Thread by @Trinhnomics

Good morning🦋 Korea 1st 20-day of exports FALL -11.7% YoY Y semiconductor exports CONTRACTED -33%.

That said, there is some silver lining - car exports rose +12.6%.

No V-shaped recovery here. Contraction deepening & it's not just Korea - Taiwan warned us that May'll be worse🤢

On top of sector-specific issues, excessive investment in previous years, weak global demand for phones etc, we have to remember that semiconductor is at the heart of trade-war & Korea is a key global supplier of semiconductor.

Not all is loss: US-China tensions also create ops.

So when people talk about H2 2019 recovery for the sector, you have to ask, are we talking about July 2019 or more like December 2019 because other than a favorable base, what are the drivers of an upturn in early H2 2019?

Korean exports to:

China fell -15.9% YoY (this is Korea's largest country-level MARKET) 🤢
EU -19.4%, ouch 🤢
Japan -1.4%
US -4.4%

Chips -33%
Oil product -5.1%
Car +12.6%
Wireless telecom devices +5.2

As a very China-exposed economy, Korean exports & investment are badly hit😬

Before u dismiss Korea's exports:

Korea is one of the few countries that have a trade surplus w/ China & mostly in high-tech products such as semiconductor;

China's contraction of imports in May tells u that Q2 demand of China is not pretty;

Actually global demand not good 🤢.

Also consider this:

Korea is at the TOP of the tech supply chain (you import chips before u assemble products in Vietnam for example);

And Korea reports data EARLIER than EVERYONE so Korean data tells you about regional & global growth.

So do not dismiss Korean trade data.

Still hear people on financial TV talking about trade-war "noise", guys, it is not noise - totally happening. Just look at financial assets & also real economic activities - Not a rehearsal.

Reminds me of👇🏻tweet (Yes, we're in the middle of it 👌🏻)

https://twitter.com/Trinhnomics/status/1128838263999877120?s=20

Since we're on this rant, let's take some time to look at that curious case of 📈GDP for Japan, yes it rose 2.1% qoq saar:

Domestic demand 📉(private demand 📉; consumption 📉; investment 📉; capital investment 📉; public demand 📉; overall investment📉; exports 📉& imports📉🙄

The following accounting feeds into each other: national account (gdp & wutnot); fiscal; BOP; IIP; trade

NOTHING UP IN JAPAN but net trade (ex - im & if imports 📉&📉to make trade balance favorable then net export contribution to GDP👌🏻)

If imports 📉, it reflects WEAK DEMAND🙄

I'm sure the MOF will use "strong" GDP to raise the VAT to 10% & constrict household consumption👏🏻(NOT);

Let's look at Singapore amazing GDP too 📈:

Goods 📉
Manufacturing 📉
Transport📉
Finance 📉

Construction OFF THE CHARTS 📈

Don't forget Singapore is a trade-exposed econ

@Trinhnomics said while the dispute threatened to “hit at the heart of the supply chain” there was a “silver lining” for Korean electronics manufacturers. “They can arbitrage from less competition from the US in Chinese markets and vice versa,” she said.
ft.com/content/2d32f9…