The Korea Times

Korea: republic of uncertainty

By Kim Jae-kyoung There is an old saying in the business world that uncertainty is worse than living with bad policies because it sends business onto the sidelines, rather than on the playing field of the economy. It can also apply to the investment sector as uncertainty scares away foreign money. In this regard, President Lee Myung-bak and his administration have failed, with many economic and financial policies lacking consistency. Of late, there are a couple of cases that have further increased uncertainty here ― the delay of the Financial Services Commission (FSC)’s approval on the sale of Korea Exchange Bank (KEB), the government’s extended profit-sharing scheme and pension funds’ exercising of voting rights. Among them, the sale of KEB by Lone Star Funds is a case in point. The fund, the largest shareholder of KEB, has agreed to sell its controlling 51.02 percent stake in KEB to Hana Financial Group, but the deal is adrift as the financial regulator has delayed giving its approval. The U.S. buyout fund’s exit plan hit a snag after the Supreme Court early last month

May 27, 2011By Kim Jae-kyoung

Economy

New force in global market

Sovereign wealth funds sit on $4 trillion war chest By Kim Jae-kyoung and Chung Min-uck With the aftermath of the global financial crisis waning, sovereign wealth funds (SWF) have emerged as a new force on the global money market, changing the landscape of the financial industry. In terms of assets under management, SWFs around the world were sitting on a combined $4.2 trillion war chest in December, up 11 percent from $3.59 trillion year-on-year, according to The CityUK. The figure stood at only $1.1 trillion in 2000. What has caught the attention of investors and policymakers is that they have increased investments in emerging markets to boost returns. In addition, they are increasingly pursuing alternative investment strategies, including private equity and hedge funds, according to data provider Preqin. “Escaping from the global crisis, many sovereign funds that had delayed plans to diversify their holdings have now again pursued differing strategies by investing in various alternative asset classes,” Korea Investment Corp. CEO Chin Young-wook told Business Focus.

May 22, 2011By Kim Jae-kyoung

Economy

War of sovereign funds

KIC aims to expand assets to $100 billion to join 'premier league' By Kim Jae-kyoung A war without gunfire is looming larger and larger. There is a heated competition brewing between major powers and emerging forces over dwindling energy and other natural resources and eventually the expansion of their economic territories. At the center stage of the war are sovereign wealth funds (SWF) representing each country, a pool of money derived from a country’s reserves, which is set aside for investment purposes. With soaring foreign exchange reserves, many countries are stepping up efforts to get the upper hand in this economic war. On the surface, the move is simply seen as an attempt to reduce their exposure to U.S. government debt and to increase emerging markets asset allocations but from a broader, longer-term perspective, it is taken as each country’s ambition to increase their influence in the global market and secure natural resources for future economic growth. The war has recently been taking a clearer shape after China announced that its sovereign wealth fund

May 22, 2011By Kim Jae-kyoung

Economy

An era of uncertainty

KOSPI undergoes corrections on course toward another upturn By Kim Jae-kyoung Osama bin Laden is gone but his sudden death has led to even more uncertainty in an already uncertain economic climate, sending the local financial market on a roller coaster ride. The domestic equity market started in May with a bullish run after the death of bin Laden, who masterminded the Sept. 11 attacks against the U.S. in 2001. The KOSPI hit a record high of 2,228.96 on May 2 but the rallies turned out to be short-lived. The benchmark index has since suffered huge losses on the back of a foreign investors’ selling spree. Despite the Bank of Korea’s (BOK) decision to freeze the key rate Friday, the stock market lost further ground. The KOSPI closed at 2,120.08, down 0.12 percent from Thursday following losses of 43.98 points that day. The currency market has also remained highly volatile with the won losing nearly 20 won against the U.S. dollar only in May. What is of more concern is that prices of commodities, including oil, gold and silver, recently took a nosedive, dampening g

May 15, 2011By Kim Jae-kyoung

Economy

Case study: Rallocating the work

By Kim Sang-yeoul One life sciences company’s global mobility function was drawing criticism from both business managers and international assignees for unsatisfactory service. Business managers felt that they lacked guidance on how to effectively select assignees, plan assignments and choose assignment policies. Many assignees reported that in the initial conversations about assignment, expectations had not been appropriately set regarding the impact of the assignment on themselves and their families. Upon investigation, the company found that the global mobility function was spending almost all of its time coordinating assignee services, with very little effort going toward offering business managers the advice they needed. Further, the global mobility function was often not even notified about assignments until the assignment was planned, the candidate selected and expectations already established. The company realized that many of the coordinating activities that were being performed in the global mobility function could actually be done more effectively elsewhere. For i

May 15, 2011By Kim Jae-kyoung

Economy

Smarter moves

How to boost returns on global mobility investment By Deloitte For many organizations, growth and even survival hinges on penetrating and scaling operations in rapidly growing and emerging markets unlocked by globalization. That’s a tough challenge, especially when the critical market and production opportunities and critical talent are often not in the same country. Yet a surprising number of companies continue to handle international assignments in ways remarkably similar to how they operated decades ago. The traditional, and still the most widespread, approach to international assignments typically handles each case as a special event with expectations for comprehensive, high-touch service. This one-size-fits-all approach, however, increasingly overshoots the mark for many situations, unnecessarily raising costs. Additionally, it often fails to meet the specific needs of both the business and the assignee, leaving key business goals unfulfilled and key talent development priorities unaddressed. More broadly, many executives are uncertain that they are receiving an appr

May 15, 2011By Kim Jae-kyoung

Economy

Restructuring brings turnaround

By Kim Jae-kyoung In the first quarter, KB recorded a better-than-expected quarterly profit on the back of rising interest margin and benefits of restructuring, raising hopes that the group will rebound both in terms of profitability and financial soundness this year. Net profit came to 757.5 billion won ($706.3 million) in the January-March period, up 23.3 percent from 614.5 billion won during the same period the previous year. It compared with a net loss of 341 billion won in the fourth quarter of last year. Its return on equity (ROE), a key barometer of profitability, jumped to 16.03 percent in the first quarter from 0.79 percent a quarter ago, while its return on assets (ROAs) increased from 0.06 percent to 1.17 percent during the same period. KB Chairman Euh Yoon-dae said that ROE is the area that the group should further improve to attract more foreign investment. “If you look at ROE, it is lower than those in China, India and Indonesia. I think the ROE should hover at least 17 percent,” he said. According to the group, the robust performance is expected to c

May 8, 2011By Kim Jae-kyoung

Economy

KB to sell Kookmins 9% stake via club deal

Euh aims to turn KB into a global lender by expanding dollar and yuan assets By Kim Jae-kyoung Another big concern for KB Financial Group Chairman Euh Yoon-dae is overhang issues associated with Kookmin Bank’s treasury stocks valued at around $2 billion. The chairman has pushed for the sale of the lender’s 9 percent stake in KB in early April but it has been delayed due to pricing issues. He believes that one of the biggest drags on stock prices is investors’ overhang concerns over the treasury shares. The group has planned to unload Kookmin’s shares in the form of the so-called club deal under which the shares will be sold to only a few investors, not to the public. Regarding the timing of the deal, the 66-year-old CEO hints that it can come in the coming months, saying, “Since we make announcements, it can be done at anytime.” KB shares closed at 55,400 won Friday, up from 51,300 won on July 13 when he took the helm. The prices peaked at 62,100 won on Jan. 4 this year and have since gone up and down due to the overhanging concerns, as well as lingering uncertaintie

May 8, 2011By Kim Jae-kyoung

Economy

In pursuit of shareholder capitalism: interview

KB may invest more in BCC; no plans of M&A with Woori By Kim Jae-kyoung It is widely known that the price of a company’s stock is the mirror of a CEO’s leadership as the price reflects the firm’s fundamentals as well as directly reflects the CEO's long-term vision and strategy. In this regard, the movement of KB Financial Group’s shares over the past one year can be quite disappointing for Chairman Euh Yoon-dae, as KB shares rose only 8.77 percent since his inauguration, underperforming the benchmark KOSPI which jumped 25.67 percent. Aside from the stock price, his first year as CEO was quite successful as the chairman steered a turnaround for the group, with net profit reaching 757.5 billion won in the first quarter as a result of extensive restructuring through layoffs and the spinoff of its credit card unit. Although Euh may disagree, he is considered a shareholder capitalist. During a one-hour interview with BusinessFocus held at his office in Yeouido, Seoul, on May 2, he stressed the importance of shareholders’ values from beginning to end. He considers the return

May 8, 2011By Kim Jae-kyoung

Economy

New math: 6 trends, 3 drivers

By Ken Cook While doing business around the world, global companies notice the complexity of the interlocking systems that shape today’s ― and tomorrow’s ― economic and social environments. Faced with such complexity, they may be tempted to watch passively as the trends unfold and just wait for a clear picture to emerge. By the time the picture snaps into focus, however, it may be ``too late’’ for them to capture the most valuable opportunities. And that’s why the global players must keep their eyes wide open and monitor major business trends from a broad, long-term perspective. Ernst & Young publishes global trends report every year and last year’s, titled ``Business redefined,’’ reflected the impact of the latest financial crisis. Now a couple of years on, the global financial system remained fragile, but economies around the world began moving toward recovery. In the 2011 paper ``Tracking global trends,’’ Ernst & Young gives attention to six major developments that are changing our business world, while at the same time identifying three key underlying drivers that hav

May 8, 2011By Kim Jae-kyoung

Kim Jae-kyoung

Read more

Korea: republic of uncertainty

New force in global market

War of sovereign funds

An era of uncertainty

Case study: Rallocating the work

Smarter moves

Restructuring brings turnaround

KB to sell Kookmins 9% stake via club deal

In pursuit of shareholder capitalism: interview

New math: 6 trends, 3 drivers

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