South Korea exports expected to rise on chip boost, calendar effects: Reuters poll

South Korea's September exports are forecast to have increased 7.2% year-over-year, reaching a 13-month high, primarily driven by robust technology demand, particularly semiconductors, and favorable calendar effects. This anticipated strong headline growth is expected to contribute to a widened trade surplus of $7.81 billion. However, economists express ongoing concerns regarding prolonged trade talks with the U.S. and persistent tariff headwinds impacting key sectors like autos and machinery, which could temper the broader positive outlook.

Analysis

South Korea's exports are forecast to have risen 7.2% year-over-year in September, marking a 13-month high, but this headline figure is significantly skewed by favorable calendar effects. The growth is primarily attributed to strong technology demand, with semiconductor shipments jumping 27% in the first 20 days of the month, and front-loaded shipments ahead of the Chuseok holiday. However, a critical counterpoint is that on a daily average basis, exports during the same 20-day period actually fell 10.6%, indicating underlying weakness masked by the four extra working days compared to the prior year. Persistent headwinds remain, as economists express concern over the impact of U.S. tariffs on the autos and machinery sectors, which are pressuring shipments to South Korea's two largest trading partners, the U.S. and China. While the monthly trade surplus is projected to widen to $7.81 billion from $6.51 billion, the outlook is tempered by uncertainty surrounding prolonged trade negotiations with the U.S., as a preliminary deal has not yet been formalized in a written agreement.

Key Decisions for Investors

• Investors should look beyond the headline 7.2% export growth and focus on the daily average export figures, which showed a 10.6% decline, to accurately assess the underlying health of South Korean trade.
• Exposure to the South Korean semiconductor sector appears favorable given the reported 27% shipment growth, but caution is warranted for the autos and machinery sectors, which face specific tariff headwinds from the U.S.
• The lack of a finalized written trade agreement with the U.S. represents a key geopolitical risk that could weigh on South Korean equities and the won, despite the projected widening of the trade surplus.
• Monitor the official trade data release on October 1 to confirm the magnitude of the calendar effect versus organic growth, as this will be a crucial signal for short-term market direction.