Moon must take chargeKorea Inc. is being shaken up. The third-quarter results from publicly-trading household corporate names have been dismal. Hyundai Motor and Kia Motors reported nearly 70 percent plunges in their respective operating profits. SsangYong Motors logged a loss, not to mention the battered GM Korea. Beauty giant AmorePacific and SK Telecom both fell below market estimates. Manufacturers responsible for the bulk of lasting jobs and consumer industries hinging on domestic demand all have entered a downturn. The chain of weakening data — investment, output and jobs — has begun to eat into business.
The shocking fall of the corporate sector explains why Korean equities suffered a bigger rout than other markets amid the ongoing trade war between the United States and China and the Fed’s interest rate hike. Our authorities still insist that the fundamentals are strong. But foreign investors are not convinced. They focus on the worsening data and financial reports from listed companies.
Choi Jong-koo, chairman of the Financial Services Commission, vowed to activate a contingency plan according to market developments, but stopped short of detailing feasible measures. At best, the authorities can regulate excessive short-selling activities, which won’t be enough to reverse the sagging sentiment.
Its pledge of creating 500 billion won ($439.3 million) to stabilize the fluctuating stock market gave little relief as the fund amounts to a pitiful 0.08 percent of the Kospi market capitalization of 1,600 trillion won.
President Moon Jae-in will embark on a tour across the country in an effort to boost sentiment. But this cannot restore confidence. What the economy needs is a dramatic turn in the government’s economic policy direction. The existing policies have already lost trust from the public. The government must stop an untested economic experiment called “income-led growth,” which has actually hurt the economy across the board. The president is the commander in chief of the economy as well. He must demonstrate a determination to combat the tough challenges.
JoongAng Ilbo, Oct. 31, Page 30