The Korea Times

Why are foreigners attracted to Korean bonds?

By Kang Seung-woo Staff reporter Despite increasing tensions on the Korean Peninsula and lingering euro zone fiscal problems, South Korea's bond market has experienced no difficulty in attracting foreign investors. The Korea Financial Investment Association (KFIA) said Sunday that this month's net buying of local bonds by foreign investors totaled 7.45 trillion won ($6.26 billion) on Friday. It is in stark contrast to the local stock market, which has suffered a net selling of 6.44 trillion won during the same period. Analysts say that South Korean bonds are seen as safe assets thanks to the nation's sounder financial and economic status than the struggling euro zone countries. "Instead of government bonds from industrialized nations, Korean bonds, which have high growth rates and sound financial conditions, have been emerging as new safe assets," said Woori Investment and Securities analyst Park Jong-yeon. He is also said that the current problems in Korea and Europe are not at such a high level. "To find how serious the current crises are, we are monitoring cl

May 30, 2010By Kang Seung-woo

Companies

Economy faces growing downside risks

By Kang Seung-woo Staff reporter Policymakers and regulators should not lower their guards in the second half of this year as the economy is likely to experience unexpected hiccups on its path to full recovery, according to analysts. In its economic outlook report Sunday, the Hyundai Research Institute (HRI) said that despite strong signs of an economic rebound, Asia's fourth-largest economy is facing a myriad of downside risks in and out of Korea in the coming months. It cited the stalled recovery of the global economy, market volatility caused by the European debt crisis and escalating geopolitical risks as the main threats to Korea's fiscal health. The South Korean economy is on the rebound thanks to robust exports and improving domestic demand. It grew 1.8 percent in the first quarter, up from a 0.2 percent expansion in the fourth quarter of 2009. The institute said that the on-going southern European sovereign debt crisis has shaken the rebounding global economy, going beyond the continent. Despite the rescue package of 110 billion euros ($136 billion) from th

May 30, 2010By Kang Seung-woo

Companies

Top officials allaying investors concern

FSS chief Kim Jong-chang stresses fundamental strengths By Kang Seung-woo Staff reporter Top economic officials are taking turns talking to domestic and foreign press on a mission to allay rising concerns about the Korean economy at a time when inter-Korean tensions are rising to a level rarely seen before due to Seoul's allegations that North Korea torpedoed its warship and the debt crises hitting Europe. Korean stock markets have lost their momentum as a result despite a rally Thursday, while the won-dollar exchange rate has been moving in a direction that shows investors are running for the safety of the greenback. On Wednesday, the Financial Supervisory Service (FSS) Governor Kim Jong-Chang took advantage of his scheduled luncheon with foreign news media to stress the fundamental strength of the Korean economy and its ability to withstand the impact of the double whammy. Kim followed Strategy and Finance Minister Yoon Jeung-hyun, who used his strong pulpit to bring home the same message. Also Deputy Finance Minister Shin Je-yoon was dispatched to the United S

May 27, 2010By Kang Seung-woo

South Korea

Will Seoul seek support for sanctions on North Korea at G-20 meeting?

By Kang Seung-woo Staff reporter Amid escalating tension between South and North Korea, the Seoul government is likely to seek support for its measures to cut funds to North Korea at the upcoming G-20 meeting of finance ministers. According to the Ministry of Strategy and Finance Thursday, the government is considering raising the sinking of the naval warship Cheonan at the G-20 Finance Ministers' and Central Bank Governors' Meeting slated for June 4 to 5 in Busan. The star-studded roster for the meeting includes U.S. Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, Japanese Finance Minister Naoto Kan, Bank of England Governor Mervyn King, IMF chief Dominique Strauss-Kahn, European Central Bank Governor Jean-Claude Trichet and World Bank President Robert Zoellick. The Cheonan sank in the West Sea after an explosion of a torpedo fired from a North Korean submarine on March 26, killing 46 sailors. However, as the incident is not really related to the main issue of the meeting, which is expected to concentrate on the ongoing southern European

May 27, 2010By Kang Seung-woo

Companies

Foreign investments return

By Kang Seung-woo Staff reporter High expectation for South Korea's economic rebound lured foreign investments in its stock and bond markets last year. The Financial Supervisory Service (FSS) announced Monday that the amount of listed stocks owned by non-Korean investors increased by 125.3 trillion won ($103.73 billion), or 73.4 percent, to 296 trillion won, compared with a year earlier, and their bond volume totaled 56.49 trillion won, up 19.29 trillion won from the previous year. "Thanks to rising hopes for an economic recovery, influx of money to the emerging markets, including Korea has been advancing since March 2009," said Choi Hyun-phil, a senior manager of Financial Investment Department at the FSS. An economist also attributed the bright outlook to an economic bounce to the surge of investment. "The bankruptcy of Lehman Brothers in September 2008 added to the selling pressure in South Korea and the local financial markets suffered a major exodus by foreign investors," said Lee Chang-seon, managing director of the financial research department at LG Economic

May 25, 2010By Kang Seung-woo

Companies

FSS to tighten grip on holding firms

By Kang Seung-woo Staff reporter The nation's financial watchdog is moving to tighten its grip on local financial holding companies in a bid to ensure that the groups will manage their subsidiaries in a more transparent and effective manner. The Financial Supervisory Service (FSS) said Tuesday that it will overhaul rules regarding the operation of financial holding companies next month in order to impose penalties on those poorly managed subsidiaries from its RFI (risk management, financial condition and impact) inspection. RFI is an evaluation system designed to establish a responsible management by assessing a financial holding firm based on three key categories ― risk management, financial conditions and potential impact. Under the revision, the FSS will increase the weighting of "potential impact" to 30 percent from the current 20 percent, while lowering that of the other two sectors by 5 percentage points to 35 percent apiece. It said that the change is aimed at strengthening the appraisal of the financial groups' supervisory role on their subsidiaries. "It is

May 25, 2010By Kang Seung-woo

Companies

Won falls to 8-month low

By Kang Seung-woo Staff reporter The local currency lost ground sharply against the U.S. dollar on escalating geopolitical risks, with the exchange rate rising above the 1,200 won level. The Korean won closed at 1,214.5 won per dollar, down 20.4 won from its previous close, and the lowest in eight months since Oct. 29 last year. This is the first time the exchange rate has finished above the 1,200 won level since Sept. 16 last year, when it reached 1,211.30 won against $1. "Foreign investors have raked in dollars amid rising geopolitical risks, which have sent the local won into a tailspin," a local currency analyst said. "Geopolitical risks related to North Korea led market players to shun risky assets although the Korean currency cut earlier losses on stock gains and offshore investors' dollar sales," he added. The weakening of the won has been steady since Wednesday, when the government reached the conclusion that a North Korean torpedo sank the naval warship Cheonan on March 26, costing 46 sailors their lives. The won-dollar rate opened at 1,212.90, up 18.80 wo

May 24, 2010By Kang Seung-woo

Companies

Korean banks going to India

By Kang Seung-woo Staff reporter With domestic financial markets overloaded, local lenders have turned their gaze outside of Korea, as the Asian market is beckoning as a new revenue source. Domestic banks, including Shinhan, Hana, Industrial Bank of Korea (IBK) and Korea Development Bank (KDB) have sweated in expanding to Asian countries, such as India, Indonesia, China, Vietnam and further Central Asian countries, via mergers and acquisitions (M&A) and localization. Among those destinations, India is emerging as the hottest place as the two countries agreed last August on the Comprehensive Economic Partnership Agreement (CEPA). Under the accord, Korean banks can open up to 10 branches until 2013 after getting approval from Indian regulators. CEPA is a free trade agreement between South Korea and Asia's third-largest economy, India. Shinhan, the only local player to operate branches in India so far, earned a final nod from the country to open its third arm in Vellore, which houses approximately 150 subcontractors of Hyundai Motors. Its two other branches are located

May 23, 2010By Kang Seung-woo

Companies

Prudential Life Insurance leads CSR activities

By Kang Seung-woo Staff reporter John Dryden's establishment of the Prudential Insurance Company in 1875 was seen as the root of insurers' corporate social responsibility (CSR) activities as the firm then played an important role in protecting those out of social safety net with a philosophy of love. With the founder's philosophy in mind, all executives and employees of Prudential Life Insurance Company of Korea have built up its corporate culture aiming at social contribution. The life insurer, along with Prudential Investment and Securities and Prudential Investment Management, set up the Prudential Foundation of Korea in December 2006 to contribute to society. It was the first time in the nation for subsidiaries of a financial group to jointly form an organization. Under the motto ``One Prudential,'' the foundation has worked on a variety of programs, including nurturing a young role model, creating a scholarship and supporting patients with incurable diseases. Community services The Prudential Spirit of Community Awards is the most-emphasized program by the

May 23, 2010By Kang Seung-woo

Companies

Gold account in surplus for 18 months

By Kang Seung-woo Staff reporter The nation's gold account posted a surplus for the 18th straight month in March as global demand for the precious metal has been on the rise with investors flocking to safe assets in the wake of the global financial crisis. The Bank of Korea (BOK) said Friday that the gold account, which excludes gold holdings by the central bank for foreign reserves, has been in positive territory from October 2008 until March this year. The accumulated surplus during the period reached $2.19 billion (2.60 trillion won). This is a very rare phenomenon as the gold account used to be in negative territory, meaning that the county sees more gold flowing in rather than out. Analysts attribute the current phenomenon to rising demand for gold as a safe haven. According to them, gold prices have been soaring due to growing uncertainties over the financial markets triggered by Southern Europe's debt crisis. "Recently, investment-related gold demand has been growing faster than that for jewelry or industry," an economist said. Before the on-going surplus

May 21, 2010By Kang Seung-woo

Kang Seung-woo

Read more

Why are foreigners attracted to Korean bonds?

Economy faces growing downside risks

Top officials allaying investors concern

Will Seoul seek support for sanctions on North Korea at G-20 meeting?

Foreign investments return

FSS to tighten grip on holding firms

Won falls to 8-month low

Korean banks going to India

Prudential Life Insurance leads CSR activities

Gold account in surplus for 18 months

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