Record-High Current Account Surplus Fails to Boost Stock Market

[Anchor]

Driven by strong semiconductor exports, South Korea's current account surplus reached an all-time high in May. However, the domestic stock market continued its sharp decline, fueled by concerns over a potential peak in the semiconductor cycle and renewed tensions between the United States and Iran.

Lee Tae-gwon reports.

[Reporter]

In May of this year, South Korea's current account surplus stood at 38.61 billion dollars, hitting a record high for the first time in two months.

The primary driver was a surge in exports, which rose by more than 60 percent, led by a 167 percent jump in semiconductor exports compared to a year ago.

The cumulative surplus from the beginning of the year through May reached 141.3 billion dollars, already surpassing the total annual current account surplus recorded last year, which was the highest on record.

[Yoo Sung-wook / Director of Balance of Payments Statistics Team, Bank of Korea: We had projected a surplus of around 151.5 billion dollars for the first half of the year, but it appears we will exceed that forecast. This suggests that the annual figure could potentially be even higher.]

Despite the news of the record-breaking current account surplus, the domestic stock market continued to plummet, following the trend from yesterday.

Both the KOSPI and KOSDAQ indices triggered sidecars, which temporarily suspend the execution of program sell orders, and closed with sharp declines of over 5 percent. The KOSDAQ index fell below the 800-point mark for the first time in 10 months.

Analysts suggest that investor sentiment has been frozen by persistent concerns that the memory semiconductor market may have reached its peak, coupled with rising tensions between the United States and Iran.

[Kim Jae-seung / Analyst at Hyundai Motor Securities: There seems to be concern over the diminishing profit momentum. Furthermore, the big tech clients investing in AI are continuously issuing a significant amount of bonds. The very fact that they are raising capital through stock issuance or funding is leading to worries about whether they can sustain this level of investment.]

In the short term, the listing of SK Hynix's American Depositary Receipts (ADR) scheduled for July 10 and the upcoming earnings reports from major U.S. tech companies are seen as key variables for the stock market.

While there is hope that the SK Hynix ADR listing could help restore domestic investor sentiment, there are also concerns that it could accelerate the exodus of foreign investors.

(Video reporting: Kang Dong-chul | Video editing: Kim Jin-won | Design: Lee Jun-ho)
※ Please note: This article was translated by AI and may contain errors.