Of all markets in deep in the red the past few days, South Korea’s is among the reddest, its stocks plunging the most and currency gyrating more than most.
A few things. Firstly is that South Korea is hitched to the U.S. economy, which investors fear is flagging badly. That means less buying of Korean made cars and electronic gadgets. In 2010, 51.6% of South Korea’s GDP came from exports. Another matter is finance. South Korean banks rely heavily on wholesale financing from European banks, which as we know, aren’t doing so well. That means a potential cash crunch for Korea’s financial system, an issue President Lee Myung-bak raised in a statement yesterday, when he called for Korea to look toward the Middle East for financing its economy.
Two figures: more than half GDP from export, more than 1/3 of stocks owned by foreigners