Thursday, May 11, 2017

Challenges Awaiting President Moon as He Takes the Blue House

11 May 2017

Rates & FX View

Challenges Awaiting President Moon as He Takes the Blue House

¨      Presidential Candidate Moon Jae-in emerged victorious as the 19th South Korean President in a landslide victory.
¨      Push for structural reforms are likely to remain challenging with a lack of supermajority from President Moon’s party, alongside sensitivity stemming from Chaebol reforms given their sheer scale as a proportion of the economy.
¨      Difficulties may arise for President Moon to implement the KRW10trn fiscal stimulus, constrained by the legislations, which prescribe very specific exceptions to which a supplementary budget can be implemented.
¨      BoK to maintain its neutral monetary policy rhetoric through 2017
¨      We maintain our neutral duration view on KTBs, while keeping a mildly bearish view on KRW over the medium term.

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