South Korea’s current account surplus surges to record on chips

[SEOUL] South Korea’s current-account surplus surged to another record in March, driven by a surge in semiconductor exports and stronger shipments across Asia and the US, even as foreign investors sharply reduced holdings of domestic stocks amid rising Middle East tensions.

The current-account surplus reached US$37.3 billion in March, the largest monthly surplus on record, according to Bank of Korea (BOK) data released on Friday (May 8). The figure far exceeded the previous record of US$23.2 billion set in February, and marked the country’s 35th straight month of current-account surpluses, the second-longest streak of surpluses since the 2000s, the BOK said.

The goods balance posted a record US$35.1 billion surplus as exports surged to an all-time high of US$94.3 billion. That was led by semiconductors and computer-related products, while petroleum products and chemicals also climbed as higher oil prices boosted shipment values. Chip exports jumped nearly 150 per cent on a customs-clearance basis, the BOK said.

Meantime, imports increased by the most in 15 years.

The data underscore how South Korea’s trade sector continued to benefit from resilient artificial-intelligence demand before broader fallout from the Iran war and heightened geopolitical tensions began weighing heavily on financial markets and investor sentiment.

The services account posted a US$1.3 billion deficit, though the shortfall narrowed from both a year earlier and the previous month. The travel account returned to a surplus for the first time since late 2014, aided by seasonal domestic tourism demand during the spring travel period.

The primary income account surplus widened to US$3.58 billion, supported by increased dividend income from direct and portfolio investments.

The financial account showed a net asset increase of US$37 billion. South Koreans continued investing abroad, while foreign investors drastically reduced holdings of South Korean equities.

Meanwhile, foreign investment in domestic stocks fell by a record US$29.3 billion as escalating Middle East risks and concerns about weakening memory demand fuelled profit-taking, according to the BOK. BLOOMBERG