Businesses relieved over Obama win
The Korean stock market showed a bullish performance on the news that Barack Obama secured a second term as the president of the United States. The benchmark index KOSPI jumped by 9.38 points or 0.49 percent from the previous close to end at 1,937.55, Wednesday. / Yonhap
By Kim Tong-hyung
The Korean corporate sector appeared to breathe a sigh of relief as Barack Obama secured his second term as President of the United States.
Business leaders welcomed the expected continuity in American economic policies, which may have been disrupted if Mitt Romney unpacked his boxes at the White House, at a time when uncertainty reigns throughout the global economy.
There has also been apocalyptic talk about the potential ``fiscal cliff,’’ a mix of tax increases and federal spending cuts due to suck $600 billion out of the U.S. economy in the New Year barring a deal with Congress, becoming an uppercut to Korea’s trade-dependent economy.
Observers in Korea questioned whether the U.S. economy had enough momentum to absorb such a hit without going into recession. The shock was likelier to materialize had the Republican House of Representatives been able to welcome a Republican President.
So as awkward as it seemed, chaebol, Korea’s mighty family-owned conglomerates, were found Wednesday blowing the horn for an American leader frequently accused by his foes of holding an anti-business bias.
However, the reaction didn’t entirely drain concerns about Obama’s vow for stronger protection of U.S. jobs and manufacturing industries weighing negatively on Korean companies in markets such as automotives.
``We believe and hope that Obama will exercise a strong leadership that will lead the cooperative efforts between governments to pull the world economy out of its troubles,’’ the Federation of Korean Industries (FKI), a business lobby representing larger companies, said in a statement.
``With the uncertainty surrounding the world economy growing larger than it ever was, the reelection of Obama represents the hope of American voters for stability in their efforts for economic recovery,’’ added the chaebol mouthpiece.
``The Korean business sector believes that the framework of economic, social and cultural cooperation provided by the Korea-U.S. Free Trade Agreement (FTA), which went into effect under the Obama administration, would bring more freedom and prosperity to the people of both nations and further develop mutual ties.’’
While the ongoing ugliness in the world economy has been battering global trade as governments become more nationalistic, Korean exports to the U.S. have been showing more resilience, thanks to the free trade pact between the countries.
Officials at the Korea-Trade Investment Promotion Agency (KOTRA) noted that Obama’s reelection could possibly prove to be a boost for Korea’s struggling construction and energy sector firms.
In past years, the Obama administration has shown significant interest in fostering low-power and alternative energy sectors, accompanied by a plan to cut the country’s fossil fuel imports by half by 2020.
This may provide new opportunities for the many Korean firms that have invested in solar cells and other renewable energy sectors in past years under the Lee Myung-bak government’s green growth drive.
A number of Korean firms are also well versed in the technologies for rechargeable batteries, bio fuel and ``clean coal’’ and there has been increasing corporate interest here over the development of shale gas, which advocates claim as one of the solutions to global energy supply problems.
The recent spending package approved by the Federal Reserve, which is the third round of quantitative easing announced by the U.S. since the start of the financial crisis, is expected to generate demand for facilities and machinery Korean firms are well positioned to exploit.
However, the jolt in money supply has led to a sharp appreciation of the Korean won in recent months, triggering uneasiness among Korean policymakers who prefer to keep the value of local currency low to help exporters.
And despite the political speechifying about the Korea-U.S. FTA in both countries, there has been touchiness on the trade front, evidenced by American authorities accusing Korean firms of dumping on products such as refrigerators, washing machines and electricity transformers in recent months.