The Korea Times

Is ETN investment a prevented fiasco?

By Lee Kyung-min Leveraged crude oil exchange-traded notes (ETNs) are emerging as a risky financial investment to be monitored, following a near 14-fold increase in the net purchase of the derivative products in only about two months, Friday.Buyers of the notes, a type of unsecured debt security that tracks an underlying index of securities, are seeking windfall gains from the difference in crude price between the current record low and a level they hope it will recover to.The product is designed to pay buyers twice the price difference between purchase price and sell price. Korea Exchange (KRX) data showed individual investors bought a net 380 billion won ($314 million) in U.S. West Texas Intermediate (WTI) ETNs in March, soaring more than five-fold from 70.2 billion won a month earlier. The March figure is a near 14-fold increase from January when the amount was 27.8 billion won. They were sold by four brokerages ― Shinhan, Samsung, Mirae Asset Daewoo and NongHyup (NH). The oil price tanked in February and continued to fall through March to the record low, falling below 20 dollars

Apr 10, 2020By Lee Kyung-min

Economy

Will corporate bond market heat up?

gettyimagesbankBy Lee Kyung-min The financial authorities and market participants are paying keen attention as to whether the corporate bond market, which has been depressed amid the continued spread of COVID-19, will pick up steam in the coming week, ahead of the planned 740 billion won ($610 million) corporate bond issuance.Of particular interest is how many of the bonds will be bought by the authorities poised to spend up to 20 trillion won to buy the benchmark three-year AA- grade, put in place to limit the virus-triggered liquidity shortage in the financial sector.Data from the Financial Supervisory Service (FSS) showed Friday that four firms are scheduled hold pre-sale biddings next week. Of the three scheduled for April 13, Lotte Chilsung Beverage, a subsidiary of Lotte Group, plans to offer two-year bonds worth 50 billion won and three-year bonds worth 100 billion won.Hanwha Solutions, a chemical and energy arm of Hanwha Group, plans to put up three-year bonds totaling 210 billion won.Hyundai Autron, an electronic control device developer under Hyundai Motor, plans to issue t

Apr 10, 2020By Lee Kyung-min

Economy

Real estate markets losing steam amid COVID-19

Towering apartment buildings dominate this part of the Gangnam area in Southern Seoul / YonhapBy Lee Kyung-min The real estate market is showing clear signs of losing steam, with Seoul apartment prices dropping for the second consecutive week amid the continued COVID-19 pandemic. A growing number of people with multiple homes have put their properties up for sale to avoid heavier capital gains tax which is putting more downward pressure on prices in the capital city.Data from the Korea Appraisal Board showed that as of Monday apartment prices in Seoul had dropped 0.04 percent from the week before. This was a much faster drop than a week earlier, when they saw a decline of 0.02 percent. The four “overheated” districts in southern Seoul ― Songpa, Seocho, Gangnam and Gangdong ― as of Monday saw a drop of 0.18 percent on average, the biggest drop in 13 months.Three districts in northern Seoul also designated as overheated ― Mapo, Yongsan and Seongdong ― saw a drop of between 0.01 percent and 0.04 percent. Seoul Digital University professor of real estate Lee Young-soo said pr

Apr 10, 2020By Lee Kyung-min

Real estate markets losing steam amid COVID-19

Economy

IBK under fire for engaging in 'mis-selling' of funds

By Lee Kyung-min The Industrial Bank of Korea (IBK) is under fire for failing to return 69.5 billion won ($57.1 million) to 200 investors seeking a redemption from funds it sold, in what they say were “mis-selling” or “irresponsible sales practices.”The dispute was brought to the fore after 30 investors staged a rally in front of the bank's headquarters in Seoul, Tuesday, saying the bank sold the financial products without making sure buyers understood the possible risks. The collective action follows a similar fiasco involving high-risk derivative-linked funds (DLFs) sold by two of the country's major commercial banks ― Woori and Hana. Compensation procedures are ongoing for at least 1,000 people with up to 2,000 more expected to be eligible upon the maturity of the products they bought.The state lender sold the funds, designed by Discovery Asset Management whose head is Jang Ha-won, the younger brother of former presidential chief of staff for policy Jang Ha-sung, in 2017. The amount raised was then referred for management to Direct Lending Investments (DLI)

Apr 9, 2020By Lee Kyung-min

IBK under fire for engaging in 'mis-selling' of funds

Economy

INTERVIEW Another market turmoil in the offing, warns JPMorgan Asset Management

JPMorgan Asset Management Asia Chief Market Strategist Tai Hui / Courtesy of JP Morgan Asset ManagementSenior Asia market chief suggests 'defensive approach' until virus containment in US, Europe This is the seventh in a series of interviews with global economic experts analyzing the economic fallout of the COVID-19 pandemic and possible countermeasures against a global recession. ― ED.By Lee Kyung-min Investors should avoid stocks and focus on safer assets in the short term as financial markets here and abroad are highly likely to undergo another round of severe turbulence amid the spread of COVID-19 in the U.S. and Europe, a senior market strategist at a global investment banking powerhouse said Wednesday.His advice comes as markets have shown signs of stabilization over the past week on the back of a global wave of economic rescue packages that are providing unprecedented amount of liquidity.“We are still advocating a more defensive approach in the short term with more emphasis on government bonds and fixed income,” JPMorgan Asset Management Asia Chief Market Strategis

Apr 8, 2020By Lee Kyung-min

[INTERVIEW] Another market turmoil in the offing, warns JPMorgan Asset Management

Economy

Virus to reduce operating profit of listed firms Q1

By Lee Kyung-min The operating profits of 141 listed firms is expected to fall by an aggregate 17 percent in the first quarter of 2020, after the COVID-19 pandemic crushed hopes that corporate performances would recover from the drawn-out U.S.-China feud, data showed Sunday.Seventy-two of the firms have a poorer-than-expected corporate outlook, outnumbering the remainder that viewed otherwise. Firms set to report an operating profit increase in the January to March period include Samsung Electronics (0.08 percent), Hyundai Motor (4.14 percent) and Samsung C&T (67.99 percent), alongside Korea Electric Power Corp. (KEPCO) which is expected to report a snap out of net losses.Those set to report operating profit drops are SK hynix (66.7 percent), LG Electronics (5.35 percent), POSCO (43.77 percent), Hyundai Mobis (2.29 percent) and Kia Motor (30.78 percent), while SK Innovation is also expected to go into the red. According to FN Guide, a financial data service provider, the consolidated operating profit of the 141 firms was estimated at 16.7 trillion won ($9.4 billion) as of April 3

Apr 5, 2020By Lee Kyung-min

Virus to reduce operating profit of listed firms Q1

Economy

Outside directors still a 'rubber stamp' in Korea

gettyimagesbankBy Lee Kyung-min Little opposition was voiced by outside directors at large conglomerates' board meetings in 2019, indicating the failure of a measure that was made to push the supposedly disinterested forces to balance out the emperor-like, centralized power at the top, data showed Sunday.Mostly filling the seats are those with close ties to firm owners, making it hard to outright criticize ― despite sufficient grounds ― what they believe could cross into criminal activity. Critics say that a major overhaul is required to change the makeup of recommendation and nomination committees that are under heavy influence of the owners of the firm or internal directors close to them. Data from the Financial Supervisory Service (FSS) showed only two out of over 2,600 motions deliberated at 971 board meetings failed to pass, one each from Hanwha Group and Hanjin Group.The meetings were held by 102 listed affiliates of the top 10 business groups. Not a single “no vote” was cast by 57 outside directors at 16 listed affiliates of Samsung, 50 of 12 listed affiliates of H

Apr 5, 2020By Lee Kyung-min

Outside directors still a 'rubber stamp' in Korea

Banking & Finance

Young China expert to spearhead Hana's globalization

Lee Eun-hyungBy Lee Kyung-min Lee Eun-hyung, the newly appointed vice chairman of Hana Financial Group, is expected to accelerate the group's global expansion initiative. Group Chairman Kim Jung-tai recently named Lee as one of three vice chairmen alongside former Hana Financial Investment President Lee Jin-kook and former Hana Bank CEO Ham Young-joo. The 46-year-old, among the youngest of the group's management, will bring a fresh perspective to the group's overseas expansion drive in China, following years of experience as an academic and key industry player. The Korea University graduate earned a master's and doctorate at Jilin University, where he later taught Northeast Asian studies before being recommended as a professor at Beijing University. The appointment of Lee, who served as the group's vice president under the helm of Kim Seung-yu, a former group chairman, is largely considered an indication of his capabilities, experience and network management. Lee will return to the group six years after he was recruited by China Minsheng Investment (CMI), a private equity investment

Apr 3, 2020By Lee Kyung-min

Young China expert to spearhead Hana's globalization

Economy

Reporter's notebook 'Having money isn't everything, not having it is'

Deputy Prime Minister and Finance Minister Hong Nam-ki / Korea Times fileHong's approach is more compelling By Lee Kyung-min “Havin' money's not everything, not havin' it is,” go the lyrics of the popular song “Good Life” by American rapper Kanye West.I don't know much of his work other than a couple of catchy songs, but I can't think of any other sentence that better encapsulates the hardship experienced by low-income people whose lives are becoming tougher by the day due to COVID-19. Sales at many small- and medium-sized enterprises (SMEs) have nosedived over the past few months. Minimum wage workers were the first to be pushed out of a job. Those lucky enough to avoid being outright laid off were instead put on forced unpaid leave. Bills are coming in, but those living paycheck to paycheck have no money. Soon, they will be out of water, gas and electricity, which may be of less concern than having no food. When Deputy Prime Minister Hong Nam-ki announced measures for a “disaster income,” March 30, a key part of an economic relief package set up

Apr 3, 2020By Lee Kyung-min

[Reporter's notebook] 'Having money isn't everything, not having it is'

Economy

Wealthy Koreans losing appetite for real estate

By Lee Kyung-min The proportion of real estate in investment portfolios of wealthy Koreans fell in 2019, breaking the uptrend for the first time in six years, a private report showed Thursday. This came as a growing number of people with multiple homes sold what are fast becoming unattractive assets as a result of heavier taxes and regulations amid the economic slowdown. According to a report titled Korean Wealth Report published by Hana Institute of Finance affiliated with Hana Financial Group, real estate accounted for 50.9 percent of the investment portfolio of the rich in 2019, down 2.2 percentage points from the year before. The report was based on a survey of 393 private banking clients with financial assets worth over 1 billion won ($812,000) of the group's flagship Hana Bank between Dec. 1 and 31 in 2019.The figure bottomed out at 44 percent in 2013 and has since been steadily increasing to 53 percent in 2018. It was 47 percent in 2014; 50 percent in 2016; 51 percent in 2017 and 53 percent in 2018. The collective rebalancing move came amid their shared concern on the bleaker

Apr 2, 2020By Lee Kyung-min

Lee Kyung-min

Read more

Is ETN investment a prevented fiasco?

Will corporate bond market heat up?

Real estate markets losing steam amid COVID-19

IBK under fire for engaging in 'mis-selling' of funds

INTERVIEW Another market turmoil in the offing, warns JPMorgan Asset Management

Virus to reduce operating profit of listed firms Q1

Outside directors still a 'rubber stamp' in Korea

Young China expert to spearhead Hana's globalization

Reporter's notebook 'Having money isn't everything, not having it is'

Wealthy Koreans losing appetite for real estate

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