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Economy

Watchdog to intensify oversight of foreign currency liquidity, real estate lending

Apartment buildings in Seoul / Yonhap South Korea's financial watchdog vowed Monday to keep closer tabs on financial institutions' management of foreign currency liquidity and real estate lending this year in a move to better respond to potential risks amid growing market uncertainties.The Financial Supervisory Service (FSS) devised the plan for the New Year amid major countries' monetary tightening to rein in inflationary pressure, the prolonged pandemic and concerns over instability in the Chinese property market.According to the plan, the FSS will enhance the monitoring of the non-banking sector's management of foreign currency liquidity and devise an advanced risk evaluation system.The watchdog also plans to expand its oversight of companies' exposure to real estate financing. Currently, only brokerage firms, asset managers and trust companies are subject to the supervision.In a move to tame growing private loans, the FSS vowed to integrate the management of hou

Feb 14, 2022
Watchdog to intensify oversight of foreign currency liquidity, real estate lending
Economy

Stock markets face tumble as Russian-Ukraine tensions rise

Ukrainians attend a rally in central Kyiv, Ukraine, Saturday, during a protest against the potential escalation of tensions between Russia and Ukraine. AP-YonhapSoaring global oil prices expected to decrease local stocks' valuations By Anna J. Park Local stock markets are forecast to feel a direct impact from global asset market turmoil, triggered by the heightening tension between Russia and Ukraine. Steeply soaring energy prices could also ultimately increase the risks of economic recession and inflation, analysts warned.Global asset markets ― such as for equities, raw materials and cryptocurrencies ― are showing jittery signs ahead of the heightened uncertainties surrounding the two neighboring countries, as the U.S.'s top security official warned Friday that Russia's military could begin an invasion of Ukraine any day now.Reflecting the pressure from these grave geopolitical concerns, U.S. stock markets were under sell-off heat in Friday's session; the Nasdaq Composite dropped by 2.78 percent, the S&P 500 shrank by 1.9 percent and the Dow Jones Industrial Average by 1.43 perc

Feb 13, 2022By Anna J. Park
Stock markets face tumble as Russian-Ukraine tensions rise
Economy

Contribution Central banks moving forward fast, how might this harm the economy?

Feb and BOK showing hawkish stances, but unlikely to overkill the economyBy Stephen LeeStephen Lee is the chief economist at Meritz Securities, Seoul. Courtesy of Mertiz SecuritiesMarket participants are still concerned about stagflation. Economic growth expectations were revised down ― albeit slowly, while the inflation rate (and outlook) continues to trend up. Of course there are some risk factors which can materialize such as: China's Zero-COVID policy possibly adding to further supply disruption, and the ongoing geopolitical tensions surrounding Russia and Ukraine fueling up risks for gas and oil prices. If we'd assume these factors are to be short-lived, it is more likely that U.S. inflation will come down off of its peak (in terms of 12-month change) in the coming months. Here are some key pieces of evidences to consider.First, month-on-month increases in the underlying Consumer Price Index (CPI) or Personal Consumption Expenditures (PCE) inflation have slowed, implying “additional inflation” pressures have likely peaked. Annualized month-on-month changes for trimme

Feb 13, 2022
[Contribution] Central banks moving forward fast, how might this harm the economy?
Economy

Discovery fund fiasco victims continue fight for justice

Members of an association of fund fraud victims protest in front of the Seoul government complex in central Seoul, urging financial authorities to impose sanctions on financial companies responsible for the mis-selling of funds, Feb. 10. Yonhap By Anna J. ParkMost victims of the mis-selling of Discovery Asset Management's fraudulent funds have yet to receive compensation for losses incurred since the funds suspended redemption in 2019. But they are still urging financial authorities to take firm action on the dragged-out matter by imposing sanctions on banks and securities firms that sold the funds to clients.Industrial Bank of Korea (IBK) sold two different types of Discovery funds valued at a total 679 billion won ($566 million) from 2017 to 2019. The amount is the highest among 12 financial companies ― including banks and securities firms ― that sold the funds to their clients. As of April last year, about 256 billion won of the invested money has not been redeem

Feb 13, 2022By Anna J. Park
Discovery fund fiasco victims continue fight for justice
Economy

Finance ministry pledges to tame inflation, financial imbalance

Leaders of Korea's financial authorities pose before holding a macroeconomic meeting at the Korea Federation of Banks' headquarters in Seoul, Friday. From right are Financial Supervisory Service Governor Jeong Eun-bo, Finance Minister Hong Nam-ki, Bank of Korea Governor Lee Ju-yeol and Financial Services Commission Vice Chairman Doh Kyu-sang. Joint Press Corps-Yonhap By Lee Min-hyungKorea's financial authorities will place its policy focus on taming inflation and the financial imbalance amid escalating economic uncertainties here and abroad, Finance Minister Hong Nam-ki said Friday.“Prices here will be on the continuous rise in the first half of 2022, so we will focus on restricting core inflation and stabilizing price levels,” Hong said during a macroeconomic meeting. This meeting was the first time since the end of September that Hong and leaders of financial authorities ― such as Bank of Korea Governor Lee Ju-yeol and Financial Supervisory Service Governor Jeong

Feb 11, 2022By Lee Min-hyung
Finance ministry pledges to tame inflation, financial imbalance
Economy

Reporter's Notebook Why do Korean-style corporate split-offs wreak havoc on minor shareholders?

gettyimagesbankBy Anna J. Park Frequent split-offs of domestic listed companies have become a target of criticisms among the country's retail investors. Minor shareholders have become acutely aware that Korean-style corporate split-offs seem to serve only the interests of major shareholders, to the detriment of all else.The recent IPO of LG Energy Solution (LGES) is one such typical case, in which the split-off of LG Chem's most lucrative battery operation resulted in decreased stock value to minor shareholders, while triggering a massive influx of capital into the new corporate body. Ever since LG Chem announced the split-off plan for its battery business last year, the company's share price has been on a downward trend. The core reason that the LGES IPO harmed the minor shareholders of LG Chem was that the original shareholders of LG Chem did not receive any extra shares or proportionate rights to the newly created affiliate's shares, unlike conventional split-off or spin-off systems in the U.S. stock market. LGES is just one example. The Korean stock markets are full of similar sp

Feb 10, 2022By Anna J. Park
[Reporter's Notebook] Why do Korean-style corporate split-offs wreak havoc on minor shareholders?
Economy

Korea's imports grow at much faster pace than exports amid inflation worries

gettyimagesbank South Korea's current account surplus was halved in December from a year earlier as imports grew at a much faster pace than exports amid higher energy and raw material prices, central bank data showed Thursday. The current account surplus amounted to $6.06 billion for the month, compared with a surplus of $12.06 billion a year earlier, according to the preliminary data from the Bank of Korea (BOK). The current account is the broadest measure of cross-border trade.The December figure was smaller than the previous month's surplus of $6.82 billion though it remained in the black for the 20th straight month. For the whole of 2021, the country's current account surplus reached $88.3 billion, which was higher than the previous year's $75.9 billion. The amount still fell short of the BOK's forecast of $92 billion. The year-on-year decline in December stemmed mostly from imports, which grew much faster than exports.The data showed that imports came to $57.95

Feb 10, 2022
Korea's imports grow at much faster pace than exports amid inflation worries
Economy

Presidential office reviewing candidates for next central bank governor

Bank of Korea Governor Lee Ju-yeol bangs the gavel to open a Monetary Policy Committee meeting at the central bank in Seoul, Jan. 14. YonhapBy Yoon Ja-youngCheong Wa Dae (presidential office) is reviewing possible candidates to replace Bank of Korea (BOK) Governor Lee Ju-yeol, whose term is over at the end of next month.According to sources, the office has started looking into possible candidates, as Lee's term is set to end on March 31. After making a list of potential candidates, a smaller number of the candidates will then be recommended to the President, after undergoing a screening process by Cheong Wa Dae staff. The President then nominates one of them as the final candidate and requests the consent of, as well as a confirmation hearing by, the National Assembly. Financial industry watchers widely expect Cheong Wa Dae to come up with its nomination of the final candidate only after the March 9 presidential election, so as to reflect the decision of the next president who will be working with the new governor.As a result, economic experts who have joined the camps of the preside

Feb 9, 2022By Yoon Ja-young
Presidential office reviewing candidates for next central bank governor
Economy

Finance minister opposes demands to increase supplementary budget

Finance minister Hong Nam-ki speaks during a parliamentary budget committee meeting at the National Assembly in Seoul, Monday. YonhapFast-growing sovereign debt concerns fiscal soundness By Anna J. Park A tug-of-war continues between the National Assembly and Finance Minister Hong Nam-ki over the allocation of the supplementary budget. While ruling and opposition party lawmakers are asking for further increases of the supplementary budget, the finance minister opposes the idea on concerns of a possible downgrading of Korea's sovereign credit rating as well as the stabilization of the government bond market.During the National Assembly's Special Committee on Budget and Account meetings held on Monday and Tuesday, Hong made clear his point that the country's repeated supplementary budget allocations due to the global pandemic situation have been risking Korea's global credit rating. “Global credit rating agencies are concerned over both the speed of the country's debt increase rate as well as a failure to keep fiscal discipline under control at the parliament,” Hong said du

Feb 9, 2022By Anna J. Park
Finance minister opposes demands to increase supplementary budget
Economy

Korea asks OECD chief for more discussions on digital tax deal

Minister of Trade, Industry and Energy Moon Sung-wook speaks during a press conference at the ministry's headquarters in Sejong in this undated photo. Courtesy of Ministry of Trade, Industry and Energy Korea has asked the chief of the Organization for Economic Cooperation and Development (OECD), Wednesday, to have additional discussions on its global tax deal to prevent exporters from shouldering an excessive burden, according to the industry ministry.Industry Minister Moon Sung-wook made the request during a meeting with the organization's Secretary-General Mathias Cormann held in Seoul.In October, the OECD announced that 136 nations had agreed upon a sweeping reform of the international tax system to adopt a 15 percent global minimum corporate tax starting in 2023 to ensure that major multinational companies pay a fair share of taxes wherever they operate and generate profits.During the meeting, Moon stressed the need for the nations involved to have more discussi

Feb 9, 2022
Korea asks OECD chief for more discussions on digital tax deal
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