Home Prices Rise Despite Rate Cuts... BOK Says "Irrational Expectations" [3-Minute Brief]

[At a Glance]
1. When expectations for rising home prices are excessive, monetary policy effectiveness is limited
2. Four major financial groups' non-banking affiliates see cumulative net profit for Q3 down 8.43% year-on-year
3. Exports from November 1 to 10 reach $15.8 billion, imports $17.0 billion... trade deficit at $1.2 billion

MARKET INDEX : Year to date

○The three major indices on the New York Stock Exchange closed mixed... Dow hits all-time high as government shutdown resolution nears

○U.S. Senate passes temporary budget bill... Shutdown expected to end soon

○Funds shift from technology stocks to healthcare stocks amid tech sector weakness

Top3 NEWS

■ "It's similar to last time, so prices will rise again" - If people expect a repeat, rate cuts will only boost home prices

○Korean consumers found to have expectations that are not rational
○Home price growth expands by 56%, while the effect on economic growth shrinks by 8~10%
○GDP, investment, and consumption increase 8~10% less

■ Shrinking profits at the four major financial groups' non-banking affiliates... 'Interest business' alternatives not easy

○All but 5 out of 16 affiliates saw declining performance
○Core business deteriorated due to economic downturn
○External factors such as low interest rates and financial market instability had an impact

■ Semiconductor boom and base effect in autos... Exports up 6.4% through the 10th of this month (comprehensive)

○Korea Customs Service releases trade statistics
○Number of working days same as last year... Exports to the U.S. up 11.6%
○Semiconductors up 17.7%, passenger cars up 16.2%

Graphic News: Government to quadruple state asset acquisitions... Policy shift underway

○3 billion won allocated, including overseas real estate purchases
○Sales-centered policy continued for five years
○Principles for disposing of state assets are being challenged

the Chart: Momentum baton passes from earnings to policy - Will KOSPI rally resume?

○KOSPI surges over 3%, recovers the 4,000 mark in a single day
○Policy momentum at play, including easing of separate taxation on dividend income
○Foreign selling has slowed, but sustained gains require a shift to net buying

Today's Key Schedule

○Domestic

08:00 Korea Unemployment Rate (October)

12:00 Korea M2 Money Supply (September)

BNK No.3 SPAC KOSDAQ subscription, final offer price 2,000 won

Vitro Next Tech KOSDAQ subscription, final offer price 6,900 won

○International

16:00 Germany Consumer Price Index (MoM) (October)

19:30 India Consumer Price Index (YoY) (October)

21:00 U.S. Organization of the Petroleum Exporting Countries (OPEC) monthly report

◇Lunch & Evening Commute Weather

○Lowest temperature: 6°C (▲3°C) ｜Highest temperature: 16°C (▲1°C)
○Chance of precipitation: 10% in the morning｜20% in the afternoon
○Fine dust: Moderate in the morning｜Moderate in the afternoon

3 minutes is all you need: essential, time-saving, value-for-money economic news. Published every day at 8 a.m.