South Korea’s Ministry of Finance said Thursday that it has agreed with the central bank to consider deploying a mix of fiscal and monetary measures that will enable them to flexibly recapitalize policy banks through direct and indirect financing.In their second task force meeting presided over by Vice Finance Minister Choi Sang-mok in Seoul on Thursday, officials from the Finance Ministry, the Bank of Korea and the Financial Services Commission saw the need to inject capital both directly and i

May 19, 2016

With Korea’s economy facing the internal risk of an aging population, the country faces another serious issue at hand that could potentially further weigh down its growth potential -- a slowdown in China.In a report, Standard & Poor’s warned that Korea will be the third-hardest-hit country by China should the world’s second-largest economy see its annual growth fall to around 3.4 percent from 2017-20.In this worst case scenario, the aggregate growth rate of Asia’s fourth-largest economy, whose b

May 18, 2016

Korean politicians, economists and government officials are expected to engage in debates on whether to further increase workers’ monetary contribution to the country’s national pension, and increase taxes for sustainability.This comes as the Organization for Economic Cooperation and Development recommended Asia’s fourth-largest economy to increase taxes and the social safety net pension system on expectations of growing social spending due to the aging population.However, observers say issues c

May 17, 2016

The Organization for Economic Cooperation and Development has urged Korea to pursue reform and innovation through policies aimed at sustaining growth and boosting small and medium-size enterprises and start-ups amid a slowdown. In its economic outlook report, the OECD said Monday that Korea will need to further implement fiscal and monetary stimulus to “sustain expansion,” while trying to maintain fiscal soundness by increasing tax rates on expectations of rising social spending due to the aging

May 16, 2016

Various scenarios have emerged as to how the government and the central bank will recapitalize policy banks for the restructuring of shipping and shipbuilding companies.However, the Finance Ministry, the Bank of Korea and the Financial Services Commission have not yet devised their unified action plan, although they have confirmed their differences over the issue.Despite the goal of reaching a compromise in bank recapitalization by next month, the central bank’s stance remains unchanged. It sugg

May 15, 2016

Green Cross Corp., a listed Korean pharmaceutical company, said Thursday that it plans issue three and five-year bonds worth some 100 billion won ($86 million) to finance its expansion overseas.The company’s bond underwriter NH Investment & Securities will evaluate the value of the bonds graded AA minus through a book building process next week. Its bond issues mark the first time for the company to raise funds in the local capital market.“The proceeds will be used for its expansion in the advan

May 12, 2016

The Korean economy is facing pressure from all sides that will make it harder to sustain growth amid high youth unemployment, rapidly changing demographics and slow manufacturing growth.With cash-strapped companies in conventional industries expected to go through restructuring soon, more people of all ages will be out of jobs and face difficulties in finding work in a slow market.This will increase Korea’s unemployment rate, while growing costs for restructuring and welfare will add burden to f

May 11, 2016

The state-run Korea Development Bank said Tuesday that it will hand over its shares of Korea Aerospace Industries to the Export-Import Bank of Korea as part of an emergency financial relief.“We have decided to give our KAI shares to Eximbank,” KDB chief executive Lee Dong-geol told reporters ahead of a meeting with the Financial Services Commission on Tuesday.Korea Development Bank (Yonhap)KDB will hand over its 7.86 percent stake in KAI worth about 500 billion won ($426 million) to boost the ca

May 10, 2016

Korea’s top financial regulator and a labor group remain divided over the government’s push to install incentive systems at state-run financial companies.Both sides are adamant in their positions with the Korean Financial Industry Union planning to go on a strike, while the Financial Services Commission reiterated that it will enforce the system as part of reforms. FSC chairman Yim Jong-yong (Yonhap)In a meeting with the heads of state-run financial companies Tuesday, FSC chairman Yim Jong-yong

May 10, 2016

Caregen is not a typical Korean biotechnology company local investors are most familiar with.When it comes to biotech shares trading on the stock market, LG Life Sciences or Medy-Tox would generally come to mind. They are big biotech players, with the market cap of LG Life Sciences reaching over 1 trillion won ($858.8 million) on the benchmark KOSPI. Medy-Tox ranks 6th with nearly 3 trillion won in market cap on the tech-heavy KOSDAQ.Caregen’s booth at the World Congress of Dermatology in Vancou

May 9, 2016

With international oil prices forecast to rise in the long-term and the effects of monetary easing waning in advanced economies, foreign investors are expected to soon become net-sellers of Korean stocks from net-buyers, according to the Korean Center for International Finance on Thursday. Several external risks are looming that will eventually lead foreign investors to offload their Korean stock holdings.The continued deadlock in talks on production between OPEC and non-OPEC oil producing econo

May 5, 2016

Korea’s household debt has recently been increasing in tandem with rising mortgages on the back of relaxed regulations on borrowings and recovery in the housing market, the International Monetary Fund said.In its regional report assessing Korea’s household debt and housing market, the IMF noted that Korea’s high household debt does not pose a downside risk to the Korean economy, with financial authorities tightening their monitoring of nonbank loans and management of debtors’ repayment capabilit

May 5, 2016

The Finance Ministry and the Bank of Korea have agreed to increase the capital base of policy banks through a mix of fiscal and monetary policies to ensure that corporate restructuring is carried out as planned, according to ministry officials Wednesday.In their first task force meeting presided over by Vice Finance Minister Choi Sang-mok with officials from the central bank, the Financial Services Commission, the state-run Korea Development Bank and the Export-Import Bank of Korea, the Finance

May 4, 2016

Korea can afford to implement more monetary easing to boost the economy amid weak growth, but not for the purpose of recapitalizing policy banks to finance restructuring of debt-laden companies, Frederic Neumann, an economist of HSBC, said.In a seminar on the Korean economy, Neumann, the head of HSBC’s Asian Economic Research, said that Korean quantitative easing is not QE in the conventional sense as practiced by other central banks like the Federal Reserve, European Central Bank or the Bank of

May 3, 2016

Lotte Capital has invested 5 billion won ($4.4 million) in commercial papers of its affiliate Lotte PS Net, an IT system and database developer of Lotte’s Korea Seven.Lotte PS Net said that it plans to use the proceeds to finance its operations.Korea Seven is an operator of Lotte’s 7-Eleven convenient stores. Korea Seven’s biggest shareholder is Lotte Shopping, according to an audit filing.By Park Hyong-ki (hkp@heraldcorp.com)

May 2, 2016