The South Korean S&P Global Manufacturing Purchasing Managers’ Index (PMI) stayed the same at 49.4 in November. This indicates that the manufacturing sector continues to shrink since it remains below the neutral mark of 50.
The stable PMI shows ongoing challenges in the manufacturing industry, with continued pressure from low demand and production.
South Korean Manufacturing Sector
The South Korean manufacturing PMI holding steady at 49.4 for November highlights the ongoing weakness in this sector. This suggests that the South Korean Won may continue to weaken against the US dollar. In the near future, we might consider buying USD/KRW call options to benefit from potential currency depreciation.
Stagnant manufacturing activity is likely to negatively impact the KOSPI index, which relies heavily on major export-oriented companies. This scenario presents a chance to buy KOSPI put options or set up bearish spreads to protect against a possible market downturn. Recent data from the third quarter of 2025 revealed that global semiconductor sales grew by only 1.5%, raising concerns for Korea’s leading export sector.
With all this uncertainty, market volatility may increase. The Bank of Korea decided to keep its policy rate unchanged in its last meeting in November 2025, citing weak external demand, which does little to boost confidence. This supports the idea of preparing for a possible rise in the VKOSPI, the market’s volatility index.
Market Volatility and Economic Indicators
The current environment is starting to resemble the extended export slump we faced in 2023, which resulted in low equity market performance for multiple quarters. This historical trend suggests we should be careful about expecting a quick recovery. The USD/KRW exchange rate has also been testing the 1,415 level, and current data offers little hope for relief from this pressure.
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