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