Korean economy

This week (23-27), the Korean stock market is expected to undergo an extreme shift in panic cells, as well as more than neutral stock price trends that seek to settle in the 1,500-point KOSPI. The factors that will increase the stock market include the Federal Reserve's soft monetary policy, the countries' policy coordination, and the U.S.'s large-scale fiscal policy, while the won-dollar exchange rate is soaring, credit risk concerns, and the expansion of fears. The financial investment industry on Tuesday proposed the expected band for the KOSPI this week in the 1,450-1550 range.

■Focus on exchange rate direction

The KOSPI plunged 205.29 points, or 11.59 percent, to close at 1,566.15 on Tuesday from the previous week, according to the Korea Exchange. The won-dollar exchange rate has soared due to extreme sentiment of preference for safe assets, leading to a massive outflow of funds by foreigners. Last week, foreign investors sold 3.398 trillion won in the securities market. Institutions and individual investors bought 86.9 billion won and 2.8819 trillion won, respectively.

Kim Yong-koo, a researcher at Hana Financial Investment, said, "Although the fear of Korona 19 summoned global policy coordination under the pretext of the Fed's aggressive monetary easing, the inherent concern of market investors that the macro-influence trend may take a long time has materialized into a rally to secure dollar liquidity through the sale of all-round assets."

This week, the market is expected to pay attention to the trend in the number of confirmed global Korona19 investors, the direction of the won-dollar exchange rate, and whether the U.S. credit market will ease instability. To stabilize the dollar, the U.S. needs to check whether the U.S. large-scale fiscal policy has been passed by Congress. On Wednesday, the U.S. Republican Party came up with an emergency budget bill worth $1 trillion, an astronomical amount associated with the Korona19 crisis. They include paying $1,200 per individual and funding small and medium-sized enterprises and the affected industries.

The recent strong dollar is mainly due to a sharp rise in demand for the dollar's cashization, such as a tight short-term money market, excessive desire by marginal companies to hold cash, and redemption of investment products," said Kim Byung-yeon, a researcher at NH Investment & Securities. He added, "During the financial crisis, the dollar jumped nearly 20 percent from July 2008. "When the TARF (Relief Financial Bill) was passed in November, the mid- and long-term highs are after the start of quantitative easing (QE) in March 2009, and the short-term high pass and index stability of the dollar is expected around the passage of the Congress of large-scale fiscal policies," he said.

In addition, analysts say that it is important to see whether additional measures will be taken to ease U.S. credit market jitters. "There are growing concerns about currency weakness and capital outflow in emerging markets due to the recent strengthening of the dollar," said Kim Yu-mi, a researcher at Kiwoom Securities Co. "To alleviate this, measures need to be taken to deal with speculative grades in the U.S. credit market."