Hakkyun Kim of Shinyoung Securities: "Stock Prices Rise Despite Fed Rate Hikes... A Rational Market Response"

Focus on Oil Price Volatility and Middle East Situation
Political Factors Beyond Monetary Policy
Warnings Triggered by 'Fiscal Addiction'

Hakkyun Kim, Head of Research Center at Shinyoung Securities, said on the 22nd, "The U.S. Federal Reserve has raised its benchmark interest rate, yet stock prices are going up," adding, "This is a rational response from the market."

Hakkyun Kim, Head of Research Center at ShinYoung Securities. Photo by Chunhan Lim

At a briefing held at the Korea Exchange in Yeouido, Seoul, on this day, Kim explained, "When interest rates rise, sometimes it is led by the central bank, and other times it is the market interest rate that rises first. Currently, it is not the central bank that is raising rates, but rather the market interest rate has already gone up ahead of the central bank."

He noted that the Federal Reserve is not in an environment to proactively continue raising rates at this time. Kim pointed out, "While headline inflation is high now due to oil prices, excluding oil, the inflationary pressure is not significant. The U.S. growth forecast has also been downgraded," he said. He continued, "Ultimately, it comes down to oil prices. Right now, it's not the Federal Reserve's time, it's the White House's time. The end of the Middle East war and a decline in interest rates are what matter at this point," he explained.

He assessed that if high interest rates persist for an extended period, it could become a global debt issue. Kim remarked, "Since the outbreak of COVID-19, one could say we've become fiscally addicted, so what kind of bulwark the central bank prepares is key. To take an extreme example, the southern European countries—Portugal, Italy, Greece, and Spain—experienced a severe debt crisis in 2010, but the next cases could be the UK and Japan," he warned.

Kim said, "There are not many new companies being listed on the KOSPI, and constant filtering of underperforming firms through delistings reduces risks for index investing. Young investors are less likely to suffer significant losses if they invest in indices, but it seems this is still a challenge," he added.

This content was produced with the assistance of AI translation services.