It's time now for an in-depth look at the global markets today.
And for that, I'm joined on the line by Dr. Hwang Seiwoon, research fellow at the Korea
Capital Market Institute.
Dr. Hwang, thanks for coming on today.
You're welcome.
So we ended last Friday with Wall Street sharply higher on expectations of an interest rate
cut by the Fed.
On this Monday, though, Korean stocks not following suit like they might have.
What's the story today?
In Wall Street stocks rose to all-time highs on Friday as investors ended a record-setting
week on a high note.
The major indexes passed multiple milestones and posted solid gains last week amid testimony
from the top Federal Reserve official signaling that a rate cut was coming.
Expectations for lower rates persisted this week despite the release of some stronger-than-expected
inflation data.
The producer and consumer price indexes rose more than expected last month.
However, market expectations for lower rates currently sit at 100%.
Traders are also pricing in a 20% chance of the Fed cutting by 50 basis points.
Asian stocks began the week with a cautious tone as investors turned their attention to
upcoming data on Chinese economic growth amid expectations for further policy support.
South Korea’s main equity index edged down by 0.20% and Japanese market was closed for
a holiday.
With the trade tensions, it seems Japanese companies have seen a worse impact on their
share prices than Korean companies.
Why is that, and where do you see these two markets going forward?
The Japanese government's export restriction on South Korea have led to a larger decline
in the share prices of Japanese companies than in South Korean companies.
According to the Tokyo Stock Exchange, after the Japanese government tightened regulations
on the export of 3 items needed for the semi-conductor and display panel production, the share prices
of Japanese manufacturers have been struggling in general.
Share price of Stella Chemipa, an etching gas producer, fell 4.6 percent in this month.
The share price of JSR, a photo-resist producer, also fell 3.4% in the same period and Shinsei
Chemical's share price also fell 2.9%.
In addition, the share price of Sumitomo Chemical, which produces fluorine polyimide and hydrogen
fluoride, also fell 1.4% in the same period.
This was because the largest customers, such as Samsung Electronics and SK Hynix, are looking
for alternative suppliers or localization of production materials, which may have a
negative impact on Japanese suppliers.
This week the Bank of Korea will be meeting to set interest rates.
And it'll release a revised forecast for the economy in the second half of the year.
The National Assembly still hasn't passed the extra budget for this year.
What are you watching this week?
The Bank of Korea will hold a monetary policy meeting on this coming Thursday.
The BOK is expected to keep its policy rate intact this month though a rate cut may be
inevitable down the road to help boost economic growth.
The extraordinary session of the National Assembly ends on this coming Friday.
In April, the Moon government and the ruling party proposed a 6.7 trillion-won extra budget
to cope with an economic slowdown and fine dust air pollution.
The extra budget bill is still pending in the National Assembly amid a call by the main
opposition Liberty Korea Party to slash much of the proposed spending.
This week would be an IPO super-week of the 3Q 2019.
Quite good number of IPO activities will take place in this week and the following week.
This week 6 pre-IPO companies begin book-building for institutional investors, and another 2
companies will begin book-building in the next week.
Alright Dr. Hwang.
That's where we'll have to leave it today.
Thanks so much for sharing your insights as always.