Time now for an in-depth look at the market news this afternoon.
And for that, I'm joined on the line by Mr. Daniel Yoo, global strategist at Yuanta Securities.
Mr. Yoo, hope you had a happy Lunar New Year. Thanks for coming on.
The World Health Organization has admitted a mistake about the coronavirus. It had called the risk "moderate," but now it's saying it's actually "very high" in China and "high" around the world. Fears about it spreading globally are now affecting the financial markets. What's your outlook on this?
Global market tumbled due to Cronavirus.
Chinese market is closed until Feb 3rd. On Friday, it fell by close to 3%.
US market also fell by 2.5% or more in the past 2 trading days.
Greed and fear index collapsed to 47 level from peak of 97.
Panic by investors is clearly seen.
In the past, SARS, GDP growth rate was cut by 1% point or so globally. Market did fall by 2 digit number. However, there after market rose by more 20% for US.
The current uncertainty will last for a little while. However, in the long term we need to pay more attention to fundamentals and earnings results.
Uncertainty quite high here in Korea too, with several cases now confirmed. The government is holding an emergency meeting of economy-related ministers today, saying it's working to minimize the impact on the real economy and the markets. What kind of impact do you see locally?
Korea will be affected due to Chinese tourist coming to Korean less as Chinese travel will go down by more than 40% or so. During the holidays, China's air flight declined by over 40%.
However, we expect more liquidity injected by the Chinese government. In the past, M2 growth rate for China rose to as high as 21.7% in 2H 2003 during SARS incident. Current Chinese M2 growth rate is at 8.7%. We think this will sharply rise in the future.
Korea's export plays will not be affected that much. Already, Korea's domestic consumption growth was negatively affected by the high consumer debt ratio and high loan to deposit ratio.
Government will provide more measures to boost the economy including rate cut/ liquidity injection as well as fiscal expansionary policy. GDP growth rate will remain above 2% but it will be very difficult to see it rise to 3% level ever in the future.
This week we'll see a bunch of earnings numbers. That and what else should we be watching this week?
Alright, Mr. Yoo. That's where we'll have to leave it for today.
Thanks for coming on as always. We appreciate it.