China's trade deal can end up hurting Korea and Taiwan

21.05.2018 / 05:31

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The strong rebound in Korean exports reported Monday may serve as a reminder that the country risks some collateral damage from the weekend's trade truce because Korea is strongly dependent on sending goods to China.

The 15% yoy export growth in the May 1-20 period fits with resurgent Chinese imports. That relationship may wither going forward if China actively seeks to boost purchases from the U.S. -- especially if semiconductors are on its American shopping list.

The same would be true for Taiwan which, like Korea, runs a significant trade surplus with Asia's largest economy. Both economies also face a triple dose of pain from recent gains for oil, USD and Treasury yields. While equities in Seoul and Taipei are marching higher with the rest of Asia Monday morning, don't be surprised if they pull up short in the medium term.

Source: Bloomberg Pro Terminal

Trader Aleksandar Kumanov

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China's trade deal can end up hurting Korea and Taiwan

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