The impact of weaker Yen and outbreak of Middle East Respiratory Syndrome (MERS) would take heavy toll on country’s economic activities and the benchmark stock index for quarters to come.
Impact of MERS –
- South Korea has seen worst outbreak of MERS virus, which is a form of cold but might turn out as life threatening. South Korea suffered the worst outbreak outside Middle East, namely Saudi Arabia.
- There has been reported case of 180 infections and 29 fatalities. Though the infection seems to be under control now, the country is still counting additional cases of infection.
How the impact is being felt?
- In order to avoid infections, schools and colleges have been closed, people are trying to avoid crowded places as much as possible. With normal activity stopped, work flow, production, consumption all are likely to be hampered.
- Sales in departmental store have dropped by almost 16.5% in June first week. Almost 1.2 million travelers and tourists have cancelled their trip.
Korean finance ministry has cut their forecast for growth to 3.1% from 3.8% in 2015 and inflation is likely to remain subdued.
Central bank of Korea has been cutting rates and Government has shore up KRW 15 trillion additional budget, however that is unlikely to soothe the economic impact as well as psychological impact any time soon.
Korea’s benchmark stock index KOSPI 200 is likely to remain depressed as sellers likely to sell at rallies. KOSPI 200 is currently at 253 and 270-280 area remains key resistance.
The material has been provided by InstaForex Company – www.instaforex.com