South Korea Sept exports down, as expected due to Hyundai strikes

[SEOUL] South Korean exports in September fell, as expected, after posting the first rise in 20 months in August, as slightly fewer working days and a strike at the biggest automaker hit shipments, data showed on Saturday.

Exports fell 5.9 per cent on-year to US$40.86 billion in September while imports slipped 2.3 per cent to US$33.76 billion, trade ministry data showed, resulting in a trade surplus of US$7.11 billion in September, up from a revised US$5.11 billion surplus in August.

In August, exports and imports rose 2.6 per cent and 0.7 per cent, respectively.

The rebound in August was widely expected not to continue as policymakers expressed concerns over major strikes at Hyundai Motor. Its labour union staged its first full nationwide strike in 12 years on Monday over stalled wage talks, putting the automaker's earnings and sales targets at risk.

The strikes, ongoing since July, have accumulated losses of nearly 2.5 billion won (S$3.09 million), the finance minister said on Wednesday.

"Although it's a fall, trade data today isn't a disappointment given that strikes at Hyundai and shipment disruptions from the collapse of Hanjin Shipping must have been dragging overall overseas sales," Moon Jung Hui, a Seoul-based analyst at KB Investment & Securities said after the data was released.

"Sectors other than auto and shipping seems to have fared alright. The Bank of Korea may not rush to cut rates again this year. They are likely to maintain their wait-and-see mode since recovery is very weak," he said.

The trade ministry also said the recent global recall of Note 7 smartphones by Samsung Electronics, due to faulty batteries causing some of the phones to catch fire, had also affected September trade numbers.

Shipments to China fell 9.1 per cent, while those to the US and the EU slumped 6.1 per cent and 14.5 per cent, respectively.

September this year had 0.5 fewer working days compared to the same month in 2015.

While the economy is improving on the back of domestic demand, the prolonged contraction in exports is a source of concern as policymakers wait the effects of expansionary fiscal and monetary policies.

Other challenges the economy faces include the ongoing corporate restructuring and the enforcement of the anti-graft law, which restricts meals and gifts public officials journalists can accept.

Economists polled by Reuters had expected a 4.1 per cent drop in exports and a 2.3 per cent fall in imports.

The average export value per working day was US$1.95 billion in September, compared to US$1.67 billion in August, a three-month high.

REUTERS