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Lee Kyung-min

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Economy

Budget surplus to finance 2nd extra budget this year

Democratic Party of Korea Floor Leader Yun Ho-jung, center, speaks at a meeting attended by the party, the government and Cheong Wa Dae officials at the National Assembly on Yeouido, May 28. YonhapBy Lee Kyung-min The government will be able to draw up a second extra budget this year, driven by a projected annual “surplus” of about 17 trillion won ($15.2 billion) in tax revenue.The greater-than-expected income is likely to come mostly from capital gains tax paid by real estate traders, the value of which has nearly doubled over the past few years.This will advance the discussion on how best to allocate state resources amid the COVID-19 pandemic, being narrowed down to whether across-the-board cash payouts would work better over targeted financial assistance to the hardest-hit, low-income earners.According to the Ministry of Economy and Finance, the country's tax revenue will increase by 15 trillion won from 285.5 trillion won in 2020. This will be 17 trillion won greater than this year's budget of 282.7 trillion won, pushing up the total to over 300 trillion won.The tax

May 31, 2021By Lee Kyung-min
Budget surplus to finance 2nd extra budget this year
Economy

Ruling party desperate to play to voter base

Apartment complexes in Seoul. Korea Times file By Lee Kyung-min The ruling party plans to tax only the top 2 percent of owners of one home, in a major change to a previous policy concerning Comprehensive Real Estate Tax, imposed on housing with an officially appraised value of over 900 million won ($816,000).The much-rushed, politically motivated move ahead of the presidential election next year seeks to play to the ruling party's voter base, enraged by the rapidly diminishing prospects of owning a home ― let alone maintaining stable living arrangements as tenants.The tax code governing expensive housing was set in 2009 and has never been revised, but the course correction is inevitable since the number of homes that are over 900 million won in value has increased six-fold in recent years.The spike in Seoul's apartment prices resulted from two dozen botched real estate policies defined by heavier tax and tightened lending rules, the combination of which led to a growing number of landlords raising rent on their tenants or evicting them.Data from the People's Solidarity for Participat

May 31, 2021By Lee Kyung-min
Ruling party desperate to play to voter base
Economy

ANALYSIS Will cryptocurrency market undergo major shakeup?

Bitcoin, Ethereum expected to define landscape for virtual asset marketBy Lee Kyung-min Participants of the cryptocurrency market are expected to realign investment interests around two top-traded digital assets, bitcoin and Ethereum, as illustrated by a growing number of global traditional financial service providers seeking to roll out virtual asset-related products. Bitcoin, the most popular and widely traded digital coin, however, consumes an enormous amount of electricity, a reason why the second-in-class Ethereum is emerging rapidly as an alternative mostly for its low energy consumption and greater scalability. Global investment bank JP Morgan is expected to release bitcoin fund products as early as this summer, the latest to join two other key industry players ― Morgan Stanley and Goldman Sachs, both of which launched bitcoin funds for high-net-worth customers. Altcoins, an umbrella term encompassing almost all cryptocurrencies except for a few top-traded ones, will not be able to establish itself as a mainstream means of investment due to its sketchy manufacturing process an

May 30, 2021By Lee Kyung-min
[ANALYSIS] Will cryptocurrency market undergo major shakeup?
Economy

Virus hits manufacturing, service industries

A Statistics Korea senior official gives a press briefing at the Sejong Government Complex, Thursday. YonhapBy Lee Kyung-min More than 91,000 people under 40 lost jobs in the October-December period last year, whereas people in their 50s and older added nearly 550,000 jobs, mostly through the government's job creation initiative put in place to weather the COVID-19 pandemic, data showed Thursday. But the added jobs are short-term and low-quality, not too different from ones created long before the pandemic. People in their 30s lost jobs over the last five quarters, and those in their 20s for the last four quarters. Manufacturing continued to shed jobs for five consecutive quarters, indicative of the industry-wide slowdown compounded further by the pandemic. Statistics Korea data released Thursday also showed the number of salaried workers stood at 19.58 million, up 503,000, or 2.6 percent, from a year earlier. People in their 60s and older added 392,000 jobs, up 15.7 percent from the year before. This is the biggest increase since 2018 when the government began compiling related data

May 27, 2021By Lee Kyung-min
Virus hits manufacturing, service industries
Companies

Emart forgoes full control of Starbucks Korea

An employee of Starbucks Korea shows off popular Starbucks goods. Korea Times fileRetail chain's cash reserved for eBay acquisition bid against Lotte Shopping By Lee Kyung-minEmart has decided to increase its 50 percent stake in Starbucks Korea to 70 percent, buying only a 20 percent stake from Starbucks International, which is selling off its full 50 percent stake.This indicates Emart's parent company Shinsegae Group is holding onto the funds that would have paid for the remaining 30 percent stake, which likely will be reserved to beat Lotte Shopping in an ongoing bid to acquire eBay Korea valued at up to 5 trillion won ($4.4 billion).The Government of Singapore Investment Corp. (GIC), a sovereign wealth fund of Singapore, will instead invest 800 billion won in Starbucks Korea to gain the 30 percent stake in the Korean unit of the global coffeehouse chain.The decision to forgo full control of the fast-growing coffee chain, which has seen 20 percent year-on-year growth since 2016 continue despite the COVID-19 pandemic, came as competition for eBay heats up, with two of the four previ

May 25, 2021By Lee Kyung-min
Emart forgoes full control of Starbucks Korea
Economy

Gov't to curb spending for fiscal soundness

gettyimagesbankBy Lee Kyung-min The government said Monday that it has begun discussing ways to manage fast-growing debt on a steep rise, due to a spike in mandatory and fiscal spending brought on by the COVID-19 pandemic.The announcement signals that the record-high growth of debt due to a year of expansionary policies needs to slow down, an objective the government says will be achieved by the implementation of a newly outlined fiscal discipline by 2025.An effort will follow to reduce the one-off increase in expenditures granted to state-run projects. Government spending will prioritize ways to bolster exports and corporate investments, two growth drivers underpinning the country's economy. A balanced recovery is needed that includes low-income earners who lost jobs during the past year.The Ministry of Economy and Finance plans to keep the government debt-to-GDP ratio under 60 percent, while limiting the consolidated fiscal deficit to less than 3 percent of the country's GDP.A deficit of up to 4 percent of the GDP is allowed in limited situations following an economic crisis. An ec

May 24, 2021By Lee Kyung-min
Gov't to curb spending for fiscal soundness
Economy

K bank on track to brisk success

By Lee Kyung-min K bank has drawn 1.2 trillion won ($1 billion) in equity financing, increasing its total capital to over 2.1 trillion won, comparable to rival Kakao Bank which has drawn a total capital of 2.3 trillion won.The 1.2 trillion won is about double the initial estimate of 600 billion won, an indication that many investors have joined what they consider a major opportunity to ride on the rapid growth of the country's No. 2 internet-only bank.New investors include U.S.-based private equity fund Bain Capital, a local player MBK Partners and an alternative investment management subsidiary of Shinhan Financial Group.The growth of K bank has led to a balance exceeding 12 trillion won, up from 8.72 trillion won in March, driven by an increase in loans to mortgage seekers.Also bolstering the internet-only lender's success is a partnership with Upbit, a cryptocurrency exchange, amid a rapid spike in demand for digital coin transactions over the past year.The lender's initial public offering (IPO) is expect

May 21, 2021By Lee Kyung-min
K bank on track to brisk success
Economy

Bank of Korea under pressure to hike key rate

Bank of Korea Governor Lee Ju-yeol. Korea Times fileBy Lee Kyung-min The Bank of Korea (BOK) is coming under growing pressure to raise its key interest rate after the U.S Federal Reserve repeatedly hinted that it would withdraw from its ultra-accommodative monetary policy.An immediate rate hike is unlikely at the upcoming rate-setting meeting scheduled for May 27, since uncertainties remain over the slower-than-expected COVID-19 vaccination rate in Korea and private consumption falling behind a rapid rebound in exports and investments. The key rate has remained at a record low of 0.5 percent.Yet the record-low borrowing cost will be raised primarily due to calls to curb snowballing debt and alleviate inflation fears, which is why discussions on a rate hike are expected to materialize in the latter half of this year. Also playing a role will be a politically-driven increase in fiscal spending ahead of the presidential election next year.Minutes of the U.S. Federal Open Market Committee meeting published Wednesday (local time) showed a number of participants suggesting that “it m

May 21, 2021By Lee Kyung-min
Bank of Korea under pressure to hike key rate
Economy

Brokerages, banks poles apart in post-virus hiring

gettyimagesbankBy Lee Kyung-min Brokerages are rushing to hire new employees to better prepare for a series of upcoming initial public offerings (IPOs) and soaring demand in stock trading, a move to strengthen corporate manpower sharply contrasted by commercial banks seeking only IT specialties.Large brokerages are expected to meet demands for expanded, in-depth coverage of environmental, social and corporate governance (ESG) drives, and consumer protection, a step crucial to continue the record-high profits of the past year.But the need to enhance consumer services is not an immediate priority for commercial lenders, most of which have seen deteriorated business conditions due to reduced interest margins amid record-low borrowing rates.Also pressuring the banks is digitization, an industry-wide trend defined by a drastic reduction in the number of bank branches and subsequent reduction in the number of employees. Not many people with IT expertise are willing to work for commercial lenders that are seen as slow to embrace new technologies and consumer demand for fast, more convenient

May 19, 2021By Lee Kyung-min
Brokerages, banks poles apart in post-virus hiring
Economy

Gold prices rising amid inflation concerns

gettyimagesbankBy Lee Kyung-min Gold prices are rebounding on the back of a combined decline in treasury yields and the value of the U.S. dollar, coupled with investment sentiment seeking to hedge against inflation, a growing concern amid the global economy showing signs of recovery from the COVID-19 pandemic.The case for inflation has strengthened as ample liquidity in the market pumped in by governments around the world to cope with the health crisis led to a fall in the dollar's value, with pent-up demand for consumption highly likely to recover.Gold bears no yield, a reason why its price sinks if interest rates rise. The price of the yellow metal, a safe-haven asset alongside the dollar, also falls when the global reserve currency appreciates.Data from the Korea Exchange (KRX) showed the price of 1 gram of gold rose to 68,200 won ($60), Wednesday, up 0.56 percent from the previous day.This is nearly a 10 percent increase from an annual low of 62,300 won March 5, and is inching upwards to the 2021 peak of 69,230 won seen Jan.8.The price of gold continued to drop from the end of l

May 19, 2021By Lee Kyung-min
Gold prices rising amid inflation concerns
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