WEBVTT - What Impeachment Means for South Korea's Economy

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<v Speaker 1>You're listening to Asia Centric from Bloomberg Intelligence, the podcast

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<v Speaker 1>that explores the big ideas in trends moving money across

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<v Speaker 1>the region.

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<v Speaker 2>I'm John Lee in Hong Kong, and I'm Katid Mitariva,

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<v Speaker 2>also in.

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<v Speaker 1>Hong Kong, Kantia. They say a week is a long

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<v Speaker 1>time in politics.

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<v Speaker 2>Yeah, two weeks is even longer.

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<v Speaker 1>Yeah, And so much has happened in South Korea so

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<v Speaker 1>quickly that it's important to note that we're recording this

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<v Speaker 1>episode on Monday afternoon on December sixteenth.

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<v Speaker 2>Yeah, because a lot can happen between now and Thursday,

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<v Speaker 2>when the episode actually airs. So this is what we

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<v Speaker 2>know up until now. President Yunon was impeached Saturday, and

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<v Speaker 2>the Prime Minister has taken over daily duties. The Constitutional

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<v Speaker 2>Court is now reviewing the matter and the first court

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<v Speaker 2>date is set for December twenty seventh.

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<v Speaker 1>And Korea's financial markets took the impeachment news quite positively

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<v Speaker 1>in the morning, but I've noticed that it's pared back

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<v Speaker 1>some of the games. It seems some investors are worried

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<v Speaker 1>about Korea's longer term economic outlook. Discuss creates politics, financial

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<v Speaker 1>markets and the implications for the economy. Is your song

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<v Speaker 1>quan economists for Bloomberg Economics based in Soul. Her song

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<v Speaker 1>Welcome to Age Centric.

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<v Speaker 3>Thank you John, Hello Kacia, I'm really happy to join

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<v Speaker 3>this podcast.

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<v Speaker 1>Your song always in soul for a brief trip. On

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<v Speaker 1>the day that the martial law was announced in Koreer

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<v Speaker 1>and the atmosphere there was one of bewilderment, anger and concern.

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<v Speaker 1>But now we've had the impeachment. What's the mood like

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<v Speaker 1>in soul right now?

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<v Speaker 3>So, especially today, I think the mood in soul is

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<v Speaker 3>kind of normal as usual, but I feel a little

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<v Speaker 3>bit tense in the mood, and especially when we have

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<v Speaker 3>a conversation with our friends or colleagues, we always talk

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<v Speaker 3>about the martial law declaration and the impeachment and what

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<v Speaker 3>we're going to happen.

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<v Speaker 2>Yeah, you said that the mood is still kind of tense.

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<v Speaker 2>So is that because of this sort of you know,

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<v Speaker 2>there is a bit of certainty in that Unit is impeached,

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<v Speaker 2>but now it's at the court level and it could

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<v Speaker 2>trigger an election and all this other stuff. So is

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<v Speaker 2>it kind of the uncertainty of it all?

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<v Speaker 3>I think so. Yeah. So even in president Unit is

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<v Speaker 3>in peach now there is a lot of uncertainty how

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<v Speaker 3>long it will take constitutional court to review the impeachment,

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<v Speaker 3>and then also there's uncertainty about what would be the

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<v Speaker 3>final decision. And then after that, it actually he's impeached,

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<v Speaker 3>then we will have a new presidential election. Then who

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<v Speaker 3>will win the next presidential election and what would be

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<v Speaker 3>the impact for South Kost' economy.

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<v Speaker 2>You've lived in Seoul for your entire life.

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<v Speaker 3>Actually I started living in Seoul since I went to university.

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<v Speaker 2>So you've been in Seoul since kind of university. Has

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<v Speaker 2>anything like this happened before that, as you can remember.

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<v Speaker 3>The last time it happened was twenty sixteen when Dan

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<v Speaker 3>President Bagune was impeached. At that time, the mood was

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<v Speaker 3>a little bit more optimistic and upbeit because the president

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<v Speaker 3>was impeached after a long period of the demonstration of people.

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<v Speaker 3>At that time, as you might see currently from the

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<v Speaker 3>video clip that young people gathered on the street and

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<v Speaker 3>chanting songs, you know, as if it's a concert or

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<v Speaker 3>a festival. At that time, it was similar to but

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<v Speaker 3>there was no such event like declaration of martial law.

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<v Speaker 3>So I think this time the condition in Seoul is

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<v Speaker 3>a little bit more tense and it's more a little

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<v Speaker 3>bit serious.

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<v Speaker 1>if I could take a step back, can you explain

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<v Speaker 1>to the listener why the initial martial law hit a

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<v Speaker 1>nerve in Korea? Like you know, I'm ethnically Korean. I

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<v Speaker 1>don't remember the military dictatorship of Korea, but there is

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<v Speaker 1>an older generation that really do. Can you explain to

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<v Speaker 1>the listener?

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<v Speaker 3>So before the very recent martial law declaration? Last time

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<v Speaker 3>the martial law declaration was in nineteen seventy nine when

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<v Speaker 3>the President Bak Junkie was assassinated and after that, the

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<v Speaker 3>General John du One investigated President bux assassination and during

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<v Speaker 3>the investigation, General John Juhan declared martial law and then

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<v Speaker 3>he took the power and then he became the president.

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<v Speaker 2>I was noticing that from the coverage here in Hong

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<v Speaker 2>Kong in Seoul where you had after the impeachment was announced,

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<v Speaker 2>there were just people crying in the streets and hugging

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<v Speaker 2>each other, and it seemed to really kind of stir

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<v Speaker 2>for a lot of people that historic moment as well,

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<v Speaker 2>because that was a very difficult time at a very

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<v Speaker 2>different time in South Korean.

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<v Speaker 3>Yeah, so it was more than forty years back when

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<v Speaker 3>the declarature martial law was imposed. It means the Korean

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<v Speaker 3>society going back to like almost four decades ago, right,

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<v Speaker 3>So I think it might shock a lot of people

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<v Speaker 3>and then like stirred their feeling and mood.

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<v Speaker 1>Yeah, and this generation, I'm not used to this type

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<v Speaker 1>of political environment. And I'll be the first to admit

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<v Speaker 1>I actually looked up on Wikipedia what a marshal law entails.

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<v Speaker 2>I think you and everyone else though, Yeah, is there

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<v Speaker 2>a curfew?

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<v Speaker 1>Can I go out? Can I leave the country? It

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<v Speaker 1>was very frightening.

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<v Speaker 3>Exactly the same here. In fact, I have to write

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<v Speaker 3>a react on the declaration martial law. When I publish

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<v Speaker 3>my react, I need to decide, you know, the react

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<v Speaker 3>should be published under my name or not, And then

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<v Speaker 3>I chose to publish it anonymously under the name of

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<v Speaker 3>the Bloomberg News, because if the martial law is actually imposed,

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<v Speaker 3>I don't know what will happened to me, right.

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<v Speaker 2>Yeah, because the media would lose freedoms as well. There

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<v Speaker 2>are a lot of kind of elements of marshal law,

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<v Speaker 2>but one of them is that the media and free

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<v Speaker 2>speech is suspended.

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<v Speaker 3>Right, So one of the announcements by the decree of

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<v Speaker 3>martial law was that any activity of politics and the

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<v Speaker 3>media is suspended. And at the end of the announcement

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<v Speaker 3>present you said that if the residents and interns will

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<v Speaker 3>not return to the hospital, there will be punished seriously.

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<v Speaker 3>So other people might take that quite you know, seriously.

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<v Speaker 1>Well, thankfully for us. You know, the marshal law only

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<v Speaker 1>lasted for six hours's martial art history. Now the president

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<v Speaker 1>has been impeached, what do you think is the most

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<v Speaker 1>likely outcome.

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<v Speaker 3>I think he is most likely to be actually impeached,

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<v Speaker 3>but he's now impeached by the National Assembly, and I

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<v Speaker 3>think the Transitional Court will determine that emvestment legitimate, so

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<v Speaker 3>I think he's more likely to be removed from his office.

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<v Speaker 3>But the question is when the decision will be made.

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<v Speaker 1>So it could be matter of a couple of months

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<v Speaker 1>to six months do you think, or.

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<v Speaker 3>Up to six months, But well, some people expect that

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<v Speaker 3>this time the wrongdoing of president is quite obvious, so

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<v Speaker 3>it might take shorter. But no, actually, right, there's job So.

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<v Speaker 1>If the Constitutional court upholds the impeachment, then there'll be

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<v Speaker 1>a snap presidential election.

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<v Speaker 3>Right, the snap presidentship election will be within two months.

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<v Speaker 3>Let's say if the Constitutional Court uphold the impitchment move

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<v Speaker 3>in April, then what will have a snap election in June?

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<v Speaker 2>Yeah, so essentially right now we're waiting John, as you mentioned,

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<v Speaker 2>rain for the Constitutional Court to rule. Once they do rule,

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<v Speaker 2>they might uphold what lawmakers just voted on. If they do,

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<v Speaker 2>there'll be a snap election. If there's a snap election,

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<v Speaker 2>it looks like, according to polls, the most likely candidate

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<v Speaker 2>is the leader of the opposition. Now we were just

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<v Speaker 2>chatting before this episode, John and I, and you know,

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<v Speaker 2>the leader of the opposition has been front and center

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<v Speaker 2>and all this, but he's also a bit of a risk,

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<v Speaker 2>right for markets, but also for the economy. More broadly,

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<v Speaker 2>there's these two main political parties in South Korean. One

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<v Speaker 2>of them is a bit more pro US and one

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<v Speaker 2>of them is a bit more pro China and whereas

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<v Speaker 2>you and it was a bit more pro us. You

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<v Speaker 2>have this candidate or could be a candidate who's a

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<v Speaker 2>bit more leaning towards China. So I wonder if you

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<v Speaker 2>could unpack that just a bit, like as an economist,

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<v Speaker 2>you're looking at first of all, all of this uncertainty

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<v Speaker 2>and then with the certainty there's also risk. So how

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<v Speaker 2>do you look at that.

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<v Speaker 3>It's very difficult to assess the risks because, as you mentioned,

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<v Speaker 3>the leader of the Democratic Party, jig Fasis is your

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<v Speaker 3>own legal risks, right. So that's why how soon the

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<v Speaker 3>Constitution of cult ruling will be made is very important.

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<v Speaker 3>So if constitutional court ruling is delayed, then we might

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<v Speaker 3>see the court ruling about Jem Yong's case, then it

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<v Speaker 3>might make him less eligible for a candidate or questionident.

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<v Speaker 1>Yeah, and just to recap for the listeners, you're mentioning

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<v Speaker 1>that the opposition party leader E JM Yong, he received

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<v Speaker 1>a suspended jail sentence for breaking electoral laws, so he's

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<v Speaker 1>got quite a lot of skeletons in the closet as well.

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<v Speaker 1>It sounds almost very parallel to what happened in the

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<v Speaker 1>US elections. But back to Katia's point. You know, President

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<v Speaker 1>Yun was quite well known for being pro us. I

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<v Speaker 1>remember he visited Washington, d C. And he actually did

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<v Speaker 1>a rendition of American Pie to Joe Biden, so he

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<v Speaker 1>was very pro us. If the opposition party gets into office, now,

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<v Speaker 1>I know we're making a lot of assumptions, but that's

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<v Speaker 1>less US focused and much more consideraty towards North Korea

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<v Speaker 1>and China. This could also bring about some more geopolitical risks.

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<v Speaker 3>Know, at this point, what I understand is, as you

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<v Speaker 3>mentioned that President Yun is more for US and the

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<v Speaker 3>opposition leader is Jam Young is more for China and

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<v Speaker 3>pro North Korea. So if he actually elected as hasan

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<v Speaker 3>is total assumption, right, and then I think we might

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<v Speaker 3>have some sort of tension between the US and Korea

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<v Speaker 3>and also between Japan and Korea. At the same time,

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<v Speaker 3>it could be possible that South Korean government will have

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<v Speaker 3>more friendly relationship with North Korea. During the UNI's administration reign,

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<v Speaker 3>it was rejected by President Yun. Right, North Korea is

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<v Speaker 3>sort of enemy as in the Cold War ends, but

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<v Speaker 3>Risemion has a different perspective. So in terms of geopolitical risks,

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<v Speaker 3>we have more pressure and at the same time less

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<v Speaker 3>pressure from the North Korea.

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<v Speaker 2>Well, speaking of the US, President elect Trump becomes President

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<v Speaker 2>Trump on January twentieth, and we know that he is

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<v Speaker 2>keen on issuing a lot of tariffs. And South Korea

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<v Speaker 2>is a very trade dependent country. So how are you

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<v Speaker 2>looking what's your base case for the economy next year

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<v Speaker 2>in twenty twenty five, because this is something that markets

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<v Speaker 2>are as you said, John and the opening, I mean,

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<v Speaker 2>this is what markets are looking at.

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<v Speaker 3>So South Korea is export dependent economy, right, and then

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<v Speaker 3>large share of exports directly goes to the US, and

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<v Speaker 3>another large share of experts goes to China to be

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<v Speaker 3>manufactured to be expert to the US. So probably the

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<v Speaker 3>great share of Korea's product final destination is the US.

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<v Speaker 3>And then present elect Trump try to have new trade

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<v Speaker 3>relationship with all of the country China, even South Korea.

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<v Speaker 3>So his policies would have a from a perspective, quite

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<v Speaker 3>significant downside risk to South Korea's economy. But it really

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<v Speaker 3>depends on how he will initiate his tetle power losses.

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<v Speaker 3>According to our Bloomboo Economics baseline scenario, the Trump administration

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<v Speaker 3>will start trade war with China on the second half

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<v Speaker 3>of next year and then the rest of the world

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<v Speaker 3>in twenty twenty six. So in that case, the burden

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<v Speaker 3>from the Trump administration trade policy would hit the economy,

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<v Speaker 3>particularly in twenty twenty six, not twenty twenty five.

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<v Speaker 2>So South Korea kind of off the hook initially.

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<v Speaker 3>Right right, That is our Bloomberg Economics baseline scenario. But

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<v Speaker 3>in addition to that, I think South Korea have its

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<v Speaker 3>own vulotability because South Korea experts rely on the US demand.

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<v Speaker 3>At the same time, South Korea is enjoying a huge

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<v Speaker 3>amount of trade SURPERUS with the US, which will make

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<v Speaker 3>a present Electron unhappy.

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<v Speaker 1>Of the target of Trump.

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<v Speaker 3>Yeah, so that he will try to crack that trade

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<v Speaker 3>relationship through a renegotiation of Korea US Free Trade agreement

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<v Speaker 3>or you know, urging Korean government to import more US

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<v Speaker 3>goods including energy or arms.

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<v Speaker 2>When does it start eating away at GDP? You know,

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<v Speaker 2>the political uncertainty. First of all, do you see the

0:14:17.440 --> 0:14:20.400
<v Speaker 2>martial law in the past two weeks and the uncertainty

0:14:20.480 --> 0:14:24.680
<v Speaker 2>hitting GDP at any point? And also all this US

0:14:25.000 --> 0:14:29.040
<v Speaker 2>tariff uncertainty as well, Does that hit South Korea's economy

0:14:29.080 --> 0:14:29.960
<v Speaker 2>at any point.

0:14:30.640 --> 0:14:33.600
<v Speaker 3>I think it is already happening, already hitting the South

0:14:33.680 --> 0:14:39.160
<v Speaker 3>krist economy because right after the martial law, people sentiments

0:14:39.400 --> 0:14:44.440
<v Speaker 3>started to deteriorate. And also during this time we tend

0:14:44.440 --> 0:14:47.720
<v Speaker 3>to have the e N gathering for some gap style

0:14:47.920 --> 0:14:52.760
<v Speaker 3>and soldio. But nowadays I hold from news that many

0:14:52.800 --> 0:14:57.040
<v Speaker 3>people canceder gathering, you know, so yeah.

0:14:56.800 --> 0:15:02.000
<v Speaker 2>Some gap style is pork Bobby Pool, Yeah, for international listeners.

0:15:02.800 --> 0:15:07.880
<v Speaker 3>So the impact is already happening. And then another wordy

0:15:07.960 --> 0:15:12.680
<v Speaker 3>I have is that due to the martial law and impeachment,

0:15:13.000 --> 0:15:17.960
<v Speaker 3>I think the government lasts some momentum to spend fiscal

0:15:18.240 --> 0:15:22.200
<v Speaker 3>expenditure in December, so that we might see decline in

0:15:22.280 --> 0:15:26.960
<v Speaker 3>government expenditure in the fourth quarter. So that will probably

0:15:27.360 --> 0:15:31.720
<v Speaker 3>reduce growth for twenty twenty four and then its impact

0:15:31.800 --> 0:15:33.520
<v Speaker 3>will continue next year.

0:15:34.760 --> 0:15:38.880
<v Speaker 1>And also before you joined Bloomberg Economics, you were actually

0:15:38.920 --> 0:15:42.120
<v Speaker 1>working at the Bank of Korea and I wanted to touch

0:15:42.000 --> 0:15:46.680
<v Speaker 1>on monetary policy. Career is one is really weak? What's

0:15:46.760 --> 0:15:51.120
<v Speaker 1>the monetary policy going forward? Like the Bank of Korea

0:15:51.240 --> 0:15:53.960
<v Speaker 1>seemed to be on the path of cutting rates, but

0:15:54.080 --> 0:15:57.080
<v Speaker 1>now you've got this weak economy. You've got weak growth

0:15:57.080 --> 0:16:00.280
<v Speaker 1>on one side, weak effects on the other what's the

0:16:00.320 --> 0:16:01.120
<v Speaker 1>path going forward.

0:16:03.400 --> 0:16:07.560
<v Speaker 3>I think Bank of Korea's monetary policy direction is quite

0:16:07.640 --> 0:16:12.200
<v Speaker 3>clear now. As you mentioned, John, further cutting rates is

0:16:12.240 --> 0:16:16.480
<v Speaker 3>on the horizon, and the only question is how fast

0:16:16.520 --> 0:16:19.360
<v Speaker 3>it my move and then how far it will cut

0:16:19.400 --> 0:16:23.800
<v Speaker 3>interest rates. So as I Lady mentioned that the discent

0:16:23.840 --> 0:16:28.320
<v Speaker 3>political crisis, Lady started eating GDP this month, and then

0:16:28.880 --> 0:16:33.360
<v Speaker 3>the households and business sentiments is deteriorating. So I think

0:16:33.400 --> 0:16:38.840
<v Speaker 3>the BOK will start cutting from January after it delivered

0:16:39.080 --> 0:16:43.320
<v Speaker 3>back to back interest records in November, after it started

0:16:43.440 --> 0:16:46.800
<v Speaker 3>easing monetary policy in October.

0:16:46.600 --> 0:16:49.320
<v Speaker 1>So they won't be I'd all be worried about trying

0:16:49.360 --> 0:16:51.800
<v Speaker 1>to protect the ethics.

0:16:51.400 --> 0:16:56.960
<v Speaker 3>Right, So yeah, fact is a tricky issue. Bank of

0:16:57.040 --> 0:17:01.720
<v Speaker 3>Korea should pay attention to pleasures under one. But I

0:17:01.760 --> 0:17:06.760
<v Speaker 3>think at this point the more risk is the downside

0:17:06.840 --> 0:17:10.520
<v Speaker 3>risk to growth because in some sense, the weak one

0:17:11.040 --> 0:17:15.879
<v Speaker 3>is driven by a strong US dollar. So I think

0:17:16.200 --> 0:17:22.159
<v Speaker 3>even if we didn't have this political instability, the market

0:17:22.200 --> 0:17:27.720
<v Speaker 3>expected the one would have depreciation pressure due to the

0:17:27.800 --> 0:17:33.200
<v Speaker 3>well incoming Trump administration trade policy and then Chinese willance

0:17:33.280 --> 0:17:39.080
<v Speaker 3>depreciation pressure, so market expected that Korean ie would have

0:17:39.240 --> 0:17:43.920
<v Speaker 3>depreciation pressure from the week Wian because one is considered

0:17:43.920 --> 0:17:48.359
<v Speaker 3>as a prox currency to Chinese van. So the bottom

0:17:48.400 --> 0:17:52.679
<v Speaker 3>line is that the one is already under pressure, but

0:17:53.080 --> 0:17:57.359
<v Speaker 3>now we have new shock to South Korea's real economy,

0:17:57.760 --> 0:18:00.239
<v Speaker 3>and then be Okay should take care of this is

0:18:00.480 --> 0:18:04.879
<v Speaker 3>downside risk to real economy and then for the FX

0:18:04.960 --> 0:18:10.800
<v Speaker 3>market it will do some smoothing operation and then possibly

0:18:10.960 --> 0:18:13.719
<v Speaker 3>to just its pace up rate cutting.

0:18:14.760 --> 0:18:18.640
<v Speaker 2>Is there a sense that like the balance there between

0:18:18.680 --> 0:18:21.760
<v Speaker 2>the currency and the risk of Trump? In other words,

0:18:22.560 --> 0:18:27.000
<v Speaker 2>a Trump administration would impose these protectionist policies that could

0:18:27.000 --> 0:18:29.679
<v Speaker 2>be bad for exports and trade, bad for South Korea,

0:18:29.760 --> 0:18:32.199
<v Speaker 2>but also with a weaker currency, it could make the

0:18:32.200 --> 0:18:36.119
<v Speaker 2>country a bit more competitive against peers, but specifically against China.

0:18:36.160 --> 0:18:38.600
<v Speaker 2>So what's the balance there? Is that good or bad?

0:18:39.800 --> 0:18:43.800
<v Speaker 3>So, as you mentioned Katya the wikiwe would give some

0:18:44.160 --> 0:18:49.760
<v Speaker 3>competitive edge to Korean exporters. But the problem is that

0:18:50.240 --> 0:18:56.680
<v Speaker 3>if the depreciation occurs rapidly, it might lead to financial instability.

0:18:57.359 --> 0:19:01.480
<v Speaker 3>So the b Okay or probably most of the central bank,

0:19:01.560 --> 0:19:05.199
<v Speaker 3>what is that the speed up depreciation or sometimes they

0:19:05.240 --> 0:19:08.320
<v Speaker 3>call it the volatility in the ex market. So as

0:19:08.320 --> 0:19:12.879
<v Speaker 3>long as the depreciation in the one occurs in an

0:19:13.040 --> 0:19:17.200
<v Speaker 3>orderly manner or you know, in a measured way, then

0:19:17.640 --> 0:19:21.520
<v Speaker 3>be okay would allow the depreciation in the one. But

0:19:21.640 --> 0:19:26.320
<v Speaker 3>if that happens steeply, were sharply, then be okay would

0:19:26.400 --> 0:19:31.000
<v Speaker 3>interven the market or even just the speed up mantorly easing.

0:19:32.600 --> 0:19:36.399
<v Speaker 1>And here, Song, some of the export beneficiaries that you

0:19:36.440 --> 0:19:38.439
<v Speaker 1>maybe have alluded to and for the listener would be

0:19:38.480 --> 0:19:42.920
<v Speaker 1>some of the major semiconductor makers like Samsung Electronics, ESK, Heinex,

0:19:42.960 --> 0:19:46.520
<v Speaker 1>and of course like the auto Giant which is and

0:19:46.560 --> 0:19:48.360
<v Speaker 1>also which owns motives.

0:19:48.080 --> 0:19:48.760
<v Speaker 2>The big guys.

0:19:48.840 --> 0:19:52.200
<v Speaker 1>Yeah, a Song, I was thinking this couldn't have happened

0:19:52.240 --> 0:19:56.000
<v Speaker 1>at a worse time for career. Even before the martial

0:19:56.119 --> 0:20:00.040
<v Speaker 1>law news, Career's equity market was the worse performing in

0:20:00.080 --> 0:20:02.240
<v Speaker 1>the Asia Pacific region. I think today I looked at

0:20:02.280 --> 0:20:05.240
<v Speaker 1>the Bloomberg screen. In local currency terms, it's down six

0:20:05.280 --> 0:20:08.520
<v Speaker 1>percent year to day. US dollar terms is down sixteen percent,

0:20:08.960 --> 0:20:11.440
<v Speaker 1>and we mentioned the effects. It's also got the weakest

0:20:11.560 --> 0:20:15.680
<v Speaker 1>currency in Asia. On the flip side, if you look

0:20:15.720 --> 0:20:19.320
<v Speaker 1>at what global investors have done, they sold a bit

0:20:19.359 --> 0:20:22.199
<v Speaker 1>of Korean equities, but as you mentioned in your report,

0:20:22.240 --> 0:20:27.159
<v Speaker 1>they've been buying some local government bonds. So does that

0:20:27.200 --> 0:20:30.439
<v Speaker 1>show you that maybe global investors are not heading for

0:20:30.480 --> 0:20:34.000
<v Speaker 1>the door and they're still somewhat sticking to Korea.

0:20:34.840 --> 0:20:39.240
<v Speaker 3>I think so, and I hope so. So. As you

0:20:39.320 --> 0:20:43.679
<v Speaker 3>mentioned that the forteen investors or global investors continue to

0:20:43.720 --> 0:20:48.720
<v Speaker 3>buy Korean government bonds, there are two things behind that movement.

0:20:49.200 --> 0:20:52.919
<v Speaker 3>One is the expectation that rates will go down further

0:20:53.440 --> 0:20:57.480
<v Speaker 3>because the economy is just slowing down and slowing down

0:20:57.840 --> 0:21:01.280
<v Speaker 3>more rapidly now. And the other day is the Korea

0:21:01.760 --> 0:21:05.920
<v Speaker 3>is likely to join the WIKBI next year, which could

0:21:06.200 --> 0:21:10.760
<v Speaker 3>increase the investor base of Korea treasury market, which will

0:21:10.920 --> 0:21:14.639
<v Speaker 3>also increase the government bond right, So I think the

0:21:14.680 --> 0:21:18.520
<v Speaker 3>global investors think that so far, even at this point,

0:21:18.880 --> 0:21:22.800
<v Speaker 3>it is a good idea to purchase more Korean government bond.

0:21:22.960 --> 0:21:28.680
<v Speaker 3>But for the stone market, there was an analysis that

0:21:29.480 --> 0:21:35.160
<v Speaker 3>actually foreign investors wasn't selling Korean stone market, but actually

0:21:35.480 --> 0:21:41.520
<v Speaker 3>they were selling Korean semiconductor industry. Except for semiconductor industry,

0:21:42.040 --> 0:21:47.360
<v Speaker 3>foreign investors continued to purchase Korean stocks. So I think

0:21:47.480 --> 0:21:52.600
<v Speaker 3>it is also good to separate what they are selling

0:21:52.800 --> 0:21:53.920
<v Speaker 3>or what they are purchasing.

0:21:54.920 --> 0:21:58.040
<v Speaker 1>And we talked about global investors. But what about local investors?

0:21:58.040 --> 0:21:59.960
<v Speaker 1>What are they doing in Korea?

0:22:00.040 --> 0:22:04.920
<v Speaker 3>Spooked by the news, the local investors, especially the retail investors,

0:22:05.440 --> 0:22:10.160
<v Speaker 3>now more interested in investing in the US market than

0:22:10.200 --> 0:22:11.879
<v Speaker 3>in the Korean styne market.

0:22:12.119 --> 0:22:13.359
<v Speaker 2>I think it's everyone right now.

0:22:14.760 --> 0:22:20.520
<v Speaker 3>Yeah, because I saw that this year, the year today

0:22:20.800 --> 0:22:25.199
<v Speaker 3>return of the COSP was negative six percent. It was

0:22:25.240 --> 0:22:30.480
<v Speaker 3>declining around six percent compared to the US one nastad

0:22:30.760 --> 0:22:36.000
<v Speaker 3>around thirty percent increase return or the SM five hundred

0:22:36.320 --> 0:22:41.240
<v Speaker 3>around twenty seven or six percent. So Korean retail investors

0:22:41.359 --> 0:22:45.639
<v Speaker 3>are not happy with the expected return in the koreanstyn market,

0:22:45.960 --> 0:22:49.960
<v Speaker 3>and they are moving their money into the US market.

0:22:51.040 --> 0:22:53.080
<v Speaker 1>Yeah, and that's quite interesting because when I was in Seoul,

0:22:53.200 --> 0:22:55.919
<v Speaker 1>I heard there's a new mantra for retail investors in

0:22:56.000 --> 0:22:59.440
<v Speaker 1>terms of asset allocation that like to put eighty percent

0:22:59.440 --> 0:23:01.240
<v Speaker 1>of their money to the S and P five hundred

0:23:01.600 --> 0:23:04.800
<v Speaker 1>and twenty percent of bitcoin twenty percent bitcoin.

0:23:05.320 --> 0:23:08.960
<v Speaker 2>Yeah, that's a whole that's a whole other episode. Well,

0:23:09.000 --> 0:23:11.359
<v Speaker 2>thanks for joining us today. Your son is a great conversation.

0:23:11.880 --> 0:23:12.560
<v Speaker 3>Thanks for having me.

0:23:13.480 --> 0:23:16.600
<v Speaker 2>I'm Katjadmitrieva in Hong Kong. You can follow me at

0:23:17.000 --> 0:23:20.880
<v Speaker 2>at Katia Dmi on x or on LinkedIn.

0:23:20.760 --> 0:23:23.000
<v Speaker 1>And I'm John Lee also in Hong Kong. You can

0:23:23.000 --> 0:23:26.760
<v Speaker 1>follow me on LinkedIn by searching John Lee at Bloomberg.

0:23:27.280 --> 0:23:30.720
<v Speaker 1>And this will also be our last podcast for twenty

0:23:30.840 --> 0:23:33.320
<v Speaker 1>twenty four. We'll be taking a two week break and

0:23:33.400 --> 0:23:36.280
<v Speaker 1>we'll be back in early January with a new lineup

0:23:36.320 --> 0:23:38.520
<v Speaker 1>of great speakers. So thank you everyone.

0:23:38.920 --> 0:23:41.840
<v Speaker 2>And the podcast was produced by Clara Chen. You can

0:23:41.880 --> 0:23:44.679
<v Speaker 2>find her on the terminal or on LinkedIn. You can

0:23:44.720 --> 0:23:48.240
<v Speaker 2>also follow Asia Centric on Spotify, Apple Podcasts, or wherever

0:23:48.280 --> 0:23:51.359
<v Speaker 2>you listen. You can also find us at b I

0:23:51.840 --> 0:23:54.720
<v Speaker 2>Podcast on the Bloomberg Terminal. See you in the new year.