By Park Hyong-ki
There are growing fears that a global bear market is getting started as the U.S. political deadlock over President Donald Trump's budget for the border wall to block Mexicans from illegally entering the country is undermining sentiment worldwide.
The impact of Trump's hardball negotiation tactic of "his way or the government shutdown" will be less severe than an outlook for the global economic slowdown on worldwide stocks, including the benchmark KOSPI here.
But the U.S. political feud over Trump's border security, compounded by uncertainties over his trade war with China and the downsizing of the NAFTA pact, is further making investors turn bearish towards stocks ranging from NASDAQ, Shanghai to Nikkei and Frankfurt indices.
The KOSPI fell nearly 21 percent from its yearly trading peak of 2,607 points in late January, according to the Korea Exchange. Thus, the global stock markets can forget about celebrating a so-called Santa rally and the New Year.
The KOSPI closed at 2,055.01 points, down 0.31 percent, or 6.48, Monday.
"Now, the market is being affected by news of President Trump seeking to fire Federal Reserve Chairman Jerome Powell," said Lee Eun-taek, an analyst at KB Securities.
President Trump has constantly expressed dissatisfaction toward the central bank's interest rate hikes as the moves go against his policy to spur businesses through tax cuts.
This isn't the first time the stock market faced an uncertain future concerning the U.S. government shutdown after it failed to reach a bipartisan agreement over a budget.
President Trump wants $5 billion to build a "good old fashioned wall to stop drugs, gangs, human trafficking, criminal elements and much else from coming into the U.S."
He said he will be "proud to shut down the government for border security … for a very long time," as long as it takes for his administration to get that money in a meeting with Democrat lawmakers.
As he couldn't get the Democrat votes needed in the Senate, nine of 15 federal agencies, including the Departments of Transportation and Justice, began to partially shut down their public services on Dec. 22.
The Trump administration said this could continue until the new Congress opens on Jan. 3.
Data showed the KOSPI was able to withstand shocks from U.S. government shutdowns in the past.
From Oct. 1 to Oct. 17, 2013, the benchmark index climbed 2.2 percent, when President Barack Obama could not reach a bipartisan agreement over a fiscal budget, according to KB Securities.
From Jan. 20 to Jan. 22, the KOSPI lost 0.72 percent.
Analysts say investors will be more worried about the uncertain outlook at home and abroad, beset by weak sentiment in part due to a labor policy that has affected corporate investment and employment.
"It would be tough to revive sentiment immediately even amid a policy shift supporting the private sector," said Ahn So-eun, an economist at IBK Securities.
The government has unveiled various projects involving infrastructure development aimed at boosting investment.
However, a revival in corporate sentiment will be difficult under the circumstances that the government is still initiating projects and restructuring to drive change.
"The government will need to keep on sending a signal via policies that the private sector is the one that leads innovation and job creation," said Kim Doo-un, an economist at KB Securities.
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| gettyimagesbank |
The impact of Trump's hardball negotiation tactic of "his way or the government shutdown" will be less severe than an outlook for the global economic slowdown on worldwide stocks, including the benchmark KOSPI here.
But the U.S. political feud over Trump's border security, compounded by uncertainties over his trade war with China and the downsizing of the NAFTA pact, is further making investors turn bearish towards stocks ranging from NASDAQ, Shanghai to Nikkei and Frankfurt indices.
 |
The KOSPI closed at 2,055.01 points, down 0.31 percent, or 6.48, Monday.
"Now, the market is being affected by news of President Trump seeking to fire Federal Reserve Chairman Jerome Powell," said Lee Eun-taek, an analyst at KB Securities.
President Trump has constantly expressed dissatisfaction toward the central bank's interest rate hikes as the moves go against his policy to spur businesses through tax cuts.
This isn't the first time the stock market faced an uncertain future concerning the U.S. government shutdown after it failed to reach a bipartisan agreement over a budget.
 |
| President Donald Trump said on his Twitter, "We need border security, and you can't have border security without a wall." AP-Yonhap |
He said he will be "proud to shut down the government for border security … for a very long time," as long as it takes for his administration to get that money in a meeting with Democrat lawmakers.
As he couldn't get the Democrat votes needed in the Senate, nine of 15 federal agencies, including the Departments of Transportation and Justice, began to partially shut down their public services on Dec. 22.
The Trump administration said this could continue until the new Congress opens on Jan. 3.
Data showed the KOSPI was able to withstand shocks from U.S. government shutdowns in the past.
From Oct. 1 to Oct. 17, 2013, the benchmark index climbed 2.2 percent, when President Barack Obama could not reach a bipartisan agreement over a fiscal budget, according to KB Securities.
From Jan. 20 to Jan. 22, the KOSPI lost 0.72 percent.
Analysts say investors will be more worried about the uncertain outlook at home and abroad, beset by weak sentiment in part due to a labor policy that has affected corporate investment and employment.
"It would be tough to revive sentiment immediately even amid a policy shift supporting the private sector," said Ahn So-eun, an economist at IBK Securities.
The government has unveiled various projects involving infrastructure development aimed at boosting investment.
However, a revival in corporate sentiment will be difficult under the circumstances that the government is still initiating projects and restructuring to drive change.
"The government will need to keep on sending a signal via policies that the private sector is the one that leads innovation and job creation," said Kim Doo-un, an economist at KB Securities.
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