Bank of Korea Governor Shin Hyun-sung stated that there has been a temporary adjustment in consumption due to the recent decline in stock prices.
During a press briefing following the monetary policy meeting on October 22, Shin noted, "Stock prices are influenced by various factors beyond the real economy, which is why they have recently experienced significant adjustments. I believe this is having some impact on the real economy as well."
He also addressed the effects on consumer sentiment and retail spending. With a substantial increase in individual investors participating in the stock market, he acknowledged the possibility of weakened consumer sentiment and reduced spending on financial services due to the stock market decline.
Shin pointed out that a decrease in stock trading can statistically reduce consumption. He explained, "Among consumption items, financial services are affected by transaction volumes and the fees charged by financial institutions. When trading volumes decline and the stock market cools, there tends to be a statistical decrease in consumption of financial services."
However, he assessed that the semiconductor industry remains robust despite the recent stock market downturn. "As I mentioned during the monetary policy briefing in July, it is important to focus on the prices themselves rather than stock prices when it comes to semiconductors," he said. "Looking at long-term contracts and spot prices, there are no signs of a decline in DRAM spot prices."
He added that the strength of semiconductor prices positively influences exports and growth. "In the long term, exports and investments are improving supply and demand conditions," Shin noted, adding that consumption is also showing a fairly solid trend.
* This article has been translated by AI.
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