Expectations Growing High for Rapid Economic

Helped by the stimulus measures and the depreciation of the local currency against the U.S. dollar, major South Korean companies have shown strong performances. Especially, IT firms and automakers were found to have outperformed their market expectations thanks to rebounding demand for their products both at home and abroad. That's why the market has been led by such large cap shares as Samsung Electronics, LG Electronics, Hyundai Motor and chip-making Hynix. Banks and other financial shares have also enjoyed solid gains as the financial system rapidly restored its stability. Most of all, the Seoul bourse is riding the wave of a global stock market rally. The latest bullish mood was created by U.S. Federal Reserve Chairman Ben Bernanke who said last week that a global recovery is in the offing. What's conspicuous is that foreign investors have rushed to buy Korean shares. This indicates that foreigners have regained their confidence in the Korean economy and the local financial market. They are re-emerging as strong buyers. Their presence in the Seoul market has risen to 31 percent with their net purchases amounting to 20.7 trillion won in the first half of this year. But now, it is not certain whether the market will continue its upward march because of lingering downside risks, including worries about a double-dip recession. Thus, it is important to get rid of destabilizing factors, further improve investor confidence and speed up economic recovery. It is also necessary to create a virtuous cycle of a stock market rebound, an increase in asset values, rising consumption, more jobs, more production and more investment. Finally, it is crucial to ensure that the market does not turn into a gambling casino as seen at the end of the 1997-98 Asian financial crisis. Let's not be overconfident.