NELI rises to the highest level since August 2021, pointing to a continued steep uptrend in Asian exports

Overview

This report is Nomura's macro chart brief on the Asia Export Leading Index (NELI). The report points out that despite ongoing global energy shocks, NELI's signal for Asian export growth shows that export momentum continues to rise rapidly. NELI covers overall nominal exports in Asia ex-Japan and measures export trends over the next roughly three months through multiple leading variables.

Core views

The core view is that the Asian export cycle is improving significantly. NELI rose sharply for a third consecutive month to 113.7, reaching the highest level since August 2021; a broad range of components improved simultaneously, especially technology, semiconductors, manufacturing PMIs, China's imports, and shipping-related indicators. Nomura judges that even after discounting freight-rate shocks, Asia's export year-over-year growth in Q2 may still exceed 30%.

Analysis framework

The report uses Nomura's Asia Export Leading Index as the main analytical tool, combining official export data, high-frequency trade indicators, manufacturing sentiment indicators, semiconductor indicators, and shipping price indicators to assess the underlying momentum of Asian exports. The chart compares Asia ex-Japan total export year-over-year growth with NELI to observe the leading relationship and turning-point signals.

Methodology notes

• Macro Leading IndicatorNomura's Export Leading Index (NELI)

  Asia Export Leading Index

  NELI is constructed from nine Z-score standardized variables weighted by the inverse of historical mean squared error. It leads Asia ex-Japan total exports by about three months and is used to reduce interference from base effects in official export data and identify turning points in export momentum.

• High-Frequency Trade ValidationSouth Korea first 20 days export data

  South Korea first 20 days export data

  South Korea's export data is released relatively early, and the report uses its 49.4% year-over-year performance in the first 20 days of April as high-frequency validation of improving Asian exports.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Asia ex-Japan exports

  Core tracking target

  Strengths

  NELI shows export growth momentum is rising steeply, and Q2 year-over-year growth may exceed 30%.

  Weaknesses

  Official export data may be affected by base effects and short-term shipping disruptions.

  Comparison

  NELI is described as a momentum-leading indicator that is less distorted by base effects than official export data.

  Risks

  Middle East conflict leading to supply disruptions, abnormal freight rates, and weaker external demand.

• Semiconductors

  Important leading component and driver of the export cycle

  Strengths

  Global semiconductor sales, South Korea semiconductor exports, and the Philadelphia Semiconductor Index are all components of NELI, and improvements in technology-related indicators are driving the index higher.

  Weaknesses

  The semiconductor cycle may be highly volatile and may be affected by end demand, inventories, and geopolitical supply chain constraints.

  Comparison

  Compared with standalone export data, semiconductor indicators provide forward-looking signals for Asia's technology export chain.

  Risks

  If global technology demand slows or supply chains are disrupted, the contribution from semiconductor exports may weaken.

• Container freight and shipping indicators

  One of the components of NELI

  Strengths

  The rise in the Shanghai Containerized Freight Index contributed to NELI, reflecting changes in shipping demand or constraints.

  Weaknesses

  The report specifically points out that this component is exaggerated by the Middle East conflict pushing up freight rates.

  Comparison

  This indicator needs to be cross-validated with manufacturing PMIs, China's imports, and semiconductor indicators, and cannot be interpreted alone as real export demand.

  Risks

  Freight-rate increases driven by geopolitical conflict may reflect supply shocks more than demand improvement.

Key data

• Latest NELI reading113.7May reading, rising sharply for a third consecutive month and the highest since August 2021.
• NELI lead period3 monthsThe report states that NELI leads overall exports in Asia ex-Japan by about three months.
• Q2 Asia export growth signalmore than 30% y-o-yEven excluding the impact of the freight-rate surge, NELI still points to Asia's export year-over-year growth exceeding 30% in Q2.
• South Korea export growth in the first 20 days of April49.4% y-o-yAs one of the timeliest trade data points in Asia, it shows exports remain strong.
• NELI Bloomberg tickerNMEIXLIThe report notes that Nomura's Export Leading Index can be accessed on Bloomberg.

Impact & implications

If the NELI signal materializes, Asia's export chain, technology hardware, semiconductors, and manufacturing-related economies may continue to benefit from improving external demand and the electronics cycle. However, freight rates have been amplified by geopolitical conflicts; if the Middle East conflict drags on, supply chain disruptions and weaker overseas demand will weaken the strength of the export recovery.

Risks

• If the Middle East conflict persists, it may constrain Asian export growth through supply disruptions and weaker external demand.
• The Shanghai Containerized Freight Index has been pushed higher by geopolitical conflict, which may exaggerate part of NELI's upward move.
• The report is a macro leading-indicator analysis; although NELI has historically predicted major turning points, it does not guarantee that future export performance will materialize.
• Official export data, semiconductor indicators, and manufacturing PMIs may be affected by base effects, inventory cycles, and changes in global demand.

What to watch

• Whether subsequent NELI readings remain at high levels.
• Export and semiconductor export data from major Asian economies, especially South Korea, China, and Taiwan.
• Trends in China's imports, China's imports from Asia, global semiconductor sales, and the Philadelphia Semiconductor Index.
• China RatingDog/Caixin manufacturing PMI, S&P EM manufacturing PMI, and US ISM manufacturing data.
• Whether the Shanghai Containerized Freight Index continues to be disrupted by the Middle East conflict.