Finance minister meets with Moody’s execs
According to the South Korean Ministry of Strategy and Finance on Wednesday, Kim, who is also Korea’s deputy prime minister for the economy, visited Moody’s headquarters in New York where he had a meeting with the U.S.-based credit rating agency’s vice chairman Richard Cantor and CEO Robert Fauber.
Kim assured the Moody’s executives that South Korea’s economic fundamentals are strong and that the impact of North Korea’s provocations has been limited on the South Korean financial markets.
While the Finance Minister said that the South Korean government is working on establishing systems that can be used to counter volatility in the market, it is also stepping up its cooperation with both traditional allies and China and Russia.
As North Korea edges closer to completing its intercontinental ballistic missiles (ICBM) and allegedly a hydrogen bomb, the mood of international credit agencies on the South Korean economy has started to change.
Until this year, international credit rating agencies like Moody’s, S&P and Fitch saw the North Korea threat as having only a limited impact on South Korea’s credit scores as it hardly disrupted the country’s financial market.
However, Moody’s latest report noted the possibility of downgrading South Korea’s sovereign ratings. South Korea’s rating was moved up from Aa3 to Aa2 in December 2015, which is the highest given to the country.
“While a limited conflict is conceivable, there is a high likelihood that, once a conflict starts, it would draw in a wider range of countries and last longer than a few weeks. In the case of a longer conflict, the economic and fiscal costs would be significantly higher and Korea’s policy-making and implementing institutions would come under far greater pressure,” Moody’s said in its report released earlier this month. “In such a scenario, the sovereign rating would likely move down, potentially by several notches.”
In fact, Seoul’s stock market responded more sensitively to the nuclear test on Sept. 3 than other recent provocations.
The day after the test the market tumbled more than 40 points, or 1.72 percent. The market eased later in the day and only lost 28.04 points, or 1.19 percent, to close at 2,329 thanks to stock buying by foreign and institutional investors.
In a government meeting on Sept. 4, the Finance Minister said that he will work to protect the external credibility of the country by providing accurate information to foreign investors, the foreign press and credit rating agencies.
BY LEE HO-JEONG [firstname.lastname@example.org]
with the Korea JoongAng Daily
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