By Lee Hyo-sik
Staff Reporter
Listed companies are holding record amounts of cash by not making new investments to cope with an increasingly pessimistic business outlook at home and abroad.
Outbound shipments have been strong but are expected to grow at a slow pace on the global economic slowdown, while domestic sales are falling fast as consumers tighten their belts against surging prices of goods and services amid slower income growth.
According to the Korea Exchange (KRX) Tuesday, the nation's stock market operator, 567 listed firms had a total of 64.4 trillion won in cash and other liquid assets as of June, up 3.2 percent from six months earlier.
Companies affiliated with the nation's top 10 business groups held a total of 33.5 trillion won in cash and cash-equivalents in June, up 14 percent from December last year, while the remaining ones had 26.2 trillion won, down 9.2 percent over the same period.
It means conglomerates performed better in the first half, compared to smaller enterprises, but refrained from expanding investments and employing more workers. Small-sized firms were hit harder by soaring oil prices and sluggish domestic consumption.
Among the top 10 conglomerates, Samsung Group held the largest cash and other liquid assets at 10.2 trillion won, followed by Hyundai Automotive Group with 7.9 trillion won and Hyundai Heavy Industries Group with 5.6 trillion won. Seven out of 10 chaebol saw their cash holdings jump from six months ago, while the remaining three recorded a drop.
A KRX official projected listed companies will continue to remain reluctant to expand for the foreseeable future, but instead increase cash and other liquid assets in preparation for a possible liquidity shortage amid the worsening international financial market turmoil.
He said private consumption here will not likely pick up any time soon as many households reduce spending due to soaring costs of goods and services amid slowing income growth.
According to the National Statistical Office (NSO), 28.1 percent of households nationwide spent more than they earned in the second quarter, the highest since the office began compiling such data in 2003, on surging inflation and falling income growth.
Additionally, the bearish stock market and declining home prices are not helping family finance either, with many having to pay higher interest on loans amid rising rates.