The Korea Times

Property price slump, possible rate hike set to ambush recovery

By Kang Seung-woo Staff reporter A key rate hike and prolonged slump in the real estate market will be major stumbling blocks to Korea's economic recovery in the second half of the year, according to the nation's financial watchdog, Wednesday. The Financial Supervisory Service (FSS) said that on top of external woes, Asia's fourth largest economy is surrounded by a number of downside risks at home, such as a possible rate increase and the struggling real estate market. "A hike in the policy rate is forecast to bring about the same for local banks' rates, which will increase the debt-servicing burden on the household sector," an FSS official said. "Eventually, it will affect domestic demand and financial soundness." The concern comes amid growing calls for a rate increase to curb inflation. The Bank of Korea (BOK) has kept its key interest rate on hold at an all-time low of 2 percent for a 16th month despite fears of increasing inflationary pressure and asset price bubbles. The construction industry has yet to see signs of a recovery since the property boom in 2005.

Jun 30, 2010By Kang Seung-woo

Companies

FSC head says no change in Woori privatization

By Kang Seung-woo Staff reporter The nation's top financial regulator said Wednesday that there is no change in the government's plan to privatize Woori Financial, the second largest institution by assets, although there has been a delay caused by technicalities. "The government's policy is to return the leadership of Woori Finance to the private sector, even though how it will sell Woori has not been determined," Financial Supervisory Commission Chairman Chin Dong-soo said in a news conference. The government has reportedly been considering options on selling its controlling stake either in its entirety or in parts. KB Financial Group and Hana Financial are likely to be the main suitors, according to market watchers. As a matter of fact, new KB Chairman nominee Euh Yoon-dae is also seriously considering acquiring Woori as his top priority once he takes office after the July 13 shareholders' meeting. "The Korean banking sector lags in competitiveness on the global stage and it is often suggested that the country needs a large bank, which would rank within the

Jun 30, 2010By Kang Seung-woo

Others

KoreaToday Seoul Milk provides freshness with production date

By Kang Seung-woo Staff reporter Seoul Milk has led the industry with a variety of high-quality products for more than 70 years. And the nation's oldest and biggest dairy producer is not content with its title, as it continues its efforts to offer the best and freshest products to customers with the introduction of the production date. Seoul Milk became the first dairy producer last July to voluntarily label the production date on its milk cartons after recognizing that customers consider freshness as their prime concern when purchasing milk. The country's current food safety law requires food makers to reveal either the production or expiration date of products, which often leads consumers to question how long the products have been sitting on store shelves. Disclosing both dates helps consumers to select fresher milk on a relative basis. In order to establish the system of using both dates on the cartons, the producer has gone through innovation and change in the process of circulation, which enables the company to deliver products once manufactured and to prod

Jun 29, 2010By Kang Seung-woo

Others

KoreaToday SK Energy puts customers first

By Kang Seung-woo Staff reporter SK Telecom, the flagship of SK Group and No. 1 wireless mobile carrier, is leading the industry on the strength of its various service offerings. And SK Energy is taking a similar step or maybe even a bigger one for its customers, as it provides a solid marketing strategy nearly equivalent to that of its sister company. SK EnClean means "Engine Clean, Environment Clean. Energy Clean is a gasoline brand of SK Energy. Since its introduction in 1995, EnClean gasoline, with its unique engine-cleaning additive, uses superior-grade products with strict quality controls that surpass legal requirements. It also introduced a cutting-edge purifier in 2006 to meet consumers' demands for high quality. In addition, the brand took a leading role in launching a membership system, introducing the EnClean bonus card in 1996. SK Energy, the nation's No. 1 refiner, upgraded the drivers' desire for premium gasoline, coming up with "Solux," a compound word of solution and luxury. The premium brand, released in 2005, is an environment-friendly a

Jun 29, 2010By Kang Seung-woo

Companies

iPhone included on price watch list

By Kang Seung-woo Staff reporter Since its debut last November, the iPhone has turned out to be a megahit in the competitive cellular phone market despite its high price. Apple's iconic handset has made another "peculiar" debut in Korea, as the government has included the pricey status symbol among 30 items that are under watch for price hikes. The Fair Trade Commission (FTC) announced Tuesday the 30 items that it was closely monitoring to keep consumer prices in check, and the blockbuster gadget became the only cellular phone on the list. "The 30 products can highly affect consumer prices because they have a high concentration ratio (CR), are highly sought after and are the basic material necessities that the government watches," a government official said. As of Tuesday, more than 800,000 of the cutting edge devices have been sold since its introduction to the domestic market. Changed consumption patterns resulted in introducing new items to the list. The government agency added 19 new products, including the iPhone, to 11 that it has monitored since 2008.

Jun 29, 2010By Kang Seung-woo

Companies

Korea’s per capita income to crawl back to $20,000 this year

By Kang Seung-woo Staff reporter Korea's per capita income is projected to climb back to the $20,000 level on the strength of solid economic growth and the won's appreciation. The Ministry of Strategy and Finance said Monday that the nation's per capita gross national income (GNI) is expected to reach about $20,600 this year. The figure is about $3,400 higher than that last year, when it logged $17,175. "As the economic growth forecast has increased by 0.8 percent to 5.8 percent and the Korean won has remained stronger against the U.S. dollar than in 2009, this year's per capita GNI is likely to surpass $20,000," said an official at the finance ministry. This is the first time for the nation's GNI to exceed the level since 2007, when it reached $21,659, meaning that Korea is recovering from the global economic crisis. Korea passed the $10,000 level for the first time in 1994, posting $11,432, continued its rise toward $20,000 until reaching that figure 13 years later. However, it dropped back below the $20,000 mark in the wake of the economic downturn, sparked by

Jun 28, 2010By Kang Seung-woo

Companies

Banks’ loan default rate peaks

By Kang Seung-woo Staff reporter Local banks' loan default rate reached the highest level in nine months in May due mainly to increased delinquencies by small- and medium-sized enterprises (SMEs). The Financial Supervisory Service (FSS) said Monday that the average loan default rate at 18 local lenders stood at 1.2 percent of their total lending in May. The figure was 0.1 percentage points higher than the previous month and the highest since February 2009, when it recorded 1.67 percent. In addition, the rate soared for the second straight month. The delinquency rate covers bank lending whose principal repayment is overdue by one day or longer. According to the financial watchdog, a growing number of loans extended to SMEs are turning sour in the wake of the global financial crisis. The default rate on SMEs saw a sharp increase of 0.2 percentage points from April to 1.88 percent, while that of bigger companies gave up 0.1 percentage point. The arrears from SMEs have grown from 7 trillion won ($5.84 billion) in March to 8.4 trillion won in May. "Bad loans in p

Jun 28, 2010By Kang Seung-woo

Companies

Savings banks hit for using taxpayers’ money

By Kang Seung-woo Staff reporter Local savings banks are emerging as one of the key hurdles to an economic recovery and the financial market rebound, as a growing number of loans extended by them are running high risks of turning sour due to the sluggish real estate market. They have been criticized for using taxpayers' money to make up for losses incurred by their "high-risk, high-return" business strategy, which has resulted in reckless risk management and aggressive credit extension in project financing (PF). Market analysts said that financial regulators should also be accountable for the savings banks' fiasco as their loose monitoring was attributed largely to the massive insolvencies. PF is the financing of a long-term project, usually real estate development such as the building of apartments or shopping centers, in which the debt is paid back from the profit generated by the project. Financial companies approve the loans if they determine that the project will be profitable. But the problem associated with PF is that if a real estate market stays in the doldr

Jun 27, 2010By Kang Seung-woo

Companies

Global firms shunning Korean stock exchanges

By Kang Seung-woo Staff reporter Few big-name foreign players are paying attention to Korea's stock markets, putting it at the fringes of the global economy further than its economic clout warrants. Twelve out of 14 foreign firms listed on the Korea Exchange (KRX) are Chinese. These listed Chinese firms are big multinationals but small in size. "In size, including market value, the Korean stock market still does stand out in terms of internalization," an analyst said. "It appears that those which fail to be listed on the markets of advanced countries come to Korea." Economists say that Korea's faster than expected economic recovery may make its stock markets more attractive. "Since last September, Chinese companies have rushed to the Korean stock market because the Korean economy has gotten back on track," said Seung Yeon-ju, an analyst of Daishin Securities. The Chinese government resumed initial public offerings (IPO) last September after the global crisis that put on hold the Chinese companies' global expansion. "A lot of companies had to delay their IPOs. Some o

Jun 25, 2010By Kang Seung-woo

Companies

Don’t go to banks to escape heat

By Kang Seung-woo Staff reporter In the heat of summer, department stores and banks usually served as a cooling spot for not just customers but also for people who wanted to escape the scorching heat outside and feel some air conditioning at full blast with the thermostat set low in the high teens. Those days are now numbered. Amid high petroleum prices, the government has intervened to tell those outlets to raise the room temperatures and join the energy conservation drive. The Ministry of Knowledge Economy said Wednesday that it will implement the related rules more strictly in order to rein in the surge in electricity use due to an overuse of air conditioning during the summer season. The enforcement of the rules has been lax so far. Retailers such as department stores and neighborhood banks, which are now accused of setting air conditioners too high, have been put under government's surveillance after being criticized for wasting power. The affected businesses are currently required to raise the interior temperatures to 26 degrees centigrade. When crowde

Jun 24, 2010By Kang Seung-woo

Kang Seung-woo

Read more

Property price slump, possible rate hike set to ambush recovery

FSC head says no change in Woori privatization

KoreaToday Seoul Milk provides freshness with production date

KoreaToday SK Energy puts customers first

iPhone included on price watch list

Korea’s per capita income to crawl back to $20,000 this year

Banks’ loan default rate peaks

Savings banks hit for using taxpayers’ money

Global firms shunning Korean stock exchanges

Don’t go to banks to escape heat

Top 5 stories