Korean Exports Surge: What This May Signal for the S&P 500

Additional content provided by Brian Booe, Associate Analyst, Research.

After a banner 2025, South Korean equities are off to a hot start this year, but momentum doesn’t appear to be limited to equity price action. South Korea’s trade ministry data released over the weekend indicated that the peninsula republic kicked off 2026 with its strongest January export growth print on record — expanding 33.9% from a year prior to $65.9 billion and besting consensus estimates of around 30.1% growth. Sunday’s stout monthly print marked the eighth straight month of export growth, with much of the strength stemming from a 102.7% year-over-year rise in semiconductor exports, which reached $20.5 billion on the back of intense global demand for artificial intelligence (AI) related chips and the ongoing upswing in memory prices. Among Korea’s 15 major export industries, 13 posted positive growth last month, with computer and wireless communication exports also among standouts, surging 89.2% and 66.9%, respectively. Auto exports rose 21.7% on strong demand for hybrid and electric cars. To be fair, while the monthly figures raised eyebrows, the Lunar New Year shift did help boost last month’s headline number due to more working days falling in January this year. However, average daily exports — which offer a clearer picture of underlying momentum — still grew 14.0%, cruising past a 7.9% increase in January 2025 and December’s 8.6% rise.

A Leading EPS Indicator?

Why do we monitor Asian export markets? Well, the relationship of South Korean exports to S&P 500 earnings growth historically has been tight, and Wall Street often considers the country’s export activity a real-time proxy for global demand. This is especially true in industries such as semiconductors, and also applies to other countries such as Taiwan, for example. South Korea’s chip and information technology industry as a whole is deeply intertwined with global technology supply chains, which respond quickly to global demand fluctuations and from there passes through to corporate earnings of not only many S&P 500 companies, but multinational earnings around the world. This metric functions as a leading indicator as export data moves before and is reported more frequently while corporate earnings reports are naturally delayed and only arrive only once per quarter (in the U.S.). Historically speaking, when South Korean exports accelerate, S&P 500 earnings per share (EPS) tends to follow, and when exports soften, future S&P 500 earnings growth often decelerates, as highlighted in the “Rise in South Korean Exports May Signal Strong U.S. Earnings” chart below.

Rise in South Korean Exports May Signal Strong U.S. Earnings

Source: LPL Research, Bloomberg 02/03/26
Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

January's sharp rise in exports could signal continued tailwinds for S&P 500 earnings growth in the coming quarters, which we believe will be a key factor for equity market gains this year. Plus, the magnitude of semiconductor growth suggests that AI-driven demand is robust, and it’s no secret that companies exposed to the AI secular growth theme have a significant influence on corporate America’s overall profits. Risks do remain, however. Concerning the raw export data, steep rises in export activity are generally followed by a weaker relative report, even if growth remains very strong, and exports — like many economic metrics — are influenced by cyclical dynamics. From a macro perspective, in addition to technology, South Korean export activity is also tied to steel, the auto industry, and general machinery, industries impacted by U.S. tariffs. Lingering U.S. tariff risk could dampen future export momentum, and of course, the risk of an economic shock always remains on the table.

It’s still early in the fourth quarter reporting season, but earnings growth is nicely ahead of schedule, which is a positive sign for 2026 reports that will begin arriving a few months down the line. As we wrote in our 2026 Outlook: The Policy Engine, we expect a growing economy to help drive mid-single-digit revenue growth (at least), and we expect margins to edge higher as tariffs are fully absorbed. In our view, these factors paired with the continued surge in the so-called ‘hyperscaler’ capital expenditures — spending and investment from Alphabet (GOOG/L), Amazon (AMZN), Meta (META), Microsoft (MSFT), and Oracle (ORCL) — will enable double-digit earnings growth for the S&P 500 as these elevated spending levels flow throughout index constituents and beyond.