South Korea’s trade balance fell to $0bn in January, down from $8.74bn in the previous period.
This means South Korea did not keep the earlier surplus in January.
Korean Won Downside Positioning
South Korea’s trade balance dropped sharply, from a strong $8.74bn surplus in December 2025 to zero in January. To us, this is a clear warning sign. It suggests export momentum may have stalled after a strong year. Because of this, we should consider trades that benefit from a weaker Korean won, such as buying USD/KRW call options or using futures.
This release also suggests stress in major export industries, especially semiconductors, which are central to the economy. Recent industry reports show global chip sales fell 12% month-over-month in January, the biggest drop since the 2023 downturn. That would directly hit South Korea’s largest firms. As a result, bearish KOSPI futures and put options on tech-focused ETFs look like reasonable short-term ideas.
On the import side, the trade balance may also be under pressure from higher energy prices. Brent crude has recently moved back above $90 a barrel due to a colder winter and renewed supply concerns. That raises import costs. Together, weaker export revenue and higher import bills point to a tougher outlook for corporate earnings.
A surprise data print like this usually increases uncertainty and market swings. We expect the VKOSPI, South Korea’s volatility index, to rise from current low levels. That makes VKOSPI calls, or long-volatility approaches like straddles on major index names, useful hedges.
Historical Parallel And Risk Stance
In 2022, we saw a similar pattern: a global slowdown hurt the trade balance and pushed the KOSPI into a long decline. That experience suggests this may be more than a one-off result. For now, we should be careful with long exposure and focus on strategies that can profit from a drop in prices or from higher volatility.
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