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Korean Economic Statistics (Jan 2009)
Showing posts with label korea economy koreality. Show all posts
Showing posts with label korea economy koreality. Show all posts
Monday, February 02, 2009
Wednesday, January 28, 2009
Data points to bigger economic crash in South Korea than 1997
Korea's latest economic indicators are plummeting faster than they did during the 1997-98 Asian financial crisis, raising alarm that the current economic downturn could be worse, government data showed yesterday.
After the September debacle on Wall Street, the global financial crisis put Korea's output, exports and consumption into a downward spiral in November, and sapped jobs in December, according to data from the Ministry of Strategy and Finance, the National Statistical Office and the Bank of Korea.
The data showed that production in the mining and manufacturing industries contracted 14.1 percent in November from a year ago, the worst since the government began compiling such data in 1970. The indicator first swung into the red in October with a 2.3 percent contraction.
The decline of the two monthly figures was steeper than a 0.4 percent contraction in December 1997 and a 7.7 percent contraction in January 1998.
Industry watchers attribute the quick contraction to worse-than-expected exports.
Exports, the main pillar of the Korean economy, dropped 19.5 percent in November and further plummeted an estimated 30 percent in the first 20 days of January.
According to the Korea Customs Service, local firms shipped an estimated $12.47 billion worth of goods during the first 20 days of this month, compared with $17.54 billion a year earlier.
Factories operated at just 68 percent of their capacity in November, compared with 80.6 percent a year ago, government data showed. It was the lowest level since 65.7 percent in August 1998.
As production of consumer goods decreased, consumption fell to the worst level in more than a decade. The November sales of consumer goods shrank 5.9 percent, the lowest since minus 7.3 percent in December 1998.
The weak exports and domestic demand created in a vicious circle, leading to output cuts and restructuring.
The economy lost 12,000 jobs in December from a year earlier, the first such decline in five years. The employment rate for those in their 20s stood at 57.8 percent in December, the lowest since May 1999, according to the NSO.
No bright spots in almost all economic indicators led the nation to suffer the worst fourth quarter GDP contraction in 11 years. The economy shrank 3.4 percent in the October-December period from a year earlier.
Many firms are forecast to suffer downgrades in their credit ratings, other industry data showed.
According to the credit rating agency Korea Investors Service, 283 Korean firms' annual rating drift rates, or upgrade rates minus downgrade rates divided by the total, swung into the red last year for the first time since minus 51.92 percent recorded in 1998.
The upward trend in credit ratings of Korean firms, which has been continuing since 1999, is now over due to increased credit risks from the last year's financial market distress, credit crunch and the deterioration in the real estate industry, a KIS official said.
Consequently, more than 20 percent of 481 corporate bonds as of Monday last week received BB or lower ratings, because the redemption of those bonds were deemed as somewhat speculative to be guaranteed in the long term, KIS said.
Ssangyong Motors and C&Heavy Industries have been excluded from the ratings evaluation since the two were rated D, or in default. Ssangyong, the Korean unit of Sanghai Automotive Industry Corp. of China has asked court receivership and creditor banks decided to cut off rescue loans to C& Heavy earlier this month. ◦
After the September debacle on Wall Street, the global financial crisis put Korea's output, exports and consumption into a downward spiral in November, and sapped jobs in December, according to data from the Ministry of Strategy and Finance, the National Statistical Office and the Bank of Korea.
The data showed that production in the mining and manufacturing industries contracted 14.1 percent in November from a year ago, the worst since the government began compiling such data in 1970. The indicator first swung into the red in October with a 2.3 percent contraction.
The decline of the two monthly figures was steeper than a 0.4 percent contraction in December 1997 and a 7.7 percent contraction in January 1998.
Industry watchers attribute the quick contraction to worse-than-expected exports.
Exports, the main pillar of the Korean economy, dropped 19.5 percent in November and further plummeted an estimated 30 percent in the first 20 days of January.
According to the Korea Customs Service, local firms shipped an estimated $12.47 billion worth of goods during the first 20 days of this month, compared with $17.54 billion a year earlier.
Factories operated at just 68 percent of their capacity in November, compared with 80.6 percent a year ago, government data showed. It was the lowest level since 65.7 percent in August 1998.
As production of consumer goods decreased, consumption fell to the worst level in more than a decade. The November sales of consumer goods shrank 5.9 percent, the lowest since minus 7.3 percent in December 1998.
The weak exports and domestic demand created in a vicious circle, leading to output cuts and restructuring.
The economy lost 12,000 jobs in December from a year earlier, the first such decline in five years. The employment rate for those in their 20s stood at 57.8 percent in December, the lowest since May 1999, according to the NSO.
No bright spots in almost all economic indicators led the nation to suffer the worst fourth quarter GDP contraction in 11 years. The economy shrank 3.4 percent in the October-December period from a year earlier.
Many firms are forecast to suffer downgrades in their credit ratings, other industry data showed.
According to the credit rating agency Korea Investors Service, 283 Korean firms' annual rating drift rates, or upgrade rates minus downgrade rates divided by the total, swung into the red last year for the first time since minus 51.92 percent recorded in 1998.
The upward trend in credit ratings of Korean firms, which has been continuing since 1999, is now over due to increased credit risks from the last year's financial market distress, credit crunch and the deterioration in the real estate industry, a KIS official said.
Consequently, more than 20 percent of 481 corporate bonds as of Monday last week received BB or lower ratings, because the redemption of those bonds were deemed as somewhat speculative to be guaranteed in the long term, KIS said.
Ssangyong Motors and C&Heavy Industries have been excluded from the ratings evaluation since the two were rated D, or in default. Ssangyong, the Korean unit of Sanghai Automotive Industry Corp. of China has asked court receivership and creditor banks decided to cut off rescue loans to C& Heavy earlier this month. ◦
Friday, January 16, 2009
The arrest of South Korea's financial blogger
FOR several months a blogger going by the name of Minerva, the Roman goddess of wisdom, has proved a severe irritant to South Korea’s government. He made several correct financial predictions, such as the Korean won’s sharp decline against the American dollar, and heaped scorn on President Lee Myung-bak and his finance minister, Kang Man-soo, for their handling of the economic crisis. This made him both a household name and a target for official persecution.
Indeed, since January 10th Minerva, who has been revealed to be an unemployed man, Park Dae-sung, has been in detention. Riot police raided his flat, finding the 31-year-old at his screen, surrounded by financial primers. He is under arrest on charges related to a posting on December 29th, asserting that in order to support the won the finance ministry had ordered financial institutions to stop buying American dollars. The ministry denies this, and prosecutors argue that the post contravened so-called “cyber-slander” legislation, and caused so much currency turmoil that the government had to spend the equivalent of $2 billion to support the won. Civic groups and opposition parties, infuriated by this apparent attack on free speech, have vowed to support him.
It is possible that Mr Park is just one of several Minervas. He denies writing a newspaper article published under his pseudonym. Others question whether a man with no formal economic training can grasp financial arcana (though many journalists claim to manage). But, however many Minervas there are, the government’s sledgehammer to the blogger’s nut does nothing to improve Mr Lee’s perceived lack of a common touch.
Mr Park seems to have fallen foul of both the two main causes of official paranoia: the internet and the financial crisis. It has been alarmed about online activism ever since this helped opposition forces organise protests that brought central Seoul to a halt last year. Over the financial crisis, the finance ministry has urged foreign journalists to “care about the Korean people’s psychology” and not use adjectives like “failing”, “desperate” or “jittery” to describe markets. After all, say officials, press and people must stand together “to tackle this giant monster”. As for the ministry’s denial, traders agree that it did not put out an emergency order, as Minerva claimed. But all of the big banks in the foreign-exchange market, they say, were called and urged to curb their dollar purchases.
http://www.economist.com/research/articlesBySubject/displayStory.cfm?story_id=12947490&subjectID=348963&fsrc=nwl ◦
Indeed, since January 10th Minerva, who has been revealed to be an unemployed man, Park Dae-sung, has been in detention. Riot police raided his flat, finding the 31-year-old at his screen, surrounded by financial primers. He is under arrest on charges related to a posting on December 29th, asserting that in order to support the won the finance ministry had ordered financial institutions to stop buying American dollars. The ministry denies this, and prosecutors argue that the post contravened so-called “cyber-slander” legislation, and caused so much currency turmoil that the government had to spend the equivalent of $2 billion to support the won. Civic groups and opposition parties, infuriated by this apparent attack on free speech, have vowed to support him.
It is possible that Mr Park is just one of several Minervas. He denies writing a newspaper article published under his pseudonym. Others question whether a man with no formal economic training can grasp financial arcana (though many journalists claim to manage). But, however many Minervas there are, the government’s sledgehammer to the blogger’s nut does nothing to improve Mr Lee’s perceived lack of a common touch.
Mr Park seems to have fallen foul of both the two main causes of official paranoia: the internet and the financial crisis. It has been alarmed about online activism ever since this helped opposition forces organise protests that brought central Seoul to a halt last year. Over the financial crisis, the finance ministry has urged foreign journalists to “care about the Korean people’s psychology” and not use adjectives like “failing”, “desperate” or “jittery” to describe markets. After all, say officials, press and people must stand together “to tackle this giant monster”. As for the ministry’s denial, traders agree that it did not put out an emergency order, as Minerva claimed. But all of the big banks in the foreign-exchange market, they say, were called and urged to curb their dollar purchases.
http://www.economist.com/research/articlesBySubject/displayStory.cfm?story_id=12947490&subjectID=348963&fsrc=nwl ◦
Wednesday, September 17, 2008
FTSE promotes South Korea to developed market
South Korea will be promoted to developed-market status from advanced emerging, global index provider FTSE Group said late Wednesday, in a move that will likely attract more fund flows into the Asian country.
The upgrade comes after FTSE surprised global fund managers last September by choosing to upgrade Israel to developed-market status instead of South Korea.
South Korea's promotion should lead to increased funds flows into its stock market, said Jerry Moskowitz, president of FTSE Americas, in an interview with MarketWatch.
"We estimate that just with the FTSE indices alone, it could be high as $10 billion, but we believe other index companies will follow," Moskowitz said. "The net could be as high as $25 billion of new funds flowing into the Korean stock market."
FTSE also said Wednesday that red-chip stocks, which are currently included in Hong Kong, a developed market, will be moved to China, a secondary emerging market. Red chips are Chinese companies trading on the Hong Kong exchange, but that have at least 50% of their revenues generated from business in mainland China.
The changes announced Wednesday will be implemented in the FTSE Global Equity Index Series in September 2009.
FTSE currently classifies countries as developed, advanced emerging, secondary emerging, and frontier.
Taiwan, which is being considered for promotion to developed market status from advanced emerging, will remain on FTSE's so-called watch list. The list includes countries that FTSE is actively monitoring for possible promotion or demotion.
While FTSE praised Taiwan for its progress on implementing market reforms over the past 12 months, the index provider said that no change in Taiwan's status will be made at this time.
Pakistan has been removed from the FTSE's watch list and will no longer be considered for possible demotion to frontier market status from secondary emerging.
What does the upgrade mean for South Korea?
The market reaction to South Korea's upgrade was muted Thursday, as global markets continue to be dominated by unprecedented turbulence.
In Seoul, the Kospi index fell 2.3%. It is down 27% this year.
Still, analysts say FTSE's upgrade of the market will likely be a major positive in the long term.
"Given the current deep undervaluation due to the ongoing global financial market turbulence, concerns over a local forex crisis and capital concerns, even a small positive, such as the potential upgrade, could trigger a rally," said Clemens Kang, a strategist at Woori Investment and Securities, in a research note.
Also, funds benchmarking advanced markets are ten times larger than those benchmarked against emerging markets, indicating that substantial capital inflows are possible for the Korean equity market, Kang said.
However, Kang cautioned: "We believe the upgrade will have only a limited near-term impact on the Korean market, as any net increase in foreign capital will likely begin after" the first quarter of 2009.
Analysts at Hyundai Research said that, judging from Israel's experience, Korea can expect a re-rating of market valuations as well as reduced market volatility when it's included in the developed market index.
"We believe large caps should benefit relatively more when Korea is classified as a developed market, given the attributes -- conservative, long-term based investment -- of global investment funds that will likely flow in," Hyundai Research said.
http://www.marketwatch.com/news/story/ftse-promotes-south-korea-developed/story.aspx?guid=%7b0AB719B6-7CFF-49B7-8BA6-4405F9A04BC6%7d&siteid=yahoomy&print=true&dist=printMidSection
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The upgrade comes after FTSE surprised global fund managers last September by choosing to upgrade Israel to developed-market status instead of South Korea.
South Korea's promotion should lead to increased funds flows into its stock market, said Jerry Moskowitz, president of FTSE Americas, in an interview with MarketWatch.
"We estimate that just with the FTSE indices alone, it could be high as $10 billion, but we believe other index companies will follow," Moskowitz said. "The net could be as high as $25 billion of new funds flowing into the Korean stock market."
FTSE also said Wednesday that red-chip stocks, which are currently included in Hong Kong, a developed market, will be moved to China, a secondary emerging market. Red chips are Chinese companies trading on the Hong Kong exchange, but that have at least 50% of their revenues generated from business in mainland China.
The changes announced Wednesday will be implemented in the FTSE Global Equity Index Series in September 2009.
FTSE currently classifies countries as developed, advanced emerging, secondary emerging, and frontier.
Taiwan, which is being considered for promotion to developed market status from advanced emerging, will remain on FTSE's so-called watch list. The list includes countries that FTSE is actively monitoring for possible promotion or demotion.
While FTSE praised Taiwan for its progress on implementing market reforms over the past 12 months, the index provider said that no change in Taiwan's status will be made at this time.
Pakistan has been removed from the FTSE's watch list and will no longer be considered for possible demotion to frontier market status from secondary emerging.
What does the upgrade mean for South Korea?
The market reaction to South Korea's upgrade was muted Thursday, as global markets continue to be dominated by unprecedented turbulence.
In Seoul, the Kospi index fell 2.3%. It is down 27% this year.
Still, analysts say FTSE's upgrade of the market will likely be a major positive in the long term.
"Given the current deep undervaluation due to the ongoing global financial market turbulence, concerns over a local forex crisis and capital concerns, even a small positive, such as the potential upgrade, could trigger a rally," said Clemens Kang, a strategist at Woori Investment and Securities, in a research note.
Also, funds benchmarking advanced markets are ten times larger than those benchmarked against emerging markets, indicating that substantial capital inflows are possible for the Korean equity market, Kang said.
However, Kang cautioned: "We believe the upgrade will have only a limited near-term impact on the Korean market, as any net increase in foreign capital will likely begin after" the first quarter of 2009.
Analysts at Hyundai Research said that, judging from Israel's experience, Korea can expect a re-rating of market valuations as well as reduced market volatility when it's included in the developed market index.
"We believe large caps should benefit relatively more when Korea is classified as a developed market, given the attributes -- conservative, long-term based investment -- of global investment funds that will likely flow in," Hyundai Research said.
http://www.marketwatch.com/news/story/ftse-promotes-south-korea-developed/story.aspx?guid=%7b0AB719B6-7CFF-49B7-8BA6-4405F9A04BC6%7d&siteid=yahoomy&print=true&dist=printMidSection
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