[Photo provided by Yonhap]
Seoul authorities raised vigilance over the looming danger of powerful Covid-19 variant Omicron that could destabilize the vaccine-backed return to normalcy at home and abroad.
Shares were less damaged after verbal intervention by authorities to take “preemptive and aggressive” actions to fend off shockwaves to Korean capital markets.
Korea’s benchmark stock index the Kospi closed 0.92 percent down at 2,909.32 on Monday after opening the day 1.49 percent lower. The secondary Kosdaq began the day 1.91 percent lower and rose slightly to finish at 992.32, down 1.35 percent.
Lee Eog-weon, first vice minister of economy and finance, at financial market monitoring meeting on Monday said the government has begun 24-hour around-the-clock monitoring on local and international financial markets.
Lee reminded of the local financial market’s resilience from shocks from previous Covid-19 outbreaks and stressed taking a comprehensive and calm approach to tackling the new challenge.
“Authorities will take preemptive and aggressive actions when necessary,” he said.
Analysts project an inevitable bear run in the year-end as the virus variant factor is coupled with rising interest rates and supply uncertainties.
It takes two weeks to scientifically prove how well the existing vaccine would work against the new virus variant, noted Jung Yong-taik, research center head at IBK Securities, projecting the local market to show on downward movement until then.
Lee Jae-man from Hana Financial Investment projected the Kospi would fall to 2,810 points in December due to fears from Omicron. The Kospi lost 7 percent in September and 6 percent in October last year versus the annual peak following the emergence of new Covid-19 variants, noted Lee. Given the past trend, the Kospi could drop 6 percent in November to reach 2,810 in December, said Lee, adding that the negative impacts would be weaker than before as the market has built up experience.
Corrections are expected for American and European stocks that have gained sharply, as well as raw materials and cryptocurrency, said Kim Hak-gyun, research center head at Shinyoung Securities. Omicron’s impact on the local stock market could be weaker compared to its global peers as it has undergone correction already but downward pressure could last for a couple of months, Kim predicted.
The global supply chain problem could grow worse from lockouts and lockdowns for preventing the new virus variant from spreading, said Shin Seung-jin from Samsung Securities. In this case, the U.S. Fed could push back its monetary tightening schedule to back economic recovery, Shin added.
By Park Yong-bem, Kim Je-gwan, Shin Hwa and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]