South Korean equities, a 2024 in weakness
Last Update: 25/12/2024
South Korea has been in the spotlight in recent days because of political tensions sparked by President Yoon Suk-yeol’s declaration of martial law on December 3.
Economically, the country is also certainly experiencing a delicate moment. GDP growth is estimated at 2.2 percent for 2024, an improvement from 1.3 percent in 2023 but lower than the historical average, while inflation is expected to slow to 1.5 percent from 3.2 percent in 2023. The South Korean economy is strongly linked to global trade and is therefore vulnerable to international slowdowns, particularly in China, its main trading partner. This is compounded by a rapidly aging population and weak domestic demand.
Taking a look at South Korea’s stock market shows how weakness is showing up in comparison with other financial centers in the region.
In the chart above we compared the KOSPI, the main South Korean stock market index, with the MSCI Asia ex Japan. You can see how, even with high volatility, the indicator’s trend was bullish until early 2024. Then we see the reversal of the trend, weighed down in recent months by the recovery of Chinese equities and, in recent days, by political turmoil.
