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The latest Export data from Korea and India seem to tell different stories…

Indian Export data for December was released today, registering at -1.05 % year-over-year. This is the third consecutive negative Y/Y figure for Indian exports, but a significant improvement from November’s number –both on a Y/Y and an absolute basis. The agony for Korean exports shows no in end sight with a January figure of -32.79% decline –the lowest Y/Y level recorded, worse even than the massive decline following the US withdrawal from South Vietnam and the later collapse of the Saigon government (South Korea was a primary hub for US equipment shipments then).

The divergence between India’s relative December resilience and Korea’s descent into the abyss is interesting but is ultimately somewhat misleading. The critical service industry component of the Indian growth story is ultimately more important than a rebound in exports of cheap motorbikes. This high tech service sector is sinking in lock step with the decline of financial services in the western economies and other major outsourcers with no hope of internal demand to offset the slump.

For the mature industrial block of the Korean economy, the picture is grim. Despite some pockets of strength in the heavy industrials that are still working through a healthy backlog (evidenced by shipbuilder Daewoo’s record numbers reported today), the export market for Korean goods, particularly automobiles and light trucks, continues to contract.

We have been negative on prospects for both India and Korea over the past year and are currently short the Indian equity market via IFN.

Andrew Barber
Director