Korea’s exporters are likely to face growing uncertainties after the Prime Minister Shinzo Abe-led ruling coalition won a crushing victory in the Japanese parliamentary upper house elections.

Market insiders predict that the Sunday election result in Japan will solidify or be used to vindicate the “Abenomics” program, which has weakened the Japanese yen versus major currencies to make its products more competitive overseas.

The Institute for International Trade said in a statement on Monday that the Japanese ruling bloc’s landside victory was expected to strengthen Abenomics, hinting that the situation could deal a blow to local exporters during the second half of the year.

IIT, a research arm of the Korea International Trade Association, estimated that local manufacturing firms saw their operating profit drop by 4.8 trillion won, or 5.5 percent, on a year-on-year basis.

The Hyundai Economic Research Institute said in a report that “when the U.S. currency remains strong to post 100 yen per dollar, Korean firms will see their collective exports fall 2.6 percent from a year earlier due to their handicapped position in price competitiveness.”

Korea’s exports are also projected to drop 5.2 percent and 7.3 percent when the dollar rises to 110 yen and 120 yen, respectively, according to the HERI report.

In particular, the Japanese yen’s weaker position against the Korean won was identified as a serious threat to the price competitiveness of Korea’s IT and car producers.

While the two sectors are the nation’s top growth engines, HERI estimated that Korea sees a drop in exports of 0.87 percent and 0.68 percent, respectively, in IT and automobiles when the yen falls by 1 percent against the won.

Samsung Electronics and Hyundai Motor have been in heavy competition with Japanese players in overseas markets in terms of price competitiveness as well as product quality.

Further, other sectors such as petrochemical, steel and machinery are expected to suffer heavier falls in exports under the strong won against the yen, HERI added.

Samsung Economic Research Institute also projected the yen would move above 100 against the dollar for a certain period after the elections.

Regarding the impact of a weak yen, LG Economic Research Institute said industries in competition with their Japanese counterparts, including steel, petrochemicals, machinery and autos, could feel the pinch the most.

“Such industries will be impacted by the second wave of the weak yen from the latter part of this year as Japanese exporters will cut their product prices a few months later when the trend continues,” said a recent report from the LG Economic Research Institute.

Exports of some of the nation’s key industries have already been affected by the lower priced Japanese goods in the global market, following the first wave of cheap yen, which lasted from late last year until May.

According to industry sources, the global market share of local steel makers fell 4 percent in the first quarter, while domestic petrochemical exporters also saw their global market share drop by 1 percent.

By Kim Yon-se (kys@heraldcorp.com)