restrictions, hedge funds believe that the rewards of investing in South Korea outweigh these challenges.

Hedge funds are showing interest in South Korean chipmakers, such as SK Hynix and Samsung Electronics, as they hunt for artificial intelligence (AI)-related investments. These chipmakers have lagged behind the AI sector's rally so far, but with the new wave of demand for high-end memory chips and increased government spending, hedge funds believe they will become more valuable. South Korean companies are important players in the generative AI race, as they manufacture high-bandwidth memory (HBM) chips that are crucial for technology firms.

The South Korean government's support package for the chip industry and efforts to improve shareholder returns are also contributing to the growing interest from hedge funds. While there are risks involved, such as a depreciating Korean won, hedge funds see the potential for higher returns as compared to other markets. Besides chipmakers, the AI theme is also expanding to other sectors in South Korea.


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