[ECONOMIC PATROL]Technology Stocks Hold a Key to Future

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[ECONOMIC PATROL]Technology Stocks Hold a Key to Future

Every July, when the second half of the year starts, summer seminars after summer seminars are held by various business organizations.

These are annual events, where the economy of the past six months are reviewed, and the outlooks for the latter half of the year are suggested.

This year, agendas of those summer seminars in most cases are focusing on reviving depressed exports, shrunken investments, and reduced growth potential, and reigniting the growth engines.

This week's economic theme is the economic stimulus policies and stock prices.

The government has publicized its economic guidelines of the second half of the year on Monday.

It seems that the government and the corporate sector are placing their hopes on interest cuts, because they think there are no economic stimulus policies to which they can turn.

Therefore, the economic prospect for the next six months will be more or less dependant on the outcome of the monetary board meeting under the Bank of Korea, the nation's central bank, which is scheduled to be held Thursday.

At the center of attention is how the Bank of Korea will accommodate the position of the Ministry of Finance and Economy, which is under strong pressure to boost the economy, in spite of its own role as the guardian of consumer prices.

Between the two choices of curbing inflation and boosting economy, the Bank of Korea is striving to restrain inflation first and thus the bank is hesitating whether to cut call rates so far.

In the stock market, information technology stocks and biotechnology stocks are calling the attention of the buyers.

Telecommunications stocks have been on a continuing slide because of the burst of the dot-com bubble and the economic slowdown, which was aided by an obscurity in telecommunications policies.

But this week, the Ministry of Information and Communication is expected to overhaul its telecommunications polices, including the long-time neglected selection of the winner for the license for the third generation telecommunication service (IMT-2000) provider.

This is projected to stabilize and to boost the overall market, not to mention the telecommunication stocks.

Last week, Korea Telecom successfully issued American depository receipts in the New York Stock Exchange, which will work as a positive factor for the domestic stock market. When it comes to technology stocks, we need to look at how Nasdaq started this week, which has been strong last week.

Money has fled biotechnology stocks, but those stocks may again emerge as interesting items considering that biotechnology stocks are performing strongly in the U.S. market.

Increases in domestic consumer goods and construction projects and the recovery in wholesale and retail sales are points to be taken into consideration when investing.

Economic experts are keeping a close eye on economic flows in the U.S. and Japan. Although the U.S. economy is decelerating continuously and the trend is felt strong, Washington will start massive income tax breaks in July, and many expect the loosening financial policies of the past six months would show some effects.

Industrial analysts generally agree that the U.S. economy would show signs of recovery from the latter half of the year to next year.

The U.S. government is asking European countries and Japan to ease their monetary policies.

At the U.S.-Japan summit that began on Saturday, Japan promised that it will reform domestic regulations binding corporate activities and to address non-performing loans in the banking sector, the issues that have faced strong resistance in Japan. Let us see what road Tokyo will take in the future.


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The writer is information and science news editor of the JoongAng Ilbo.


by Kwak Jae-won

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