중앙데일리

Korean chamber warns of possible bear market

Dec 11,2007
As the nation’s economy slows, Seoul stock markets, which have risen sharply over the past five years, might face a long-term correction, a leading business lobbying group warned yesterday.
The Korea Chamber of Commerce and Industry said in a report the United States and Japanese benchmark stock indexes had fallen into six-year and 13-year corrections respectively, after tripling over the previous five years. It warned that Korea’s benchmark Kospi might follow their examples. The Kospi has also tripled in the last five years from 627 points at the end of 2002 to 1,906.42 yesterday.
When stocks climb sharply, investors tend to become sensitive to negative factors such as a slowdown in gross domestic product growth, the chamber said.
As for the United States, the benchmark Dow Jones industrial average tripled in five years to above 11,000 points in 1999. But as the country’s GDP growth decelerated from 4.5 percent in 1999 to 3.7 percent in 2000, the index began a sharp decline, led by information technology shares, which had led the previous sharp rises. Wall Street remained bearish until 2006.
The chamber said the local economy’s growth could slow because the nation’s growth potential has weakened. Capital spending by companies grew only 4.7 percent on average during the last five years, while the GDP grew 4.8 percent, it said. In addition, higher oil prices and tightening global financial markets in the aftermath of U.S. subprime mortgage defaults are also negative factors, it said. Last week, the Bank of Korea forecast GDP growth would slow to 4.7 percent in 2008 from this year’s estimated 4.8 percent.
“When the economy shows signs of a decline, investors tend to become pessimistic about the market and unload shares,” said Lee Kyung-sang, head of the chamber’s corporate policy team.


By Moon So-young Staff Reporter [symoon@joongang.co.kr]


dictionary dictionary | 프린트 메일로보내기 내블로그에 저장