Korea weak shipment trend extends into June

Korea's exports fell 1.8% y/y in June, broadly in line with consensus (-2%). Although the decline was less severe than the contraction in May (-11%) and April (-8%), the June drop means that H1 exports fell 5% (Q2: -6.9%; Q1: -3%). 

Korean exports to the US (particularly cars) rebounded strongly in June, rising 10.9% y/y after declining for the prior two months, also because the supply chains that were dislocated after the US West Coast port strike have been restored.  Another encouraging sign is that shipments of several major product categories appear to have stabilized. 

Exports of mobile devices grew for the second straight month after contracting for four consecutive months (June: 28.2%; May: 26.6%; Apr: -8.6%). The value of vessels delivered jumped by 41%, snapping the declines of the two preceding months, notes Barclays.  

Shipments to China, Korea's largest trading partner, also appear to be bottoming, albeit weakly. June exports to China rose 0.8% y/y, reversing the declining trend of the past five months, even as the Chinese government is taking more decisive measures to stimulate its economy.

The improvement in June was helped by stronger auto exports, as well as technical factors - namely three more working days compared with last year and 3.5 more days compared with May, said Barclays.