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CLSA warns of negative impact of ruling party's victory

CLSA head of Korea research Paul Choi / Captured from CLSA Twitter
CLSA head of Korea research Paul Choi / Captured from CLSA Twitter
By Park Jae-hyuk

A Hong Kong-headquartered investment bank has warned global investors of the possible negative impact of a victory by the ruling Democratic Party of Korea (DPK) in the forthcoming April 15 general election

Given that the bank has affected foreigners' investment strategies significantly, there are fears that the Korean market could stumble if such a scenario takes place.

Paul Choi, head of Korea research at CLSA, said Thursday in a report, "Inside the minds of Moon supporters," that more power for the ruling party would be negative for the market.

"We made our best effort to get inside the minds of those that still support Moon. Our findings explain unwavering support and implies the ruling party is likely to win," he said.

"Such an outcome has negative implications for the market as investors brace for the continuation of socialist policies."

In a previous report published in December, the analyst defined the Moon Jae-in administration's regulations as "socialist" policies, warning that a series of anti-business regulations could dampen economic confidence and result in an exodus of capital and firms.

In the recent report, he proposes that those policies have even "backtracked democracy."

"An important political development has gone unnoticed, due partly to the coronavirus, where the current ruling power has been centralizing power by what seems like an effort to undermine the independent investigative power of the prosecutors' office," he said.

"Such efforts, along with increasing state-control of the economy, press and education, is reversing Korea's decades-long progress toward a more free and pluralistic society."

Choi said, however, Moon supporters have extended full and unanimous support for almost all government policies, because they believe the DPK, despite its mistakes, is the only power that genuinely cares about them and is trying to restore social fairness.

"What economists may think is irrational policy can be a perfectly rational thing for the ruling power to do to maintain its power. This is classic populism in play," he said.

"As far as corporate profit and market valuations are concerned, the continuation of the current regime, which increases state control of the market and inhibits creative destruction, is deemed negative."

Denying his report had a political purpose, the researcher emphasized the overall comments on his report were made for the sake of his clients, most of whom are large investors worldwide.

"We are not a judge of ideologies but of the market," he said.


CLSA head of Korea research Paul Choi / Captured from CLSA Twitter
CLSA head of Korea research Paul Choi / Captured from CLSA Twitter
By Park Jae-hyuk

A Hong Kong-headquartered investment bank has warned global investors of the possible negative impact of a victory by the ruling Democratic Party of Korea (DPK) in the forthcoming April 15 general election

Given that the bank has affected foreigners' investment strategies significantly, there are fears that the Korean market could stumble if such a scenario takes place.

Paul Choi, head of Korea research at CLSA, said Thursday in a report, "Inside the minds of Moon supporters," that more power for the ruling party would be negative for the market.

"We made our best effort to get inside the minds of those that still support Moon. Our findings explain unwavering support and implies the ruling party is likely to win," he said.

"Such an outcome has negative implications for the market as investors brace for the continuation of socialist policies."

In a previous report published in December, the analyst defined the Moon Jae-in administration's regulations as "socialist" policies, warning that a series of anti-business regulations could dampen economic confidence and result in an exodus of capital and firms.

In the recent report, he proposes that those policies have even "backtracked democracy."

"An important political development has gone unnoticed, due partly to the coronavirus, where the current ruling power has been centralizing power by what seems like an effort to undermine the independent investigative power of the prosecutors' office," he said.

"Such efforts, along with increasing state-control of the economy, press and education, is reversing Korea's decades-long progress toward a more free and pluralistic society."

Choi said, however, Moon supporters have extended full and unanimous support for almost all government policies, because they believe the DPK, despite its mistakes, is the only power that genuinely cares about them and is trying to restore social fairness.

"What economists may think is irrational policy can be a perfectly rational thing for the ruling power to do to maintain its power. This is classic populism in play," he said.

"As far as corporate profit and market valuations are concerned, the continuation of the current regime, which increases state control of the market and inhibits creative destruction, is deemed negative."

Denying his report had a political purpose, the researcher emphasized the overall comments on his report were made for the sake of his clients, most of whom are large investors worldwide.

"We are not a judge of ideologies but of the market," he said.


Park Jae-hyuk pjh@koreatimes.co.kr


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