Sales down, profitability up in Corporate Korea in 2015

Sales dropped, but profit margins edged up in Corporate Korea last year, the Bank of Korea said Friday. According to the central bank’s survey of business performance at nearly 20,000 companies in Korea, revenues were down 2.4 percent in 2015 from a year earlier, led by manufacturers, which posted an average 4.2 percent drop. Profit margins, as a ratio of operating profit to revenue, increased to 5.2 percent from 4.2 percent during the same period. This means the companies earned an operating pr

May 27, 2016

Korean shares advance on refiner, chemical gains

South Korean shares closed higher Friday as falling crude prices drove up refiners and chemicals, supported by strong foreign buying. The local currency slightly gained ground against the U.S. dollar.The benchmark Korea Composite Stock Price Index gained 12.11 points, or 0.62 percent, to 1,967.17. Trading volume was moderate at 517.98 million shares worth about 4.81 trillion won ($4.07 billion). Gainers far outpaced decliners 516 to 290.Local analysts said slipping oil prices due to increased pr

May 27, 2016

Seoul to introduce 'kill switch' on trading platform next month

South Korea's main bourse on Friday said it will introduce a "kill switch" and other safety measures in its program trading platform next month to prevent investors from suffering losses from trading errors.A kill switch, also known as an emergency stop or e-stop, is a safety mechanism designed to help identify mistakenly placed orders and avoid liabilities due to such technical errors."If the kill switch system is introduced, the Korea Exchange can cancel mistakenly placed and untraded orders a

May 27, 2016

Gov't to apply stricter lending rules in nonbanking sector

South Korea's financial authorities on Thursday said they will apply stricter lending rules in the nonbanking sector starting in the second half of the year to keep rising household debts in check. The Financial Services Commission will have insurance companies apply strengthened rules when extending loans to customers starting in July, the FSC said in a statement. Local banks began to adopt similar lending rules in February.  Lending section of a commercial bank branch in Seoul (Yonhap)"We will

May 26, 2016

Seoul seeks to cap ratio of national debt to GDP

The South Korean government said it will seek to cap the proportion of national debt to gross domestic product as part of efforts to preemptively enhance fiscal stability in the long term.In a meeting presided over by Finance Minister Yoo Il-ho in Seoul, the government discussed follow-up measures to drafts previously floated at the April fiscal strategy meeting that aimed at better managing tax revenue, budget and public pension funds.“The government plans to submit a bill on improving fiscal s

May 26, 2016

Tough road ahead for HI investment & securities sale

Debt-ridden Hyundai Heavy Industries is expected to put up stake in Hi Investment & Securities for sale but industry experts are skeptical about a successful M&A. Lack of specialization of the mid-sized Hi investment & securities may lead to failure in attracting a takeover bid from other peer brokerages.“Many people have taken a dim view on the deal as Hi investment & securities is not specialized in any business compared to other mid-sized securities companies,” an official at a local brokerag

May 26, 2016

Up to 4 buiness groups may be asked to clean up balance sheet

Three or four big business groups may be asked by their creditor banks to take voluntary balance sheet improvement measures, local reports said Thursday. Korea’s large banks are currently reviewing the financial soundness of 39 big business groups, chosen late last year by the Financial Supervisory Service, and may push a financial rehab for three or four of them, the reports said.  Financial Supervisory Service headquarters (Yonhap)“The check on the financial health of big business groups by cr

May 26, 2016

Household debt jumps 11% from year ago

South Korea's household debt jumped 11 percent in the first quarter despite stricter lending rules at banks, its central bank said Thursday. The country's overall household debt climbed to 1,223.7 trillion won ($1.035 trillion) in the January-March period from 1,098.3 trillion won a year earlier, the Bank of Korea said in a statement.Quarter-on-quarter, household debt, which includes credit-card spending, rose 1.7 percent, it said.  "As banks have adopted a stricter evaluation system before exte

May 26, 2016

SM Group not buying part of SPP Shipbuilding: report

Samra Midas Group, or SM Group, has no intention to acquire part of midsized shipyard SPP Shipbuilding from its creditors, a local news report said Thursday.The business group, which owns listed shipper Korea Line and builder Woobang Construction, could not narrow differences in the price negotiation for SPP’s shipyard in Sacheon, Yonhap said. “We had estimated that additional 140 billion won ($118 million) would be needed for SPP Shipbuilding based on the result of due diligence. But creditors

May 26, 2016

Korean insurers' Q1 net rises 6.3%

South Korean insurance companies posted a 6.3 percent gain in combined first-quarter net profit helped by an increase in insurance premium income, government data showed Thursday. For the three months ending March 31, the country's 25 life insurers and 32 non-life insurers posted 2.235 trillion won ($1.89 billion) in combined net profit from 2.103 trillion won a year earlier, the Financial Supervisory Service said in a statement."In the first quarter, the insurers' insurance premium income excee

May 26, 2016

Banks set to suffer from exposure to troubled shipbuilders

As the specter of bankruptcy rises for Korea’s shipbuilders, concern is growing over local banks’ exposure to the ailing sector. According to industry sources Wednesday, local banks’ exposure to the shipbuilding sector exceeds 70 trillion won ($59.3 billion) in total, which is far larger than to shipping, another troubled sector with high default risks.  Korea Development Bank headquarters in Seoul (Yonhap)The high exposure stems partly from ship financing, which typically involves shipbuilders’

May 25, 2016

STX Shipbuilding likely to face court receivership

Creditor banks said they have begun discussing whether to put Korea’s midsized shipbuilder STX Offshore & Shipbuilding under court receivership, as their years of financial aid have failed to improve the shipyard’s business prospects.Leading creditor Korea Development Bank said Wednesday the creditors agreed to put an end to the shipyard’s self-rescue plan and to decide on whether to put the company into the hands of a court by the end of this month. STX Offshore and Shipbuilding workers leave t

May 25, 2016

Contingent liabilities in securities firms jumped 22 pct last year

Contingent liabilities in Korean securities companies jumped 22 percent in 2015 compared to a year earlier, raising worries about their financial soundness, government data showed Wednesday. Contingent liabilities in local securities firms reached 24.226 trillion won ($20.38 billion) last year, up from 19.891 trillion won a year earlier. A contingent liability is a potential liability. It depends on a future event occurring or not occurring. For example, if a brokerage company guarantees an asse

May 25, 2016

Corporate concern rising on incoming parliament

Corporate executives now seem as jittery as government officials about a controversial bill that will allow lawmakers to hold hearings more frequently.The revision to the National Assembly Act, which was passed by the outgoing parliament last week, gives parliamentary committees the right to hold hearings on all “pending” issues. Existing law stipulates that the hearings can be held if necessary for the deliberation of important matters and parliamentary audit or investigation.Speculation has be

May 25, 2016

Banks worry over reserve requirements as shipbuilding industry tumbles

The imminent overhaul of the shipbuilding industry is shaking up local banks, which will have to raise their reserves once the loans to companies are reclassified as risky, financial officials said Wednesday.The majority of the loans to the troubled shipbuilders -- Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries and Samsung Heavy Industries -- are categorized as "normal" in risk ratings, a far cry from the firms' abysmal financial standings.  Local banks' exposure to the three

May 25, 2016

Korean shares open higher on Wall Street gains

Korean stocks started higher Wednesday, following overnight gains on Wall Street.The benchmark Korea Composite Stock Price Index (KOSPI) rose 15.99 points, or 0.83 percent, to 1,953.67 in the first 15 minutes of trading. (Yonhap)Top market cap Samsung Electronics gained 0.24 percent, and industry leader Hyundai Motor was up 0.37 percent. The state-run Korea Electric Power Corp. also rose 1.34 percent.In New York on Tuesday (local time), the Dow Jones industrial average jumped 213.12 points, or 1

May 25, 2016

KRX to extend stock trading hours from August

Korea’s stock market operator will extend trading hours of the stock and derivatives markets by 30 minutes from August, in a bid to synchronize them with other Asian markets, Korea Exchange said Tuesday. The bourse operator said the markets will be open from 9 a.m. to 3:30 p.m., aiming to invigorate the sluggish equity market. Kim won-dae, the head of the securities market division at KRX, speaks during a press conference, held in Seoul, Tuesday. (KRX)“The Korean equity market is increasingly ex

May 24, 2016

[Market Now] Re-auction of KDB Capital fails

The state-run Korea Development Bank has once again failed to sell its subsidiary KDB Capital. KDB said in a statement that only one bidder participated in the final bidding for KDB Capital that closed at noon Tuesday, which did not result in a binding competition. Korea Development Bank headquarters (Yonhap)In the preliminary bidding in March, U.S. private equity giant Carlyle, a private equity firm set up by SK Securities and a non-financial company based in Korea were selected as the three su

May 24, 2016

Seoul shares dip to 3-month low on looming Fed rate hike

Korean stocks closed 0.9 percent lower Tuesday as concerns about a potential U.S. rate hike weighed on market sentiment here. The local currency sharply fell against the U.S. dollar.The benchmark Korea Composite Stock Price Index (KOSPI) dropped 17.57 points to 1,937.68, the lowest since late February. A total of 511 million shares were traded, worth 4.9 trillion won ($4.2 billion), with losers outnumbering gainers 582 to 247. (Yonhap)Foreigners and institutional investors sold a net 120 billion

May 24, 2016

ING Life extends sales offer to find buyer

ING Life Insurance will be extending its sales offer by the end of this week to fuel more potential bids for the insurer owned by Korean private equity MBK Partners following lower-than-expected buyout interests, according to news media citing investment banking sources.MBK and ING could not be reached for comments. Morgan Stanley is the sales manager of MBK’s ING Life Insurance.Only about three companies at home and abroad submitted their letters of intent for the insurer on Monday. MBK seeks t

May 24, 2016