BNY’s Bob Savage highlights South Korea’s powerful export rebound, led by semiconductors and strong shipments to China and the U.S., generating a sizeable trade surplus. However, South Korean equities remain deeply below prior holdings peaks, tightening financial conditions just as the new BoK governor adopts a cautious stance amid Middle East-driven Oil and inflation risks.

Tech-led trade boom versus tight conditions

"South Korea’s exports in the first 20 days of April rose 49.4% y/y on both a working-day-adjusted and unadjusted basis. This marked an acceleration from 40.4% y/y in the equivalent period in March, while imports increased by 17.7% y/y, resulting in a trade surplus of $10.4bn."

"Export growth was driven by semiconductors (+182.5% y/y), computer peripherals (+399% y/y) and oil products (+48.4% y/y), although autos and auto parts recorded falls. By destination, there were y/y rises in shipments to China (+70.9%), the U.S. (+51.7%), the EU (+10.5%) and Taiwan (+77.1%)."

"Rising oil prices linked to the Middle East tensions have driven up import costs, with import prices around 16% higher and export prices also rising over 16% m/m, adding to inflation pressures. KOSPI +2.72% to 6388, USDKRW +0.14% to 1470.45, 10y KTB -3bp to 3.685%."

"The new BoK governor Shin Hyun-song has signaled a cautious and flexible monetary policy stance at the start of his term. He cited heightened uncertainty emanating from the Middle East crisis, with rising oil prices adding to upward pressure on inflation while weighing on growth and increasing financial market volatility."

"The BoK earlier held its benchmark rate at 2.5%, in a seventh consecutive hold despite being in an easing cycle, with Shin describing policy as requiring “strategic patience” given unclear inflation and growth paths."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)