Deputy Bureau Chief for Korea, Seoul, South Korea
Choonsik's Feed
May 28, 2015

South Korea’s problem: hard on the outside but soft on the inside

SEOUL, May 29 (Reuters) – Even as higher U.S. interest rates
pull funds out of emerging markets, South Korea will probably be
spared from the upheavals caused by a massive capital flight in
2008, because it now has a smaller dependence on overseas funds.
The worry for the economy is more domestic – the country’s
mounting household debt.

Capital inflows – or net foreign investment in local stock
and bond markets plus mostly short-term overseas loans -
totalled $15.5 billion in the year ended March. That’s just
one-third of the $46.2 billion seen a year before the Lehman
Brothers collapse in September 2008 sparked the global financial
crisis. The reduced capital flows into South Korea since then
were due to a sharp drop in short-term overseas borrowings -
classified as “other investment” in the international financial
account – to $400 million from a whopping $31 billion.

May 28, 2015

Industrial hub Ulsan a warning for cooling South Korea

ULSAN, South Korea, May 29 (Reuters) – The port of Ulsan was
the cradle of South Korea’s breakneck industrialisation. Now,
the main production site for big manufacturers such as Hyundai
Motor and oil refiner SK Innovation
risks becoming the country’s rust belt.

In effect, Ulsan is a real-time warning signal for South
Korea, a nation that has the world’s fastest-ageing society and
an economy struggling to shake its dependence on manufacturing
and exports in favour of a model based on consumption and
services.

May 19, 2015

S. Korea doubles stock price trading band, seeks to cut speculative risks

SEOUL, May 19 (Reuters) – South Korea will double the daily
price band for stocks listed on its two main exchanges to allow
them to trade 30 percent higher or lower, a move aimed at
boosting transactions and reducing the risk of markets being
driven by speculative trades.

Under the current system, it is relatively easy for
speculators to push a stock to its upper limit by the end of a
session while spreading expectations for another rally the next
day when they would take profits, Korea Exchange, the market
operator, said in a statement.

Apr 30, 2015

Investors trim bets on further Bank of Korea rate cut

SEOUL, April 30 (Reuters) – Investors have been scaling back
their bets that South Korea’s central bank will cut interest
rates again as inflation and overall growth in Asia’s
fourth-largest economy are seen at or past the worst.

The Bank of Korea surprisingly cut the policy interest rate
by 25 basis points to a record low of 1.75 percent
in March and for some time the market had priced in high chances
for another cut soon. The central bank kept the rate unchanged
in April and will next meet on May 15.

Apr 21, 2015

As Korea’s secondary stock market soars, so do doubts

SEOUL, April 21 (Reuters) – Many of the stocks on South Korea’s
Kosdaq are looking a touch frothy after more than
doubling in price in under four months as retail investors
plough into the market, armed with borrowed funds. Some firms
are now trading at hundreds of times their earnings.

Almost one out of 12 stocks on the secondary board has more
than doubled in price since the start of 2015. More than one in
five are trading at least 50 times their earnings. That compares
with the market’s average price earnings ratio of 21 and the
ratio of 9.94 on the main board Kospi, Thomson Reuters
data shows. Reflecting the gains, the tech-heavy Kosdaq has
risen 30 percent, the most for any four-month period since 2009.

Apr 13, 2015

Financial industry lobby seeks longer Seoul bourse trading hours

SEOUL, April 13 (Reuters) – Trading hours at the South
Korean stock market should be extended by an hour at least so
that they overlap with other regional markets to encourage more
foreign investment, the head of the local financial investment
industry association said.

The market currently closes at 3 pm local time (0600 GMT),
an hour earlier than mainland Chinese markets and two hours
earlier than Hong Kong.

Apr 9, 2015

South Korea teeters on edge of (another) fiscal cliff

SEOUL, April 9 (Reuters) – South Korea’s persistently rosy
assumptions about government finances risk derailing public
spending in a year when exports and other engines of growth are
sputtering.

The government expects its 2015 revenue to rise 8.1 percent
from last year’s actual receipts. But that target is
increasingly looking elusive. The goal is based on assumptions
of 4 percent economic growth and 2 percent inflation, both about
1 percentage point above market estimates. Even the central bank
has lowered its GDP and inflation forecasts. Slower GDP growth
would cut tax revenue, including from corporate income tax,
while lower consumer inflation would dampen revenue growth for
taxes on goods, as their prices increase more slowly.

Apr 9, 2015

Bank of Korea keeps rates on hold as expected, cut seen later

SEOUL (Reuters) – South Korea’s central bank kept interest rates untouched on Thursday, as forecast, as the bank widely expected to pause before easing again in a follow-up to its March rate cut.

The Bank of Korea’s monetary policy committee held its base rate KROCRT=ECI steady at 1.75 percent, a media official said without elaborating. Governor Lee Ju-yeol is due to hold a news conference from 11:20 a.m. (03:20 a.m. BST).

Apr 1, 2015

Weak South Korea March exports, inflation add to pressure for more rate cuts

SEOUL (Reuters) – South Korean exports fell the most in two years in March and inflation hit its lowest since 1999, weakening economic momentum and putting the central bank under pressure to cut interest rates again.

The central bank has said the South Korean economy would pick up in the March quarter after suffering its worst growth in almost six years in October through December, but a recent run of data provided little evidence of a sharp rebound.

Mar 30, 2015

South Korean won on edge as yield premium falls, dividend outflow rises

SEOUL, March 30 (Reuters) – South Korea’s won could be
Asia’s surprise first casualty in any hint of an early rise in
U.S. interest rates as its yield advantage over the dollar has
plunged, while dividend payouts to investors overseas are poised
to surge.

The U.S. dollar’s value has headed upward as the Federal
Reserve gets closer to begin raising its policy interest rate,
whereas South Korea’s central bank is under mounting pressure to
cut its rate even further.