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Lee Kyung-min

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Economy

KB secures highest rating from Moody's

The headquarters of Prudential Life Insurance Company of Korea in Seoul / Korea Times fileBy Lee Kyung-min Moody's Investors Service has affirmed the A1 long-term foreign currency issuer rating with a stable outlook and Prime-1 short-term foreign currency issuer rating for KB Financial Group.KB Financial entered into a purchase and sale agreement April 10 to wholly acquire Prudential Life Insurance Company of Korea from Prudential Financial for 2.3 trillion ($1.9 billion).Prudential Life Korea, established in 1989, was the 11th-largest life insurer in Korea by asset size as of December 2019.The affirmation of KB Financial's A1 issuer rating incorporates the acquisition's impact on the group's leverage and on Prudential Life's credit metrics, as well as the diversification benefit the acquisition brings to the group.Specifically, Moody's expects KB Financial's double leverage ratio ― investments in subsidiaries divided by shareholder's equity ― will rise to about 129 percent after the acquisition.While this ratio is high, Moody's capital and dividend flow analysis suggests KB will mai

May 11, 2020By Lee Kyung-min
KB secures highest rating from Moody's
Economy

INTERVIEW Korea needs to change its paradigm, says US professor

James Dator, a professor and director of the Hawaii Research Center for Futures Studies / Courtesy of James DatorHawaii-based futurist lauds Korea's exceptional handling of COVID-19The unprecedented coronavirus pandemic, which broke out in late December 2019 and has now engulfed the world, portends to reshape our lives, and the world order as we know it. This is the ninth of a series to cast light on the changes that might lie ahead. ― ED.By Lee Kyung-min Korea's successful rise from a war-ravaged country to an economic powerhouse in a few decades has been called “the Miracle on the Han River.” Its economic strategy rested on being a “fast follower,” where a small country with limited resources quickly copies industrial developments in bigger nations.Local information technology (IT) companies, for example, adopted a future-oriented, sustainable strategy where they were on constant alert anticipating what top global competitors would do and then follow them to catch up. But Korea should no longer pursue this strategy and instead adopt a new set of fundamental

May 10, 2020By Lee Kyung-min
[INTERVIEW] Korea needs to change its paradigm, says US professor
Economy

SMEs borrowing soars in April due to virus

People fill out application forms needed to seek loans at a branch of Small Enterprise and Market Service in Jongno-gu, central Seoul, April 9. / Korea Times fileBy Lee Kyung-min The amount of loans taken out by small- medium-sized enterprises (SMEs) reported the steepest increase in five years in April, following a government-backed, low-interest borrowing offered as part of an economic relief package set up to limit fallout of the COVID-19 pandemic, data showed Friday.The program offers loans up to 30 million won ($24,500) per person with an annual interest rate of 1.5 percent, mostly to small merchants. Eighty percent of the difference between the market rate and the offered rate will be shouldered by the government. According to Korea's top five commercial banks ― Shinhan, KB Kookmin, Woori, Hana and NongHyup ― loans made out to SMEs stood at 463.9 trillion won in April, up 8.4 trillion won from a month earlier. This is the highest jump since September 2015. Of the 8.4 trillion won increase, over 5.1 trillion won was in loans to small merchants. Loans made out by the five banks

May 8, 2020By Lee Kyung-min
SMEs borrowing soars in April due to virus
Economy

Major hurdles expected before expanding employment insurance

Members of the Korean Confederation of Trade Unions hold a rally in front of the National Assembly, April 13, demanding the government relief measure include workers not subscribed to the state-run Employment Insurance. Korea Times fileBy Lee Kyung-min Debate is heating up over whether to expand the state-run employment insurance, an issue brought to the fore after the economic fallout of the COVID-19 pandemic laid bare the vulnerability of low-income earners who are ineligible for unemployment benefits.Being discussed is whether self-employed people should be included in the system, how many workers should be brought in and who should shoulder the insurance premium.According to data from the Ministry of Employment and Labor, 13.75 million people are subscribed to the insurance as of March, less than half of the over 27.78 million who make up the working population.It is mandatory for salaried workers to subscribe to the insurance with a monthly premium ― 1.6 percent of the worker's salary ― shouldered equally by the employer who pays 0.8 percent and the other half paid by the worker

May 8, 2020By Lee Kyung-min
Major hurdles expected before expanding employment insurance
Economy

'Debt concern in the face of crisis meaningless'

Jang Jei-wooBy Lee Kyung-min Independent statistical analyst and author Jang Jei-woo said the economic relief package to help those hit by the COVID-19 pandemic should prioritize the urgent needs of the people over concerns about government debt, Thursday. The debt incurred by the government is a major concern in the long term, but not as imminent a problem as the severe financial difficulties that many citizens are facing following layoffs or forced unpaid leave, especially in a country where a weak social safety net has pushed up the number of suicides. Details are more clearly outlined in his new book titled “Tax Education.” “Korea is known for having one of the world's highest suicide rates and it has been closely related to financial difficulties in times of crisis,” said Jang.Following the Asian financial crisis in 1997, Korea's suicide rate was the second highest among the Organization for Economic Cooperation and Development (OECD), with the rate increasing by 5.3 for every 100,000 from 13.1 in 1997 and 18.4 in 1998.Of OECD countries, Korea saw the fo

May 7, 2020By Lee Kyung-min
'Debt concern in the face of crisis meaningless'
Economy

Top-band earners spend four times more than bottom-band

By Lee Kyung-min Where spending is spread across 5 tiers, the monthly household spending of the top-band of earners was four times greater than that of the bottom band in 2019, government data showed Thursday. The figures exclude spending on taxes, interest payments and monthly premiums for state-run healthcare and national pension services.According to Statistics Korea, those in the top band spent 4.22 million won ($3,400) a month, whereas those whose earnings are in the bottom band spent 1.02 million won. Those in the second-highest income brand spent 3 million won, followed by 2.35 million won spent by those in the middle band and 1.69 million won by those in the second-lowest band.For the bottom band, nearly a fifth, or 19.9 percent of spending was on food and non-alcoholic beverages followed by housing and utilities (19.5 percent), healthcare (12.9 percent) transport (7.3 percent) entertainment and cultural activities (5.3 percent) and education (2.1 percent).The top band spent 12.8 percent on transport (12.8 percent), followed by education (11.9), food and non-alcoholic bevera

May 7, 2020By Lee Kyung-min
Top-band earners spend four times more than bottom-band
Economy

Virus-hit low-income earners to receive W1.5 mil. in relief

Deputy Prime Minister and Finance Minister Hong Nam-ki, second from right, speaks at a meeting at the Seoul Government Complex in Gwanghwamun, Seoul, Thursday. / YonhapBy Lee Kyung-min Some 930,000 people including those whose income dropped at least 25 percent compared to before the COVID-19 pandemic will be able to receive up to 1.5 million won ($1,220) in emergency relief in June, the government said Thursday. The latest relief measure seeks to address concerns that low-income earners who are not subscribed to the state-run Employment Insurance system and therefore left out of jobless claim benefits remain particularly vulnerable amid rising layoffs. Also factored in was a rapid loss of income following unpaid leave experienced by many salaried workers, to whom subscribing to the state-run insurance system has become meaningless.“The government has decided to strengthen social safety net to minimize the hardship experienced by the vulnerable group of people whose loss of job and reduced income can be felt more painfully,” Deputy Prime Minister and Finance Minister Hon

May 7, 2020By Lee Kyung-min
Virus-hit low-income earners to receive W1.5 mil. in relief
Economy

'Jeonse ratio' hits 6-year low on rapid apartment price hike

A man looks at apartment rent and sales offers put up in the front window of a realtors office in Seoul, April 21. Korea Times fileBy Lee Kyung-min The “jeonse ratio,” the ratio of housing deposit compared to the market value of apartments, dropped to the lowest in six years in Seoul and the surrounding Gyeonggi Province region, continuing the downtrend of the past 16 months on the back of a rapid increase in apartment prices over the past few years, data showed Tuesday. The ratio is considered a bellwether index for forecasting the property market outlook. Unique to Korea, jeonse is a way of renting a home whereby tenants pay a massive lump sum as a deposit instead of monthly rent. Despite the months-long downtrend, however, expectations are growing that jeonse prices will bounce back in the coming months as many landlords are likely to ask for larger deposits amid the low interest rates, compounded further by the fast-tightening property market amid the COVID-19 pandemic. Data from KB Kookmin Bank showed the jeonse ratio in Seoul and Gyeonggi Province stood a

May 5, 2020By Lee Kyung-min
'Jeonse ratio' hits 6-year low on rapid apartment price hike
Economy

Heavier tax on expensive home owners unlikely in 2020

Apartment complexes in Seoul / Korea Times fileBy Lee Kyung-min Owners of expensive homes worth over 900 million won ($734,000) are unlikely to see their property taxes rise this year as the rival parties remained deadlocked Tuesday over a bill introduced to impose a heavier tax to curb the overheating housing market.For the government to enforce the strengthened measure proposed last December, the National Assembly must pass it by the end of May as the bill stipulates June 1 as the date the new tax code should be applied.But the prospect of passage has become dimmer after the ruling Democratic Party of Korea (DPK) and the main opposition United Future Party (UFP) refused to budge from their respective stances, with the last related parliamentary committee meeting ending with no tangible results, April 29. The bill will be discarded once the current Assembly session expires. Even if a similarly drafted bill passes in the latter half, imposing a raised tax retroactively is nearly impossible, meaning the tax burden will stay the same as in 2020.Further kicking the bill down the road a

May 5, 2020By Lee Kyung-min
Heavier tax on expensive home owners unlikely in 2020
Economy

'Haywire' ETN investment hits record in April

A worker passes a screen in Seoul displaying the crude oil price, April 20. Korea Times fileBy Lee Kyung-minThe monthly trading volume of leveraged crude oil exchange-traded notes (ETNs) skyrocketed 20-fold over the past four months, in what appears to be a market gone haywire driven by many investors seeking short-term, windfall gains following the steep oil price drop, data showed Sunday.The data from the Korea Exchange (KRX) showed the market daily trading volume averaged 412.3 billion won ($336 million) in April, more than 20 times the 20.7 billion won in December. The April figure is the highest since November 2014, when the market opened.The explosive demand in the derivative market was driven largely by ETNs tied to U.S. West Texas Intermediate (WTI), which reported a negative price for the first time, closing at minus $37.63 in New York, April 20 (local time), following sharp drops over the previous few months.Buyers of the notes, a type of unsecured debt security that tracks an underlying index of securities, are seeking gains from the difference in the crude price between t

May 3, 2020By Lee Kyung-min
'Haywire' ETN investment hits record in April
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