[EDITORIALS]Pessimists may be right

The Korea Composite Stock Price Index has fallen sharply again. Following last Monday’s sharp fall of 6 percent of total share value, the stock market recorded another nose-dive by losing 5 percent of total share value on Monday. Consequently, the stock price index lost 207.08 points, or over 22 percent of the total value, in 15 days of trading since April 23, when the index reached the year’s highest level of 936.06 point. During the same period, the total value of the shares traded in the stock market lost some 90 trillion won ($76 billion). Not only in the Korean market, but also in most Asian markets, including Japan, Hong Kong, Taiwan, Singapore and India, the prices of shares plummeted. The price of crude oil, which skyrocketed to history’s highest level, the possibility that the U.S. interest rates will be raised and the belt-tightening policy of the Chinese government are the three bad factors that resulted in the stock market crash.
In the case of Seoul’s securities market, the situation is even worse because there are worries over the future prospects for economic recovery. The reason why demand for stocks disappeared in the market recently seems to be because people find it difficult to keep hope for the future. Although the number of shares for sale is not great, prices of stocks fall helplessly. It is because there is no buying power in the market. In other words, investors don’t think that the future prospects of the Korean economy are bright.
But the government seems to have a different view on the Korean economy from investors. The government repeatedly said that overseas factors were nothing but temporary and would not have a serious effect on the Korean economy. President Roh Moo-hyun said in his address Saturday, “It is true that the economy is facing overlapping difficulties, but it is not a crisis that can’t be managed.”
However, high oil prices, hikes in U.S. interest rates and Chinese policy could drive the Korean economy to non-recovery, if not handled properly. Especially, an extremely shrunken investment psychology of businesses could undermine growth potential. It is not time to say that the stock market crash is common to all Asian markets and that the economic crisis theory is spread by those who oppose reform.