[Viewpoint] The COVID-19 Pandemic and Efficient Capital Markets

Choi Gukhyun, Professor at Chung-Ang University Business School

Professor Choi Guk-hyun, Chung-Ang University Business School

Last year will likely be remembered by all humanity as the year the COVID-19 pandemic began worldwide, the first such event since the 1918 Spanish flu. Even though it was not a war, the number of deaths in the United States alone surpassed those of World War II over 70 years ago, with Europe, India, Brazil, and other countries also experiencing casualties exceeding those of any war. Last year, South Korea was able to respond more swiftly than other countries, significantly limiting casualties through coordinated efforts between the government and the public. Nevertheless, the country experienced major economic and social turmoil and a pessimistic crisis regarding humanity.

Amid widespread pessimistic forecasts for the Korean economy, the KOSPI plummeted to the 1430 level like a waterfall after a sudden outbreak of COVID-19. In an instant, the outlook for the Korean economy regressed to levels seen over 20 years ago, creating an anomaly. As global supply chains halted and collapsed simultaneously, causing unprecedented economic crisis signs with simultaneous evaporation of production and demand for goods and services, the United States, China, Europe, and OECD countries responded with unprecedented large-scale monetary supply and bailouts, based on the survival of their nations. These financial and monetary policies supported the collapse of key industries such as aviation and transportation, while relief funds played a significant role in barely sustaining small businesses and vulnerable households from sudden collapse.

South Korea established a system to manage the COVID-19 pandemic, and both the real economy and finance began to recover. Although the damage was relatively smaller compared to other countries, all communication channels consistently report that the internal wounds to our economy and households are by no means small. The deeper wounds are concentrated among small business owners and vulnerable groups. Since small business owners account for over 40% of our economy, they must be reintegrated as a key pillar of our economic structure. This responsibility requires that they be newly positioned to bear a pillar of our economy in the post-COVID-19 era and the era of the Fourth Industrial Revolution’s platform economy and convergence of innovative technologies.

Globally, companies leading the Fourth Industrial Revolution era after COVID-19, driving fundamental changes toward a new economic structure, are emerging at the forefront. Online non-face-to-face economy support companies like Zoom and Google’s YouTube have penetrated our lives as part of the platform economy, creating and rewarding added value through platforms. Apple and Tesla are accelerating change as protagonists of disruptive innovation. The era in which we live within the time and space created by these companies is approaching, and accordingly, the U.S. stock market continues to set new highs, with these innovative companies showing astonishing levels of growth. It seems to be signaling the start of a new era.

Meanwhile, looking at our economy, frustration weighs heavily on mind and heart. There is deep concern that we may be losing an excellent opportunity?one in which everyone is given an equal chance to start from the same starting line and run at full speed. Political, economic, and social meticulous consideration must support our companies in the harsh survival-of-the-fittest arena so that they can become just winners in fair competition and create greater social value. Our stock market has also entered the era of the KOSPI 3000. If we positively evaluate the survival and prosperity of our companies under reasonable expectations, we will achieve even more beyond the KOSPI 3000 era.

This content was produced with the assistance of AI translation services.