Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Earlier today, South Korean business sentiment for March showed an improvement in the headline results. This was more evident in non-manufacturing (to 74 from 70), rather than manufacturing (to 66 from 65). The manufacturing index is only just up from recent lows. The sub-index, measuring export expectations, also ticked lower. The first chart below plots South Korean export growth against this series.
- Export expectations remain above 2020 lows, but continue to trend lower. This is consistent with yesterday's first 20-days of trade data for Feb. Headline export wasn't that poor, but average daily export growth was close to -15% y/y.
- The tech backdrop remains quite soft, the second chart below plots y/y momentum for chip exports (first 20-days) against y/y in global semiconductor sales.
Fig 1: South Korean Exports Versus Manufactures Expectations
Source: MNI - Market News/Bloomberg
Fig 2: South Korea Chip Exports & Global Semiconductor Sales
Source: MNI - Market News/Bloomberg
- This comes against a backdrop of rising core yields. The final chart below is the US 10yr real yield (inverted) against the SOX semiconductor equity index. Higher yield/tighter rate expectations have generally weighed on the equity outlook for this sector over the past 12 months.
- Such a backdrop is challenging for the won, which has lost 5.5% since the start of the month (the worst performer in EM Asia FX), but also continues to paint a challenging global growth backdrop, even with recent resilient data outcomes in the major economies.
Fig 3: US Real 10yr Yield & SOX Semiconductor Index
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.