Net Equity Outflows Accelerate

1 month USD/KRW trended higher for much of the post Asia-close. We moved up from around 1254 to 1266, before closing at 1264 in NY. Note spot closed yesterday at 1256.70, so expect some catch up today.

• Equity sentiment remained weak, with the SOX index off a further 2.69%, while the MSCI IT index lost 2.75%. The China Golden Dragon index faltered as well, losing 6.76%, its first fall this week.
• The Kospi finished down slightly yesterday, but tech losses and broader weakness in US equities overnight should weigh in the early stages today.
• Note offshore investors dumped $837mn of local stocks yesterday, the largest daily net outflow since early April of this year, see the chart below.
• Earlier, the April current account balance print a small deficit of -$79.3mn, versus a revised surplus of $7057.6 from March. This is a sharp swing lower, but largely owes to dividend income outflows to offshore investors. We should see an improved picture in May, although higher commodity prices remain a headwind to the overall balance.
• BoK Governor Rhee noted in a speech that the central bank must stick the course with interest rate rises to bring down inflation pressures, even if this impacts those vulnerable in the economy.
• The other focus point will the Truckers' strike and its impact on domestic/trade activity.

Fig 1: South Korean Equity Outflows Accelerate

Source: MNI - Market News/Bloomberg