Exports Rise In Line With Forecasts, Import Weakness Sees Trade Surplus Maintained

South Korean October trade figures saw exports print close to expectations, up 5.1% y/y (versus 6.1% forecast and -4.4% prior). Imports were weaker than expected at -9.7% y/y (-2.1% forecast and -16.5% prior). This saw the trade position remain in surplus, +$1636mn, versus a projected deficit of -$1700mn (the prior surplus was $3697mn).

• This paints an improving export backdrop, although base effects are less favorably in Nov and in coming months. From a KRW standpoint, we are also roughly in line with the y/y export trend, see the first chart below.
• In terms of the detail, auto exports remained a source of strength, up 19.8% y/y. Machinery exports were also strong, while the drag from chip exports (-3.1%) lessened.
• China exports were down -9.5% y/y, which is also on an improving y/y trend. Exports to the US remained up strongly in y/y terms. By share US exports have also almost surpassed those to China.

Fig 1: KRW/USD Y/Y Versus South Korea Export Growth Y/Y

Source: MNI - Market News/Bloomberg

• The larger import drop aided the trade position, although today's surprise hasn't aided won sentiment (last near 1354 for the 1 month NDF, -0.25% weaker in won terms).
• The trade position is comfortably past the 2022 trough (see the chart below), although further significant improvement may be more difficult given terms of trade proxies have stabilized.

Fig 2: South Korea Trade Position Surprises On The Upside In October

Source: MNI - Market News/Bloomberg