In-depth: Global market wrap-up

In-depth: Global market wrap-up


time now for an in-depth look at the
market news on this Friday and for that I’m joined on the line by dr. kim
sehwang professor of economics at ey Woman’s University dr. Kim thank you for
coming on today good afternoon Bevan good afternoon well
the People’s Bank of China on Monday lowered its short term funding rate for
the first time in four years then it cut another key rate on Wednesday trying to
shore up growth tell us about that and what effect its had on the markets this
year Chinese economy is experiencing declining more than expected due to
quite a few structural problems in China for stimulating economic growth Chinese
central bank decrease prime rate by 0.05 percent on last Tuesday but this is not
enough interested adjustment for providing significant impact on Chinese
economy infesting Lee the tiny invest card of this time shows complicated
situation inside Chinese economy today actually they wanted to decrease
interest rate in a larger scale like 1% but lower interest rate toesies another
negative problems in China like iron inflation and bubbles in housing markets
so the episode the tiny interest cut by Chinese central bank represents
complicated Chinese economic situation the cut was like 5 basis points right
yes right now meanwhile the protests in Hong Kong have resulted in the worst
quarter for Hong Kong in 40 years the city of course a major destination for
Korean exports so what direct or indirect effects might
this have on the Korean economy Hong Kong’s economic growth in third quarter
decreased by 3.2 percent compared to the previous quarter because of ongoing
political instability this is a natural economic outcome because Hong Kong’s
economy is highly dependent on service industry like
sightseeing’s and restaurants and so on Hong Kong attack
like Ria’s the fourth-largest export partner which covers about 7% of Korea’s
total export but the export the Hongkong is on intermediary export which goes
automatically to mainland China so I believe that as far as Hong Kong’s
harbor facilities are working there won’t be a serious effect on Korean
economy well Hong Kong is of course now a
variable in the trade war situation the US Congress passing a bill and supported
the protesters which China has reacted to angrily this uncertainty has also hit
Korean stocks so what’s the situation there the phase 1 us-china trade deal is
continuously delayed because of u.s. dissatisfaction on China’s u.s.
agricultural product import and Hong Kong’s political instability gives
another negative impact on completing the deal between the two countries since
Korea is highly dependent on both of the countries Korean stock market will
experiencing larger and more frequent ups and downs until the deal is
finalized it certainly has lagged behind this year
now estimates of global GDP growth for this year keep getting lower and we saw
an estimate this week putting global debt at a record of more than 250
trillion dollars why his debt jumped like that and what is a figure like 250
trillion mean in the global context so large that problem in global economy is
I think the possibly the most destructive threat to the future of
global economy but that has been generated all over the world after
global economic crisis of 2008 and the counteract policies of quantitative
easing the 244 trillion US dollars of global debt is actually three times
larger than global GDP so if each central bank increases interest rate
faster there is a possibility wave of
bankruptcies which goes to another financial crisis all over the world
indeed well Korea’s debt of course is growing
too with things like next year’s super budget does this as some say affect
Korea’s basic fiscal soundness compared to other major economies Korea’s
strength is on healthy government that structure which is 40 percent of the
total GDP actually this is much lower than other 320 members
government decides like US hundred 60 percent of the GDP and Japan’s 210
percent of our GDP so broadly speaking Korea has an advantage over implementing
expansionary and aggressive fiscal policy but too fast increases up that
that should be avoided because if we increase government that at the speed of
next year the size of the government that could be uncontrollable in the next
ten years all right dr. Kim we appreciate you coming on today we always
appreciate your insights thank you very much

Leave a Reply

Your email address will not be published. Required fields are marked *