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S. Korea fastest to recover from global crisis

Publication Date : 17-09-2012

 

Among the world’s major economies, South Korea is most rapidly recovering from the global financial crisis stemming from the fall of Lehman Brothers in 2008, studies showed Sunday.

The Korean market posted the highest overall share price increase among 11 major economics of the world during the past four years, according to research by the Korea Center for International Finance. The KCIF assessed 10 other countries that rank the highest in terms of gross domestic product including the US, China, Japan, Germany, France, the UK, Brazil, Italy, Russia and Canada as well as Korea.

The nation’s benchmark Korea Composite Stock Price Index bottomed out at 938.75 points in October 2008 right after the global investment bank’s crisis, but more than doubled four years later, marking 2,007.58 points last Friday.

The Russian market showed the biggest increase by jumping from 549.43 in 2008 to 1,589.40 recently, boosted by the hike of raw materials prices including oil price. The U.S. S&P 500 increased by 67 per cent during the same period, Chinese stocks 15 per cent, and Japanese stocks 20 per cent.

Korea also came in second in terms of improvement in the exchange rate among the 10 researched countries excluding the US. The Korean won improved significantly against the US dollar by 21.54 per cent between October 2008 and September 2012, following that of the Canadian dollar to the US dollar which strengthened 24.4 per cent. The rate of the euro to the US dollar, on the other hand, increased by 3.24 per cent during the same period.

The credit default swap premium on South Korea’s foreign currency bonds with five-year maturities had marked 316 basis points in December 2008 but dropped to 69 bp last week. The decline of the CDP Premium signifies less risk in terms of the government’s credit. The premium was lower than China’s and Japan’s, even at its lowest mark this month.

The KOSPI 200 Volatility Index and the spread on the government’s currency stabilisation bonds, both indexes that indicate the economy’s risk level, had skyrocketed to 89.30 and 428 bp, respectively, soon after the Lehman crisis, but came down to 17.98 and 63 bp this month.

“Electronics goods and automobiles led the export after the Lehman crisis, which helped speed up economic recovery. The nation’s household debts and mortgage sector were relatively stable compared to other countries,” Jeong Yeong-sik, a researcher at Samsung Economic Research Institute, was quoted as saying by Yonhap News.

 

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