Next stop under the AI craze: Hedge fund giant Point72 targets Asian currencies such as China and South Korea as next year's biggest winners.

Sophia Drossos, strategist and economist at hedge fund giant Point72 Asset Management, stated that as the US dollar weakens, Asian economies closely tied to the artificial intelligence (AI) boom are expected to be the biggest beneficiaries next year. Drossos pointed out that the trend of US dollar depreciation will continue until 2026, although the rate of decline will be less than the 7.1% so far this year. She believes that the biggest beneficiaries of this weakening dollar may come from Asian countries whose currencies have not kept up with the surge in AI-related stocks. "As the AI theme expands globally, I will focus on China and South Korea," she said in an interview in New York. "While the South Korean stock market has performed well this year, the South Korean won remains relatively weak." This year, Asian tech stocks have significantly boosted the performance of emerging market stocks, with the South Korean stock index soaring by about 70% and the Chinese stock market rising by over 35%. However, the South Korean won and the Chinese yuan have not strengthened at the same pace, making them the currencies with the most potential for appreciation in 2026. After experiencing four consecutive years of decline, the South Korean won has only risen by about 1% so far in 2025. Due to easing of tensions in US-China trade relations, the offshore yuan has increased by over 3% during the same period, but only ranks fifth in terms of Asian currency appreciation this year. Drossos stated that with the US federal government ending the shutdown, newly released economic data is likely to show that economic growth is slowing down. This will pave the way for the Fed to cut interest rates in December, leading to a weaker US dollar. Affected by trade tensions and concerns about economic prospects, all currencies of the G-10 countries have appreciated against the US dollar this year. Despite record highs in US stock indices, the US dollar index is heading towards its worst annual performance since 2017. "While the US economy is performing well, the performance of other countries is even more impressive," Drossos said. "Global investors are increasingly taking advantage of the valuation advantages in other economies."