Reaction to reshuffle in economic ministry

Financial analysts say that the new economic team must manage the last leg of the current corporate and financial restructuring. Half-way through President Kim Dae-Jung¡¯s term, it seems that the number one priority is to stabilize financial markets by pushing ahead with Hyundai Group¡¯s self-restructuring and resolve the mounting tensions between the government and the Hyundai Group as soon as possible.

The initial reaction to the newly formed economic team was disappointment. With the announcement of the cabinet reshuffle, the KOSPI plunged 34 points. Some interpret the drop as low expectations towards the new economic team members and their policies.

The download trend in stock prices has been the habitual reaction towards cabinet reshuffling for the past three years. In March 1998, May 1999 and January of this year, the stock market dropped 4, 14, and 3 points respectively.

In contrast to the plummeting stock market, interest rates of corporate bonds remained at the same level.

However, the majority of stock analysts do not see any connection between the drop in the KOSPI and the new appointment of ministers. The cabinet reshuffle was no surprise as it had been repeatedly announced by the government. Also, regardless of who was appointed, analysts assessed that the ongoing restructuring would not change drastically,

One financial analyst noted that the newly selected administrators should not follow the footsteps of the previous team that complicated policy implementation with its inconsistent comments. Some were anxious that the new economy team would be swayed under pressure from corporate and political heavy weights in their policy-making,