South Korea's economic problems aren't made in Japan.
That isn't the way it looks in the two rival exporters' stock markets. Investors convinced that Japan's weakening yen will help its companies claw global market-share back from Korean competitors have bought almost $75 billion worth of Japanese stocks so far this year. Part of that appears to have come at the expense of South Korea, where foreign investors have sold nearly $6 billion of shares.
Japan's benchmark stock index has thus soared 50 percent this year on hopes Prime Minister Shinzo Abe can revive the economy and with it the fortunes of big exporters such as Toyota and Panasonic. Stocks in Seoul have meanwhile stagnated, with Samsung down around 1 percent.
The problem for Korea had seemed obvious: while the yen has slid 20 percent against the dollar over the past year, the won has climbed by a third against the Japanese currency. In theory, that makes Korea's exports more expensive relative to Japan's, enabling Japanese companies to undercut Korean competitors and carry home more yen. In reality, that's unlikely to happen.
Japanese exporters have moved much of their output offshore. And since fluctuations in the yen don't affect the cost of producing overseas, continued weakness in the Japanese currency - even long-term - won't necessarily undercut the competitiveness of Korean manufacturers.
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"The issue we hear from Korean exporters - that a weak yen is bad for Korea - just is not proven," said Paul Donovan, senior global economist at UBS in London. "It doesn't mean that Korean companies lose market share, or that Korean companies lose profit either."
For instance, in the first three months of 2013, Toyota sold 5 percent fewer vehicles while Korean rival Hyundai sold 9.2 percent more.
More worrisome are Europe's slump and slowing global growth, which have weighed on both Japanese and South Korean exports.
South Korea, whose exports amount to more than half its gross domestic product, has long served as a proxy for global trade to investors. So stalled export growth in the first quarter, led by reduced shipments to the United States and Europe, was seen as an ill omen for stocks.
Japan's export numbers don't look much better. While Japanese exports calculated in the weakened yen rose in the first quarter by 1.2 percent, they dropped 11 percent in both dollar terms and volume terms.
The weaker yen has also not immediately given Japan a bigger share in overseas markets. In the United States where Toyota and Hyundai compete most closely, the automakers lost market share to American competitors in the first quarter, according to industry market statistics firm Autodata.
Currency fluctuations don't translate into market share - at least not right away - because multinationals can't change the prices they charge as quickly asthe currency moves.
According to UBS, Japanese manufacturers of transportation equipment, a category that includes cars and trucks, have managed to cut their prices by only about 1.1 percent in the past year. Their Korean competitors have raised theirs by only about 1.2 percent.
One reason is that currencies don't change the cost of producing overseas. Big Japanese manufacturers have shifted much of their production offshore to cut costs. Exports now amount to the equivalent of just 12 percent of Japan's gross domestic product, an amount exceeded by the combined revenues of just six of its biggest brands: Hitachi, Panasonic, Sony, Honda, Nissan and Toyota - whose exports from Japan account for less than a quarter of the vehicles it sells worldwide.
Because so little of what they sell is exported, how much the weaker yen helps Japan's economy depends largely on what its companies do with the added yen they earn.
"The key to the second half and into 2014 is to see how that gain in competitiveness translates into a broader boost for the Japanese economy," said Simon Dobson, who manages the Japan portfolio at London-based asset management firm BDT Invest. "Following on from increased profits is increased investment, rising employment and production and, finally, more consumption."
Korea's own manufacturing sector is hollowing out, too. More than 80 percent of the mobile phones sold last year by South Korean makers, including Samsung Electronics, were made outside Korea, according to the National IT Industry Promotion Agency. Hyundai Motor makes almost 60 percent of its cars overseas.
That result is that, while the dominance of exports and manufacturing over the Korean economy is bigger than ever, the number of jobs they create is shrinking. Last year, the number of Koreans employed in manufacturing dropped below 16.6 percent.
With youth unemployment more than double the national rate, pursuing a weaker won for the sake of exports has become politically incorrect. Korea's new president, Park Geun-hye, campaigned on promises to support domestic jobs over exports, and to fight rising prices and household debt.
"The won-yen rate has not come at a good time for corporate Korea at the moment, but it certainly is not the only problem Korea faces," said Rob Brewis, who helps manage about $125 million in assets in Asia-related funds at BDT.
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While there may be worries that a weaker yen is threatening Korean exports, it may not pose much danger to either Korean consumers or the kind of big companies whose stocks foreign investors tend to own.
The market's decline has thus left Korean stocks looking relatively cheap: Korean stocks trade at just eight times their projected earnings, the lowest in Asia and roughly half the cost of Japanese stocks, which now cost 15 times forecast earnings.