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Tai Hui, chief market strategist for Asia at JPMorgan Asset Management, speaks during a meeting with the media in Seoul on Thursday. (JPMorgan) |
A senior market strategist at JPMorgan predicted Thursday that South Korea would benefit “significantly” from the rosy global economic outlook this year despite the U.S. policy to scale back its stimulus package and the local currency’s rise against the dollar.
There is increasing evidence of a recovery in the world’s largest economies, including the U.S. and Europe, and improving major economies will provide more opportunities to the export-driven Korean economy, said Tai Hui, the Hong-Kong based chief market strategist at JPMorgan Asset Management.
“We believe the four biggest economies ― Europe, the U.S., China and Japan ― are all likely to see growth for the first time since 2011,” he told a news conference in Seoul.
He said Korea’s export performance “may not have been significant last year, but we expect much bigger contributions from the U.S. and the European market.”
Given signs of a global economic recovery, Hui pointed out that the Purchasing Managers’ Index, which gauges business activity via manufacturing prices, has risen to above 50 for each of the four economies, hitting the highest level in 30 months.
The improving PMI trend is signaling a rise in global exports and capital spending, which all bode well for equity markets, especially in Asian countries including Korea, he said.
“Our analysis data show (that) equities tend to perform well when the world’s big four economies have experienced synchronized growth,” he added.
Samsung and Hyundai Motor, the country’s two biggest conglomerates whose sales account for nearly one-third of local firms’ total net profit, saw their stock prices fall in the first week of the year, amid fears of the won’s sharp appreciation versus major currencies.
Still, Hui said he believes the yen’s continuing weakness would have limited impact on Korea’s auto and electronics exports.
“The won-yen exchange rate fall should not be underestimated, but in my view, much more important is global demand for Korean imports, which I believe (will) gradually increase in 2014,” he said, exemplifying the gradual increase in U.S. auto sales.
Commenting on the Korean central bank’s monetary policy, Hui predicted that the Bank of Korea would keep its benchmark interest rate at 2.5 percent for a while.
“The inflation is stable. There is no urgency to adjust interest rate, up or down,” he said.
“I expect Korea’s economy to be more sustainable and more resilient,” he added.
By Oh Kyu-wook (
596story@heraldcorp.com)
