Since the beginning of this year, Asian stock markets have shown mixed performance against the backdrop of a strong US dollar.
Among these, some achieved a bull market in domestic currency at the cost of currency depreciation, while others sacrificed part of the stock market's gains for a relatively stable exchange rate.
Only South Korea is an exception:
In terms of Korean won, the KOSPI index has fallen by 10.0% this year, and considering the depreciation of the won, the KOSPI has dropped by 18.9% when measured in US dollars, making it the weakest in Asia.
Foreign investors are becoming more pessimistic. In November this year, foreign net sales of South Korean stocks reached 41.5 trillion won, marking four consecutive months of net selling. In the two weeks starting in early December, there was an additional net sale of 24 trillion won.
Is exports really strong?
In 2023, South Korea's exports accounted for as much as 40% of GDP. As an export-oriented economy, exports are a barometer of South Korea's economy.
Latest data indicates that South Korea's exports may be showing signs of recovery.
Export data published by the Korea International Trade Association shows that in November, the export amount increased by 1.4% year-on-year, maintaining growth for 14 consecutive months, although the trend has slowed down.
Data from the Korean Customs Service for the first 10 and 20 days of December show year-on-year export increases of 12.4% and 6.8%, respectively, indicating that South Korea's exports should not be weak in December.
First, there is the weakness in semiconductors.
South Korea's domestic semiconductor giants, Samsung Electronics and SK Hynix, mainly focus on memory chips, which account for only about 30% of the entire semiconductor market. Compared to Taiwan, which has a complete supply chain including chip manufacturing, packaging, and testing, South Korea's presence is weak.
Data from TrendForce shows that in the second quarter of this year, TSMC's share in the global foundry market was 62%, while Samsung Electronics was only 11%, widening the gap between the two companies from 36.5% in Q3 2020 to 51% now.
Insufficient policy support is the main reason; South Korea lacks government subsidies like those in the US, mainland China, and Taiwan, making it difficult to promote domestic chip production.
South Korea's key materials, components, and equipment for semiconductors are highly dependent on overseas sources. Data from the Korea Customs Service shows that in 13 sub-sectors of semiconductor equipment, more than half have been in a trade deficit for a long time.
Korean cars are struggling in the Chinese market.
On December 15, the Korean National Assembly officially passed the impeachment motion against President Yoon Seok-youl. On the 16th, the leader of the ruling party, Han Dong-hoon, announced his resignation from the party leadership.
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Even if the impeachment case makes Yoon Seok-youl's defeat certain, the future of South Korea's political situation is even more uncertain, potentially exacerbating foreign investors' bearish sentiment.
With both domestic and foreign investors not optimistic, where will the South Korean stock market head next year?
