2024 Global Economic and Financial Market Status and Outlook

1. Recent Stock Market Rally Background

Improved Economic Data
- CPI (Consumer Price Index): The December Core CPI (core inflation) rose by 0.225% compared to the previous month, a more positive outcome than the market expected.
- Increase in Retail Sales and Manufacturing Production: U.S. fourth-quarter consumption growth is projected to reach 3.2% on an annualized basis.
Recovery in Housing-Related Growth Signals:
- Housing starts in December increased by 15.8% compared to the previous month. This partially alleviates pessimism about the housing market.
- However, risks in the housing market still exist, such as mortgage rates remaining in the 7% range.

2. Bond Market and Interest Rate Trends

10-Year Treasury Yield Decline: Interest rates have fallen to around 4.6%, acting as a positive signal for the stock market.
Renewed Discussion of Interest Rate Cuts:
- Discussions about the Fed potentially bringing forward the timing of interest rate cuts to July from the initial expectation of September or October are providing relief to the market.

3. Dollar Strength and Exchange Rate Trends

Trump Uncertainty:
- Uncertainties regarding Trump 2.0’s tariff policies and other factors may have a significant global impact.
Exchange Rates and Investment Strategies:
- If the dollar continues to strengthen, it will be necessary to utilize global asset allocation strategies to counter the decline in the Korean won’s value.

Frequently Asked Questions from Investors and Overseas Stock Investment Strategies

1. Future Outlook for Tech and Growth Stocks

Possibility of Sustained High Interest Rates: The potential for continued interest rate hikes could burden tech and growth stocks.
Sector Strategies: It is necessary to increase the weight of consumer discretionary and financial stocks in response to the strong dollar and increased consumption in the U.S., or focus on cyclical stocks.

2. Response to Bond Market

10-Year Treasury Yield at 5% Strategy: Some suggest considering it an opportunity to buy bonds.
It is important to diversify the investment mix by combining short-term and long-term government bonds when adjusting the investment ratio.

3. Hard or No Landing for the 2024 Economy?

The market reaction has eased from concerns of a hard landing. If the U.S. economy maintains stability and growth, the possibility of a bull market increases over a bear market.

Optimal Investment Action Guidelines

Be prepared for a volatile market.
Increase Cash Holdings: Consider increasing cash holdings to 10-20% for emergency investment purposes.
Timing Strategy: This year, the market changes very quickly, so it’s recommended to employ short-term trading strategies rather than “Buy & Hold.”

Major Economic Risks

Massive federal government spending and the growing debt problem.
Increased business uncertainty due to Trump’s trade policies.
Changes in the globally interconnected economic system.

Crafted by Billy Yang
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South Korean Economic Status and Solutions: Key Analysis from 2024 to 2025

1. Current State of the South Korean Economy

Youth Unemployment Rate: The current unemployment rate for young adults aged 20 to 40 is approximately 45%. This indicates that nearly half of university graduates are unable to secure employment.
Corporate Investment Environment: Foreign direct investment has decreased, while the number of South Korean companies moving overseas (to the US, Vietnam, India, etc.) has more than doubled. Major corporations like Samsung and LG are also relocating their factories abroad.
High Tax Rates: South Korea’s corporate tax rate is 26%, inheritance tax is 60%, and income tax is 50%. Considering that the OECD average corporate tax rate is about 21%, this significantly hinders competitiveness.
Domestic Economy: The domestic economy is in a slump, with small business owners seeing their sales decrease by half. The delinquency rate for small business owners has recently exceeded 20%.

2. Analysis of Major Problems

Over-Regulation: The structure makes it difficult for platforms and the sharing economy to grow. For example, new industries like ‘Tada,’ ‘Uber,’ and ‘Airbnb’ are banned because of concerns that they could harm traditional industries.
Political Instability: Political risks and legal systems negatively affect corporate growth and investment environments. This leads to a decrease in foreign tourist inflows and the departure of foreign capital.
Decline in International Competitiveness: The economic growth rate is lower than that of developed countries like the US and Japan. South Korea’s projected growth rate for 2025 is 1.8%, lagging behind the US (2.3%). This is even lower than South Korea’s potential growth rate.
Export-Dependent Structure: South Korea’s trade dependence is excessively high at 75%. This implies that South Korea is highly susceptible to global economic changes.

3. Proposed Key Solutions

Tax Rate Reform:
- Reference to Ireland’s Case: By significantly lowering the corporate tax rate from 50% to 12%, Ireland attracted 1,700 multinational corporations to establish their headquarters there. Currently, Ireland has the highest per capita GDP in Europe at $120,000.
- South Korea should also lower its corporate and income taxes to the OECD average.
Easing Industrial Regulations:
- New policies are needed to reduce conflicts between new and traditional industries.
- Example: Australia requires Uber to donate 10% of its revenue to the taxi industry to promote coexistence between new and traditional industries.
Political Stability and Attraction of Foreign Investment:
- Political stability is essential for revitalizing the domestic market. Deepening internal political conflicts will erode foreign trust.
- Provide incentives to attract foreign investment (tax reductions, free land, etc.).
Preventing Corporate Exodus:
- Create an environment where companies can grow within South Korea through various support measures.
- Persuade large corporations that are leaving to increase domestic investment.
Improving Regulations for the Fourth Industrial Revolution:
- Former President Trump removed 70% of regulations, leading the era of the Fourth Industrial Revolution.
- South Korea also needs to drastically ease regulations to promote the development of new industries like AI, autonomous driving, and eco-friendly energy.
Boosting Domestic Economy:
- Increase support for small and medium-sized enterprises and small business owners.
- Introduce new consumer policies and programs.

< Summary >

The South Korean economy currently faces issues such as high unemployment rates, corporate exodus, excessive tax rates, and a stagnant domestic market. To solve these problems, bold policies are needed, including tax reform, easing industrial regulations, attracting foreign investment, and boosting the domestic economy.