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The Plunging Yen Could Decimate Ford Motor Company (F), General Motors Company (GM) and Caterpillar Inc. (CAT)

Korean electronic companies could suffer from a weak yen
There are few U.S. electronic makers left. Instead, Japan’s rivals on this front — LG, HTC and Samsung — are located in South Korea.

A weak yen would benefit Sony, Panasonic and Sharp over their South Korean rivals — consumers might opt for a relatively cheaper Sony Bravia over a Samsung LCD.

The Korean electronics makers aren’t directly traded on U.S. exchanges, but traders can get access to them through iShares South Korea Index Fund. Samsung is a major holding within the fund, as are Korean automakers Hyundai and Kia. As with the U.S. car companies, Korean car companies should be susceptible to emboldened Japanese competition.

Germany’s exporters also compete with Japan
Like South Korea, Germany too faces export competition. The iShares Germany Index Fund holds companies such as Volkswagen, Porsche, Siemens and BASF.

As car companies, Porsche and Siemens face the same risks as GM, Ford, Kia and Hyundai. Likewise, Siemens and BASF face competition from a host of Japanese competitors in the industrial and chemical markets.

Currencies matter to exporters
With the recent shift in the relative value of the yen, Japanese exporters will receive a currency tailwind, boosting their profits. That might lead to price cuts, much to the detriment of those companies that directly compete. Non-Japanese electronic, auto and industrial makers all could suffer.

Bottom line, investors with stakes in companies that are reliant on exports should pay attention to trends in the currency market.

The article The Plunging Yen Could Decimate These Stocks originally appeared on

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