The Korea Composite Index (KOSPI) has topped 1,000. That is a welcome development. A prospering stock market is enough to create a positive economic atmosphere and in doing so create positive cycle. Investors and the authorities need to do their part to maintain the four figure KOSPI.
This is the first time the market has topped the 1,000 mark and the significance is great. To begin with, it means that shares that were undervalued will now be reassessed in earnest. And while the sharp rise in prices are a reflection of expectations about a recovery, that in turn is promoting a recovery. It particularly looks like this will play a big part in reviving domestic consumption, which has been stagnant for a long time now.
Not that we can be purely optimistic. If we start congratulating ourselves the 1,000 figure will collapse, and in a single moment. There must not be a repeat of the past, in which the market topped 1,000 three times only to fall under that mark again.
Government authorities will have to do a good job of managing the flow of cash. The current trend is for fluid cash to accumulate in the stock market as a result of relaxed real estate market regulations and low interest rates. Even if it is hard to do something about interest rates, the real estate market should be subject to sustained regulation so as to thoroughly keep fluid cash from returning to it. The rise in stock prices was also in part the result of a low quantity, and so there must not be a sudden issuance of new quantities on the occasion of the current trend.
There is also a need for a preemptive effort to keep pessimism from spreading on the economic front. The biggest worry is about exports. Given the rapid rise in exports last year it is very likely the increase will slow down in the not too distant future. That could release a bout of pessimism, and that should be kept from happening ahead of time.
More attention needs to be paid to the rate of the rise in prices. If the rise is too steep, the rise will dissipate. Though it would be late in coming it will be very important to sustain the rise and keep it alive.
The Hankyoreh, 1 March 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] KOSPI Tops a Thousand |
