Korean IT export earnings shot up again in Q2, taking the stock market to record highs (and down again) as well and continuing the region-wide trend we've seen in neighboring economies.

In contrast to Taiwan, China and Vietnam, however, the Korean boom is mostly about rocketing prices for memory chips and other components, with only a more limited impact on industrial output ... and, for that matter, on the domestic economy at all, where most local activity indicators are flat.

Nor is there any joy with the KRW. Trade and current account surpluses have exploded, but FX reserves have been flat and the won is underperforming.

We remain cautious on equity valuations. The AI bubble is, well, a bubble, and timing the subsequent downturn is difficult. Meanwhile, local listed firms have enjoyed a significant rerating, but in the absence of domestic growth it's unclear how far this can go.