Bank of America has identified four compelling reasons to invest in the Korean market in 2026, driven by strong macroeconomic tailwinds and favorable external dynamics. The bank forecasts further appreciation of the Korean won, targeting 1,395 by year-end, with risks skewed toward additional strength. Korea's January 2026 exports rose 33.9% year-over-year to $65.85 billion, producing an $8.74 billion surplus.

Central to BofA's bullish outlook is the ongoing semiconductor supercycle, with chip exports doubling to $20.5 billion and accounting for nearly 30% of total shipments. The momentum continued into early February, with exports climbing another 44.4% year-over-year. This robust export performance has pushed corporate foreign exchange deposits above $100 billion for the first time, reflecting a strengthening external position. The Bank of Korea's more hawkish stance, with growth forecasts raised to 1.8% and markets pricing in nearly two rate hikes over the next year, should further support the won.

Government policy tools are also playing a crucial role, with the National Pension Service reducing overseas equity allocation, potentially lowering net dollar demand by $17-20 billion. Additional support is expected from extended FX hedging programs, Reshoring Investment Account progress, and anticipated WGBI inflows of $50-60 billion beginning in April 2026. The stabilization of the Japanese yen removes a key external headwind that has historically pressured the won.