Korea data preview: Industrial production likely to continue upward trend in April

Industrial activity data in March(+3%YoY) was weaker than I expected(+5.8%YoY) but it still remained upward. While the semiconductor sector showed a strong gain of 24%YoY in March, a slowdown in most of cyclical sectors such as chemical, refining, and steel drags on the headline. Falling inventory/shipments ratio by 1.1 to 115.6 which left the peaks of the beginning of the last year may suggests that the production is likely to be expanded more in the near future.

Under my estimate, industrial production data in April is expected to show a strong print of 5.7% in YoY terms(+1.8%MoM), slightly above consensus expectations of +5.28%YoY(+1.42%MoM), mostly driven by skyrocketing semiconductor sector growth that recorded +54.9%YoY on exports data in April. It may provide some evidence to support the BOK's latest view that the domestic economic growth could outpace their economic outlook in April. The better-than-expected data should put some pressure on the Korean bond market as the KTB futures traded on the top of the range yesterday, however, based on my recent experience, market impacts from domestic data is likely to be limited.