It alleviates chronic over-demand for funds from unprofitable businesses, and allows for a more efficient allocation of resources. Only the fittest companies survive. Plus, declining interest rates are helping healthy companies. Corporate failure is also changing management thinking. In future, that should steer managers away from risky, unwarranted expansion heavily funded by external borrowings.
Investors are in a dilemma due to poor corporate earnings.
It seems the stock market is rising without valid reasons. But in reality, it is an early indicator of an impending turnaround. Looking at the macro-economy, things are improving. The weakness of the yen is about to end. That should help Korean exports.