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This past summer..., the Korean stock market emerged as one of Asia's most popular safe-havens,...
amid fears over the outlook for U.S. monetary policy,... which sparked a major sell-off.
But... that upward trend has reversed in recent weeks.
Our Yoo Li-an reports.
It was less than two months ago,.. when Korean stocks enjoyed their longest-ever foreign
buying spree,.. and hit an 18-month high. That's when heightening fears over the timing
of U.S. stimulus tapering sent foreign investors seeking a safe haven to Korea,... as they
considered it a more solid economy compared to other developing nations.
Korea recorded a trade surplus for the 19th straight month in October.
But it turns out that was no more than a blip on the radar.
In recent weeks, the KOSPI has dropped by nearly five-percent,.. to a point even lower
than the beginning of the year. On top of fears that the U.S. will mostly
likely start tapering in the near future,.. experts say Korean companies' disappointing
report cards in the third quarter also prompted the foreign sell-off.
Of the 254 local companies that announced their earnings in the third quarter,... only
a third of them posted higher than expected profits.
This compares to around two-thirds,... both in the U.S. and Japan.
"Ever since the global financial crisis, the United States carried out strong restructuring
measures and Japan lashed out a new set of stimulus policies, so-called "Abenomics."
Korea instead, continued to create a bubble, raising companies' credit rating as they benefited
from the strengthening yen.
The lack of strong restructuring measures, he says, has taken a toll on local companies.
Pundits are calling for a new and stronger growth engine and appropriate policies to
support them so that Korea's stock market can follow a solid upward trajectory.
Yoo Li-an, Arirang News."