South Korea's rate hike may materialize next week—can the technically bearish Korean stock market withstand it?
Markets widely expect the Bank of Korea's Monetary Policy Committee meeting on the 16th to announce an interest rate hike—the first increase since August 2021. Massive foreign sell-offs and leveraged ETF unwinds have triggered a triple crisis, igniting the 'semiconductor paradox,' wherein industry giants' soaring earnings have been met with severe market losses. With tightening monetary conditions looming, South Korea's capital markets now face a critical test of survival.
Express News | SK Hynix CEO Forecasts Memory Chip Shortage to Extend into the Next Decade
Is a rate hike next week all but certain? Bank of Korea Governor reinforces hawkish stance, stating outright that it is 'necessary' to raise rates at an appropriate time.
Bank of Korea Governor Shin Hyun-sung stated that, given persistently elevated inflation above the target level, improving economic growth, and rising financial stability risks, the central bank needs to raise its policy rate at an appropriate time.
Express News | Bank of Korea Governor Reiterates Need to Tighten Policy as Soon as Possible
Express News | Ministry of Economy and Finance of Korea: Korea issued EUR 1.7 billion in foreign exchange stabilization bonds at a historically low spread.
Express News | The Bank of Korea: It will continue to implement market-stabilizing measures. The Korean won has depreciated more than other major currencies. Given the risks, including those related to prices, an interest rate hike is imperative.