[THE INVESTOR] South Korea has become more vulnerable to financial shocks in the stock market, an economic think tank said in a report on Sept. 13.

In comparison with the United States since 2013, while the financial stress index for both countries rose, the increase for South Korea overall was more gradual except for the stock market, according to the Korea Economic Research Institute. For the US, the index for the securities market climbed from minus 0.3 to 0.4, a rise of 0.7. For South Korea, it rose from minus 0.6 to 0.6, a jump of 1.2.

“The projection is that South Korea‘s stock market will be twice as vulnerable from the same level of shock occurring at the same time than the United States,” Kim Yoon-jin, the author of the report, said.

“Should the U.S. Fed hike the key rate, uncertainties will deepen, and corporate bonds prices will rise while the stock market falls. Chances are high that South Korea’s stress index for stock market will go up further,” Kim said.

Financial stress index measures each country‘s weaknesses to shocks in the banking sector, stock market and foreign exchange market. A rise in the index affects a country’s real economy in one to four months, the KERI report said.

(theinvestor@heraldcorp.com)