The local unit of Goldman Sachs gave an optimistic view on Korea’s exports in the second half of this year, lowering its previous warning against weak yen’s negative effects on the Korean economy.
“We said in an earlier report (in April) that the weak yen was seen as major problem that was manageable as long as the cross rate stays around 105,” said Kwon Goo-hoon, co-head of research of Goldman Sachs Asia Seoul branch, in a press conference in Seoul on Thursday.
“Now we are seeing an inverse case, where a weak yen is actually helping or having no influence over Korean exports,” he said, noting lower yen led to cost drop in Korea’s export to Japan.
The Korean researcher said the weak yen appeared to have positive effects in about 70 percent of Korea’s exported goods, such as materials for ships and liquid crystal displays, by lowering export costs.
This is largely because Korea’s exported goods have been enhanced in quality and the country does not vie with Japan in making the same products, he added.
But about 30 percent of Korean exports, such as steel, auto parts and certain machinery products, are expected to struggle, if not so currently, he added.
Kwon advised that investors should heed the won-dollar cross rate more than the won-yen cross rate, as Korean won and Japanese yen tend to go together in their cross rates to the greenback.
Kwon noted that although years of weakening yen may be problematic, the current market view shows relatively little unpredictability. Current financial risks are about one-third to one-fifth of what we underwent during the 2008 crisis, he said.
Meanwhile, regarding concerns over the negative impacts of the slowing Chinese growth on Korean exports, the Korean researcher hinted that Korean exports rely more on the recovery of the U.S. economy rather than that of China.
By Chung Joo-won (
joowonc@heraldcorp.com)
