Q1 corporate finance sentiment stays below par

South Korea's corporate finance index remains below the benchmark level for the first quarter, reflecting concerns that a persistent global economic slump will adversely affect cash flows for businesses, a poll showed Sunday.

The business survey index on corporate finance (FBSI) for the January-March period came to 86, unchanged from the previous quarter, the Korea Chamber of Commerce and Industry (KCCI) said.

The FBSI has remained below the benchmark 100 for seven straight quarters since the second quarter of 2011.

A reading below 100 means pessimists outnumber optimists, with a reading above the break-even baseline meaning the opposite.

The index is based on a survey of 500 businesses across the country.

"Corporate financial conditions are unlikely to turn for the better in the first quarter due to still bad economic conditions at home and abroad," the KCCI said.

A strong South Korean currency is feared to erode the competitiveness of exporting companies, with growing household debt expected to put a damper on domestic demand, it added.

Last year alone, the won appreciated more than 8 percent against the U.S. dollar, sparking concern that it could eat into exporters' overseas earnings by making their goods more expensive overseas.

South Korea's household debt reached a record 937 trillion won (US$881 billion) as of the end of September last year, or more than 70 percent of Korea's gross domestic product.

Analysts worry that the high household indebtedness could dampen consumer spending, having a negative impact on the economy's recovery.