Center Director Kim Hak-gyun: "The Reason for KOSPI's Particularly Poor Performance Is the Lack of Institutional Role... Credit Risk Management Is Essential"

27th at Korea Exchange Seoul Office
Democratic Party Emergency On-Site Inspection Briefing for Financial Crisis Countermeasures

Lee Jae-myung, leader of the Democratic Party of Korea, attended the "Emergency On-site Inspection for Financial Crisis Countermeasures" held on the 27th at the Korea Exchange in Yeouido, Seoul, and received a briefing on recent financial issues from Kim Hak-gyun, head of the Shin Young Securities Center. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Lee Myunghwan] Kim Hakgyun, Head of the Research Center at Shin Young Securities, recently advised that "credit risks arising from rising interest rates must be well managed" in response to market instability caused by recent interest rate hikes.

On the afternoon of the 27th, Kim briefed on the current domestic stock market situation at the Democratic Party's 'Emergency On-site Inspection for Financial Crisis Measures' held at the Korea Exchange Seoul building in Yeouido, stating this.

Regarding the recent causes of the stock market decline, Kim said, "The stock price adjustment is due to the rise in interest rates," and diagnosed, "Since the consumer price index has not turned down from its peak, I think the base interest rate should be raised until November." He added, "If the central bank raises rates and maintains a high level of interest rates like during the subprime mortgage crisis, problems may arise with a time lag, so we need to remain vigilant until next year."

He also pointed out that the domestic stock market's decline rate is larger compared to major countries. Kim diagnosed, "Relatively, the KOSPI and KOSDAQ markets are among the poorer performers because institutional investors' roles have been weak." The domestic economic structure, which is manufacturing-oriented, was also cited as one of the causes. He explained, "Stock prices in countries with similar structures to Korea, such as Taiwan and Vietnam, have fallen significantly," adding, "Stock prices in countries with a high proportion of manufacturing are falling, reflecting an economic recession."

He also forecasted that the economy will not perform well next year. This is because both the domestic stock index and the leading economic indicators are declining. Kim said, "The pain felt in economic life will be much more severe next year," diagnosing, "The recent stock prices reflect that the real economy will not be good next year."

He anticipated that as the number of domestic stock investors has increased, the shock they experience during stock price adjustments will also be significant. According to Kim, the number of domestic stock investors, which was around 6 million at the end of 2019, increased to 13.8 million by the end of last year. He said, "There have been investment booms in the past, but the Donghak Ant boom over the past two years was unprecedented," adding, "This means that the public's interest and pain regarding the stock market situation are considerable."

Kim Hak-gyun, Head of Research Center at Shin Young Securities. / Photo by Shin Young Securities

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