ID :
54011
Mon, 04/06/2009 - 07:21
Auther :
Shortlink :
https://www.oananews.org//node/54011
The shortlink copeid
N. Korea's rocket launch to have limited impact on S. Korean
SEOUL, April 5 (Yonhap) -- North Korea's long-range rocket launch is unlikely to exert negative influence on the South Korean economy and its financial markets although it could increase market volatility in the short term, senior officials said Sunday.
The Korean government confirmed that North Korea launched what it claims is a
communications satellite earlier in the day despite repeated international
warnings.
The Ministry of Finance and Strategy said in a emergency meeting of economic
ministers that the rocket launch does not in any way alter the country's
fundamentals.
It said that Seoul will carefully monitor market developments and take measures
to limit any side effects.
The ministry said despite North Korean saber-rattling in the past month, the
local bourse and foreign exchange rates were not seriously hurt and actually
improved.
This view was echoed by Chin Dong-soo, chairman of the Financial Services
Commission (FSC) who told reporters after the meeting with Yoon and other high
ranking policymakers that he didn't anticipate major problems.
"The launch had anticipated for some time so we do not think there will be any
serious problems," the official said.
The FSC added that it is using its contacts in overseas economic ratings
companies and investment banks to explain the country's economic situation and
alleviate any concerns through investor relations tours in the future.
Private analysts, meanwhile, agreed with officials by predicting that the rocket
launch is unlikely to have a grave impact on the South Korean stock market in the
long term as the markets, which are accustomed to geopolitical risks stemming
from the North's military threats, have already factored in the news.
"As chances are slim that South Korea and the United States would take military
actions, the North's rocket launch itself will have limited impact on the Seoul
bourse," said Sung Jin-kyung, a market analyst at Daishin Securities Co.
The country's benchmark Korea Composite Stock Price Index (KOSPI) gained ground
recently to breach the 1,200-point level, as foreign investors snapped up local
stocks. The Korean currency rose almost 11 percent against the U.S. dollar last
month, shrugging off fears that Japanese investors may pull money out of the
Seoul markets en masse in March.
The previous responses of the stock market to military threats by the North give
some support to the analysts' prediction.
The KOSPI closed a tad lower on July 5 2006 when the communist country test-fired
six medium and long-range missiles that landed off the west coast of Japan.
Although the key stock index tumbled 2.4 percent on the day of North Korea's
nuclear weapon test in 2006, it recouped losses later in about 15 sessions.
"The local financial markets will not fluctuate just because of the rocket
launch," said an official at the finance ministry who asked not to be named.
"Although the market may undergo short-term volatility, it will eventually
stabilize as foreign investors are already accustomed to geopolitical risks
stemming from North Korea's military threats."
Experts also said the rocket firing would not have a negative effect on
consumption and investment as private and business spending has been already
dented by the global economic recession.
The Korean economy shrank 5.1 percent in the fourth quarter from three months
earlier, the worst performance in 11 years, due to tumbling exports and weak
domestic demand. Asia's fourth-largest economy is widely expected to post
negative growth this year, with the government predicting a 2 percent
contraction.
Fitch Ratings said in an e-mailed interview with Yonhap News Agency that the
communist country's rocket launch will likely "jeopardize" the six-party
denuclearization talks but will not have an immediate effect on South Korea's
sovereign ratings. The agency said it would maintain South Korea's sovereign
rating as unchanged at A-plus with a negative outlook.
yonngong@yna.co.kr
(END)
The Korean government confirmed that North Korea launched what it claims is a
communications satellite earlier in the day despite repeated international
warnings.
The Ministry of Finance and Strategy said in a emergency meeting of economic
ministers that the rocket launch does not in any way alter the country's
fundamentals.
It said that Seoul will carefully monitor market developments and take measures
to limit any side effects.
The ministry said despite North Korean saber-rattling in the past month, the
local bourse and foreign exchange rates were not seriously hurt and actually
improved.
This view was echoed by Chin Dong-soo, chairman of the Financial Services
Commission (FSC) who told reporters after the meeting with Yoon and other high
ranking policymakers that he didn't anticipate major problems.
"The launch had anticipated for some time so we do not think there will be any
serious problems," the official said.
The FSC added that it is using its contacts in overseas economic ratings
companies and investment banks to explain the country's economic situation and
alleviate any concerns through investor relations tours in the future.
Private analysts, meanwhile, agreed with officials by predicting that the rocket
launch is unlikely to have a grave impact on the South Korean stock market in the
long term as the markets, which are accustomed to geopolitical risks stemming
from the North's military threats, have already factored in the news.
"As chances are slim that South Korea and the United States would take military
actions, the North's rocket launch itself will have limited impact on the Seoul
bourse," said Sung Jin-kyung, a market analyst at Daishin Securities Co.
The country's benchmark Korea Composite Stock Price Index (KOSPI) gained ground
recently to breach the 1,200-point level, as foreign investors snapped up local
stocks. The Korean currency rose almost 11 percent against the U.S. dollar last
month, shrugging off fears that Japanese investors may pull money out of the
Seoul markets en masse in March.
The previous responses of the stock market to military threats by the North give
some support to the analysts' prediction.
The KOSPI closed a tad lower on July 5 2006 when the communist country test-fired
six medium and long-range missiles that landed off the west coast of Japan.
Although the key stock index tumbled 2.4 percent on the day of North Korea's
nuclear weapon test in 2006, it recouped losses later in about 15 sessions.
"The local financial markets will not fluctuate just because of the rocket
launch," said an official at the finance ministry who asked not to be named.
"Although the market may undergo short-term volatility, it will eventually
stabilize as foreign investors are already accustomed to geopolitical risks
stemming from North Korea's military threats."
Experts also said the rocket firing would not have a negative effect on
consumption and investment as private and business spending has been already
dented by the global economic recession.
The Korean economy shrank 5.1 percent in the fourth quarter from three months
earlier, the worst performance in 11 years, due to tumbling exports and weak
domestic demand. Asia's fourth-largest economy is widely expected to post
negative growth this year, with the government predicting a 2 percent
contraction.
Fitch Ratings said in an e-mailed interview with Yonhap News Agency that the
communist country's rocket launch will likely "jeopardize" the six-party
denuclearization talks but will not have an immediate effect on South Korea's
sovereign ratings. The agency said it would maintain South Korea's sovereign
rating as unchanged at A-plus with a negative outlook.
yonngong@yna.co.kr
(END)
