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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
Economy

Korean economy faces heightened external economic risks: KDI

gettyimagesbank The Korean economy is on a recovery track, but external economic uncertainty remains high amid soaring energy costs and monetary policy shifts by the U.S. Federal Reserve, a state-run think tank said Wednesday.The manufacturing industry has extended solid growth and the latest spike in COVID-19 cases appears to have had limited impacts on the services sector, compared to previous waves of the pandemic, the Korea Development Institute (KDI) said in a monthly economic assessment report."However, a continued rise in raw material prices and unstable financial markets indicate economic uncertainty remains high," the report said.The Korean economy is on a recovery path on the back of robust exports of semiconductors and autos. Asia's fourth-largest economy expanded 4 percent last year, its fastest growth in 11 years.Private spending gained ground in the fourth quarter despite the upsurge in COVID-19 cases in the latest sign that the negative impact of the

Feb 9, 2022
Korean economy faces heightened external economic risks: KDI
Economy

Soaring oil prices, weakening won weigh on Korea's economy

International oil prices feared to hit $100 a barrelBy Yi Whan-wooA toxic mixture of soaring oil prices and a weakening Korean won are expected to put a further drag on the Korean economy, with international oil prices forecast to surpass $100 per barrel soon and the local currency hovering around the worrying threshold of 1,200 won per dollar.Benchmark crude oil prices have surged to the highest levels in seven years, with Dubai, Brent and West Texas Intermediate (WTI) all rising above $90 per barrel, Feb. 4.Analysts said Monday the upward trajectory will continue at least through the second quarter of this year, fueled by optimism over a decline in Omicron coronavirus variant infections and a recovery of international travel. Escalating Ukraine-Russia tensions also remain as a critical variable as supplies of Russian natural gas can be jeopardized.A bigger cause of jitters, according to experts, is that the won will continue to weaken unless uncertainties over U.S. tapering are resolved.A simultaneous rise in oil prices and the won-dollar exchange rate is particularly worrisome bec

Feb 7, 2022By Yi Whan-woo
Soaring oil prices, weakening won weigh on Korea's economy
Economy

SillaJen fiasco raises bar for bio firms' IPOs

SillaJen shareholders protest in front of the Korea Exchange (KRX) on Yeouido, Seoul, Jan. 18. NewsisBy Anna J. ParkThe country's bourse operator Korea Exchange (KRX) is set to raise the bar for tech-heavy startups aiming to go public through the KRX's special listing track for the Kosdaq market. According to the KRX, the bourse operator already started the process early this year, in the face of a series of fiascos of its Kosdaq-listed bio firms, including the sudden trading suspension of Osstem Implant due to the embezzlement of some 188 billion won ($157 million), as well as a heightened chance of SillaJen being delisted from the Kosdaq market. The KRX's corporate review committee decided to delist SillaJen in mid-January. Yet the decision could still be overturned at the bourse operator's Kosdaq market committee, which will release its review results by the end of next week. In the best-case scenario, the committee could give SillaJen another chance to improve its financial condition to avoid delisting for another year, although the bio firm is certainly one step closer to its po

Feb 7, 2022By Anna J. Park
SillaJen fiasco raises bar for bio firms' IPOs
Economy

Money raised through IPOs hits record high in 2021 amid ample liquidity, bullish sentiment

gettyimagesbank The amount of money Korean firms raised through initial public offerings (IPOs) more than quadrupled last year to hit a record high thanks to ample liquidity and the overall bullish stock market sentiment, data showed Monday.Eighty-nine companies went public in 2021, listing shares on the benchmark KOSPI and secondary tech-heavy Kosdaq markets and raising a combined 19.7 trillion won ($16.4 billion), according to the data from the Financial Supervisory Service.The money raised from IPOs represented a 333.9 percent surge from 4.5 trillion won a year earlier, the data showed. The number of companies whose shares listed on the stock markets for the first time also jumped from the previous year's 70. The IPO market was driven by the overall rise in local stock markets and ample liquidity injected into the economy bolstered by low borrowing costs in line with record low policy rates intended to boost the COVID-19 pandemic-hit economy.Investors became more

Feb 7, 2022
Money raised through IPOs hits record high in 2021 amid ample liquidity, bullish sentiment
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