It's time now for a look at the global markets on this Thursday.
And for that I'm joined on the line by Mr. Daniel Yoo, global strategist at Kiwoom Securities.
Mr. Yoo, thanks for coming on today.
Stocks on Wall Street pared back some of the gains they've seen recently. The S&P off point-2 percent. Again, fears over trade. What's the story today?
Korea up slightly down KOSPI 0.24% but Kosdaq up 0.74%.
Option maturity day. US stock market fell yesterday by 0.17% dow, 0.21% SP and 0.38% for Nasdaq. Continued concern for US-China trade dispute is putting pressure on the global market. However, because of G20 summit expectation market is not trading heavily or falling sharply.
Data show household debt up in May by 5 trillion won, the biggest rise we've seen yet this year. Yesterday, the BOK governor hinting at a rate cut. Wouldn't that encourage people to borrow more?
Korea's household debts as % of GDP is 97.7% as end of 2018. That is highest number ever. 10 years ago, it was only at 70% level.
Lower interest rate environment is good thing, but you need the disposable income rising for Korean consumers.
Also government debt as GDP is less than 40% which is far lower than US or China. Therefore, we need government budget to be more aggressive.
Monetary policy is important but fiscal policy is more important for Korea now.
As of yesterday, borrowers have a new right in Korea to ask lenders to lower their interest rates if they've improved their credit one way or another by getting a new job or a higher income. What do you think will be the effects of this system?
Any one who had rising trend in earnings or NAV can ask for lower interest rate.
It started yesterday.
This is definitely good news for domestic consumption.
Given consumer debts as percentage of GDP is very high, lower interest rate will have positive effect on consumption.
However, as for the banks' earnings, it will not be that positive news given average lending rate will fall.
Alright, Mr. Yoo. That's where we'll have to leave it today.
Thanks for coming on. We appreciate your insights.