Tantu Macro stated that the current financial risks in South Korea are structurally similar to the 1996 Asian financial crisis, with semiconductor exports accounting for 41%, foreign ownership in the stock market reaching 40%, and foreign debt/GDP rising to 39.6%. The key differences are that the external reserve adequacy ratio has reached 92%, the proportion of short-term foreign debt has dropped to 9.4%, the exchange rate is freely floating, and the growth rate of corporate leverage has slowed down. At present, KOSPI has a price to book ratio of 2 times, a price to earnings ratio of 30 times, and a financing balance of 38.6 trillion Korean won. The model estimates that there is a 5% probability of South Korea falling into negative growth in the next year, but the risk of a vicious cycle is lower than that of the 1996 Asian financial crisis. If the semiconductor cycle reverses or the Federal Reserve tightens, causing foreign capital to withdraw, the stock market may become a risk transmission hub.
