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US trade deal remains unclear: South Korean prez as Trump's deadline looms
AP Seoul
South Korean President Lee Jae Myung said that it remained unclear whether Seoul and Washington could conclude their tariff negotiations by the deadline set by President Donald Trump for next week, noting Thursday that both nations were still working to clarify their positions and identify areas of agreement.
Speaking at his first news conference since taking office last month, Lee also reiterated his intentions to improve badly frayed ties with North Korea, though he acknowledged that mutual distrust between the Koreas is too deep to heal anytime soon.
Trump's tariff hikes and other America First policies are major challenges for Lee's month-old government, as are North Korea's advancing nuclear programme and domestic economic woes. Lee, a liberal, came to power after winning a snap presidential election caused by the ouster of conservative President Yoon Suk Yeol over his ill-fated imposition of martial law in December.
Lee calls tariff talks with US clearly not easy
Lee said the tariff negotiations with the US have been clearly not easy and stressed that the countries must reach mutually beneficial outcomes.
It's difficult to say with certainty whether we will be able to reach a conclusion by July 8. We are now doing our best, Lee said. What we need is a truly reciprocal outcome that benefits both sides and works for everyone, but so far, both sides are still trying to define exactly what they want.
Trump's 90-day pause in global reciprocal tariffs is set to expire on July 9, potentially exposing South Korean products to 25 per cent tax rates.
Washington has separately been seeking higher duties on specific products such as automobiles and semiconductors, which are key exports for South Korea's trade-dependent economy. There are growing concerns in Seoul that Trump may also demand a broader deal requiring South Korea to pay significantly more for the 28,000 US troops stationed in the country to deter North Korean threats.
Lee has consistently urged patience on tariffs, arguing that rushing to secure an early deal would not serve the national interest. His trade minister, Yeo Han-koo, was reportedly arranging a visit to Washington for possible meetings with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.
Lee pushes to revive long-stalled talks with North Korea
On North Korea, Lee said he would seek to restore long-dormant talks with Pyongyang, whose expanding military cooperation with Russia pose major security concerns to their neighbours.
I think we should improve relations with North Korea based on a reliable coordination and consultation between South Korea and the US, Lee said. But I expect that won't be easy as mutual antagonism and distrust are too serious.
Lee previously faced criticism that he was tilting toward North Korea and China and away from the US and Japan. But during his campaign, Lee promised to pursue pragmatic diplomacy, saying he would bolster the alliance with the US while also seeking to repair ties with North Korea, China and Russia. Some critics say it's too difficult to satisfy all parties.
Lee added that he had proposed resuming more frequent summits with Japan.
Lee's government has made proactive efforts to build trust with North Korea, halting frontline anti-Pyongyang propaganda broadcasts and taking steps to ban activists from flying balloons carrying propaganda leaflets across the border.
Trump has also expressed intent to resume diplomacy with North Korean leader Kim Jong Un. Lee has said he would support Trump's push.
North Korea hasn't publicly responded to the conciliatory gestures by Trump and Lee. But officials said North Korean propaganda broadcasts are no longer being heard in South Korean border towns.
North Korea has refused talks with the US and South Korea since earlier Trump-Kim nuclear talks collapsed in 2019. North Korea is now working to expand relations with Russia, supplying troops and weapons to support its war against Ukraine in return for economic and military assistance.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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India seems relatively insulated from these developments and we seem to be dancing to a different tune. So, still we are focused very much on what is happening within India where things seem to be generally fairly good. The monsoons have been good and credit off take is picking up a little bit, inflation is mild, and the market is beginning to recognise some of these facts. Live Events So, what should one do in this kind of market? When you flagged off, there are multiple concerns around us. Punita Kumar Sinha: I mean, there are some concerns obviously. Valuations are a concern. While FIIs have started putting money back into India, the money that is flowing into other markets is actually far higher than what is coming to India. And if you look at the performance of the markets globally, year to date while it seems like India is doing well now and things have turned around in the last couple of months; if you look at year to date European markets have done a lot better; a lot of other EM markets have done a lot better than India. So, India has really not been an outperformer this year even though last few months seem to have seen some strength, but relatively to other markets we are not the best performer and that goes back to the one single concern that has always weighed on India which is valuations. So, at what level this global strength to your mind will get challenged? Could it start with reversal of dollar? Could it start with GDP data? Because while we may argue about the state of the economy, the fact that US markets at an all-time high, the harbingers like Nvidia , they have made a new high, that is clear indication of where the appetite right now is moving. Punita Kumar Sinha: See, the thing is that US and India have been the best performing markets globally over the last decade. And given the demographics and the growth cycle that we are in in India, I do not think that is going to get derailed by much of the global concerns or any global events to a very large extent. So, longer term, medium-term, India obviously is well positioned to capitalise on all the trends that are in favour of our economy here. So, short-term yes, there could be some concerns that emanate time to time and that causes some corrections, but longer term the investors will have to keep focusing on India. Now, we have to obviously worry about the fact that the geopolitical situation is still quite uncertain and what that means for commodities, what that means for currencies, and right now the markets seem to be ignoring every risk out there. And so, one should start also be thinking of the risk-reward trade off. And given where valuations are, given that there are risks out there that the markets have ignored in the last one month or two months, that there could be some rationalisation and some repositioning of portfolios as a result of that. But coming to the India growth story, select pockets that you were betting on was NBFCs and India's consumption story as well. But given the runup in NBFC specifically, are the valuations still reasonable? Punita Kumar Sinha: Well, if you look at the last several years, the NBFC sector, the financial sector has been quite a bit of laggard and so to that extent given good monsoons, the credit cycle is going to keep on improving from here, at least that is what the current data is showing and therefore, there could be more upside in the financial sector. Obviously, there is a large universe of stocks to choose from. 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To what extent is AI going to disrupt, what our IT services sector is doing is still open to debate and the verdict is out I mean, in the sense that there is definitely going to be some change in the nature of the work that the Indian companies are doing and whichever companies are able to keep up with the new trends would obviously be winners. So, it is going to be a mixed bag. Indian companies will really need to innovate. The interesting thing is in India itself, we do not hear much about the use of AI by companies as much as in the US. In the US, we are definitely seeing a lot of change happening. Companies are really changing, the kinds of jobs people are doing, and our IT companies are very focused on the US and so to that extent they are changing, innovating, and there could be periods of consolidation. But in the end, we will come out strong in my view. Given the geopolitical situation that we have at play, what is the best strategy that you would advise for our viewers to have because I remember back in May when you connected with us and it was whole that India-Pak issue that was going on, you suggested that one should really be on the defensive side, one should have a defensive portfolio, have some cash in the hands as well. But what about now that given that the trade deal could be on, the earning season is approaching, what is the best asset diversification that you would like to suggest? Punita Kumar Sinha: Well, I still maintain my view that the markets have run ahead of all the risks out there and it has actually been quite surprising that the markets have ignored all the geopolitical tensions that the world is seeing, whether it was India-Pakistan, Israel-Iran. There is obviously Russia- Ukraine and there is a lot of tariff disputes and the markets seem to have ignored all of this. So, I still think that one should remain cautious and also focused on the risks and in terms of asset, it is great to be diversified. And while right now it seems that small and midcaps have been the place to have been in over the last 12 months, over the last two years-three years, it has been really like a midcap, a smallcap rally in India and while in the rest of the world, in the US it has been technology. So, there has to be some diversification from these themes and one should still focus on the company's inherent growth rates and companies that are insulated largely from exports or global trends and focus more on India specific growth. ETMarkets WhatsApp channel )
