1. finance
2. bank

No. 4597
Monday, March 23, 2015
TOP STORY
TODAY’S HEADLINES
S. Korea, China, Japan summit hinges on
‘spirit of facing history squarely’
Gov’t to inject $9bn to
stimulate economy
By Kim Gi-jung
Public servant pension
fund reform to enter
new phase
Hackers drool over
business online
banking
FM says labor, mgmt,
gov’t should reach
high level of
compromise
High-profile
shareholder meetings
fizzle out
S. Korea should target
Asian infra market
with ‘Korea package’:
KNC
At Hotel Shilla for the joint press release of South Korea-ChinaJapan foreign ministers’ meeting on March 21, Japan’s envoy
suspiciously checked the phrase in the joint statement, ‘in the
spirit of facing history squarely.’
Bank of Korea
breathes easy as Fed
shifts to flexibility
On the day, foreign ministers from the three nations agreed to
work for trilateral summit at the earliest convenient time. The
latest meeting laid the groundwork for the three to resume their
cooperative efforts, the government praised. The ‘cooperative
efforts’ in the text refer to ‘trilateral summit.’
Will Shareholders’
Agreement of
Megabox help seal the
deal?
Consultative
committee says,
‘Hyundai Motor
should simplify
complex wage
structure’
However, experts pointed out that there is still a long way to go
before the three Asian nations hold trilateral summit. Notably,
the phrase ‘in the spirit of facing history squarely’ deserves
attention in the joint statement which was announced in five
years. It was mentioned in the ‘Vision 2020’ by the leaders of the
three in 2010.
"The war has been over for 70 years, but the problem with history
remains a present issue, not an issue of the past," Chinese
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Monday, March 23, 2015
Foreign Minister Wang Yi said. In other words, whether the three nations could resume
their cooperative efforts hinges on Japanese prime minister.
Thereupon, eyes are on ‘Abe statement’ to be released to celebrate the 70th year of the end
of the war. Some expect the Abe statement will be crucial in China’s deciding on the
trilateral meeting. The Korean government is flexible over the trilateral meeting, but if
Japan fails to dispel neighboring nations’ concerns over its recognition of wartime past,
prospects that the meeting would be held within this year are dim.
FINANCE
Bank of Korea breathes easy as
Fed shifts to flexibility
In a press conference with reporters held
right after the meeting of the Monetary
Policy Committee on March 12, Lee Ju-yeol,
governor of the Bank of Korea, said, “we’re
bracing for the Fed’s move to lift rates in
the second half of this year,” adding,
“however, the US interest rate hike does
not mean that other countries should
immediately follow the footsteps of the US.”
By Seo Dong-cheol, Kim Tae-joon
Will Shareholders’ Agreement
of Megabox help seal the deal?
By Hanna Lee
The Bank of Korea (BOK) seems to put its
feet up, at least for now, after keeping a
close watch on the meeting of the Federal
Open Market Committee (FOMC)) of the
Federal Reserve.
The central bank, which lowered its
benchmark interest rate to a one percent
level on March 12, would face pressure to
raise rates again in a few months if the Fed
hinted at a rate hike in June. However, as
the Fed still left open the possibility of a
rate increase in June, the BOK has kept on
its toes. An official of the central bank said,
“the Federal Reserve will more likely raise
rates in September than in June, but we do
not rule out the possibility of a rate hike in
June.”
Korea Multiplex Investment Corporation
(KMIC), the largest shareholder of
Megabox, has filed a request for arbitration
to the International Chamber of Commerce
(ICC) in Hong Kong on March 17th, in an
effort to settle the on-going disputes with
the
second
largest
shareholder
J
Contentree over the suitability of the
preferred bidder in the sale of the cinema
chain. The consequence of coming out on
the losing end of the arbitration could lead
to some significant financial losses
according to the terms of the shareholder’s
Chances are that the Bank of Korea would
keep rates ultra-low before the risk of
capital outflows mounts due to the US rate
rise.
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Monday, March 23, 2015
agreement drawn between the two parties,
drawing eyes to whether the sale process
will take a new turn.
tag along right. In this case, financial
losses will be incurred by not only J
Contentree, but may also affect the
shareholders of J Contentree, a listed
company. If KMIC wins and exercises its
call option, KMIC’s shareholders including
Public
Officials Benefit Association,
National Pension Service and Military
Mutual Aid Association, will be able to
withdraw additional profits on top of the
gains from the sale of Megabox.
Industry sources on March 19th confirmed
that KMIC
has submitted official
documents to the ICC Hong Kong
requesting a arbitration to settle disputes
between the two shareholders. According to
the sources, the losing party is expected to
suffer considerable financial damage
pursuant to the terms of the shareholders’
agreement.
Experts familiar with the sale expect to see
a decision on the arbitration by the first
half of next year at the latest, as the
arbitration is a process of examining which
party has violated the terms of the
shareholders’ agreement. Meanwhile, J
Contentree previously said it could take up
to a year for the ICC just to select the
arbitral tribunal.
The shareholder’s agreement was drawn
between KMIC and J Contentree when the
two parties merged Megabox and Cinus
back in 2011. The agreement states, in the
case of a dispute between the two
shareholders, the winning party may
exercise its call option and purchase the
shares of the losing party at a price below
the fair market value offered by the
preferred bidder. The agreement also
allows the winning party to dispose its
shares to the counterparty at a price above
the fair market value.
“We are confident that the ICC will rule in
our favor as we have fulfilled terms of the
shareholders’ agreement throughout the
sale process,” said an official of KMIC.
“Our shareholders are not pressured to sell
off their shares as Megabox is consistently
generating profits and additional profits
are expected if KMIC wins the arbitration,”
he added.
In short, the losing party will have to
either sell its shares at a price lower than
that offered by Orient Star Capital, the
preferred bidder of Megabox, or acquire the
winner’s shares at above-market price.
Moreover, the loser of the mediation will be
required to bear all expenses incurred
throughout the arbitration process for both
parties, in addition to the financial losses
resulting from the call or put options.
Hackers drool over business
online banking
By Lee Yoo-sup
The dominant vibe in the investment
banking industry is in favor of KMIC, who
has submitted a Letter of Commitment
(LOC) to provide proof of funds from the
potential Chinese buyer. Some even
anticipate that J Contentree will attempt
to reach negotiations with the majority
shareholder before March 31st, which is
the expiry date of the Share Purchase
Agreement (SPA) drawn between Orient
Star Capital and KMIC.
Online banking for companies is emerging
as a new target for hackers.
Should J Contentree lose the arbitration,
the company will have no other choice but
to sell its shares at a price lower than what
they could have gained from exercising its
A local commercial bank reported a total of
nine fraud cases related to its business
internet banking in the second half of last
year alone. But the corresponding number
rose to 10 in the first three months of this
Business online banking refers to a system
for online financial dealings via a dedicated
communication line between companies
and banks. Companies can easily manage
capital flow with a glance at money
transfer, collection and transactions.
Businesses also use the system to pay
salaries and other expenses to employees.
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Monday, March 23, 2015
year. Including regional banks, such cases
are estimated to surpass 100.
The market cap of nine business groups,
strongly led by Samsung Group, saw a
sharp jump in their market cap as buying
spree by foreign investors concentrated on
large-cap shares.
According to a financial information
provider on Sunday, aggregate market cap
of the nation’s biggest 10 conglomerates on
March 20 grew 29.1 trillion won ($26
billion) or 4.26 percent from last year to
712.2 trillion won on the closing price basis.
Suspects are active mainly in China and
these crimes are resurfacing after China’s
Lunar New Year holiday. An official of the
bank said business online banking frauds
are increasingly remarkably this year and
most of hacking attacks are targeting small
and medium businesses.
Notably, Samsung Group’s market cap
soared 17.4 trillion won or 5.41 percent
from earlier this year to 340.3 trillion won.
The shares of Samsung Electronics, a
major affiliate of Samsung Group,
recovered to the 1.5-million-won level for
the first time in 16 months last week on
positive feedback of the latest smartphone
‘Galaxy S6’ and expectations of recovery of
earnings.
Hackers are drooling over business online
banking because money under transactions
reach hundreds of millions of won
compared with transactions between
individuals. In particular, SMEs often fall
prey to this hacking because of a low level
of
security
compared
with
large
corporations.
Buoyed by rising shares of the tech
mammoth, Samsung SDI’s market cap also
sharply grew 22.84 percent and Samsung
Electro-mechanics’ 42.96 percent.
Online banking for SMEs are as vulnerable
to security flaw as that for individuals, said
a security official at a financial company.
Then came LG Group and SK Group.
Market cap of LG Group stood at 71.2
trillion won, up 9.03 percent or 5.9 trillion
won from earlier this year. Over the
corresponding period, that of SK Group
jumped 3.34 percent or 3.03 trillion won to
93.9 trillion won.
Market cap of top 10 biz
groups skyrockets $26bn
Copyrightsⓒ Yonhap News
GS group saw the sharpest rise in market
cap. Its market cap reached 10.8 trillion
won, up 15.51 percent over the cited period.
Meanwhile, the combined shares of the top
10 listed companies accounts for 51.2
percent of the local stock market.
High-profile
shareholder
meetings fizzle out
The market cap of South Korea's top 10
business groups listed on the main bourse
KOSPI soared over 29 trillion won so far
this year on the back of global liquidity
expansion.
By Yoon Won-sup, Oh Soo-hyun, Lee Dongn, Yong Hwan-jin
Green Cross’ attempt to influence Ildong
Pharm board has ended in failure,
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Monday, March 23, 2015
eclipsing the controversy over a possible
hostile takeover by Green Cross, the second
largest shareholder of Ildong Pharm.
appointment was voted down as Ildong
Pharm secured objections that represent
more than half of the votes.
Kia Motors’ shareholder meeting held at
Hyundai Motor’s headquarters building in
Yangjae ended in 40 minutes with few
objections.
Kia Motors vice chairman Lee HyoungKeun was re-appointed as inside director,
extending his term for another three years.
Vice president Han Chun-soo was newly
appointed as the carmaker’s inside director.
At Lotte Shopping’s shareholder meeting,
re-appointment of Lotte Group chairman
Shin Kyuk-ho as inside director was passed
by
the
company’s
shareholders
unanimously.
During its regular shareholder’s meeting
held Friday, Ildong Pharm re-appointed
Lee Jung-chi, chairman and CEO Ildong
Pharm, as inside director, and Seo Changrok, Korea University professor as outside
director and Lee Sang-yoon, former Orion
supervisor as supervisor. All three were
recommended by Ildong Pharm’s board.
Shareholders of Amore Pacific and Amore
Pacific Group Friday approved the
proposed 1-to-10 stock split.
Green Cross, which owns a 29.36 percent
stake, had attempted to appoint Huh Jaehoe, former president of Green Cross as
outside director, and Kim Chan-seop,
outside director of Green Cross, as
supervisor. But Huh’s appointment was
aborted as Ildong Pharm’s appointment
was
passed
earlier,
while
Kim’s
ECONOMY
S. Korea should target Asian
infra market with ‘Korea
package’: KNC
strategy to recover the economic dynamics
of South Korea, along with the Maeil
Broadcasting Network (MBN) and the
Asian Development Bank (ADB).
By Special Report Team
The Korea National Conference team
(Maekyung team) of the Maeil Business
Newspaper suggested that the country
should emerge from ‘infra trauma’ as soon
as possible, facing up to the fact that the
Asian infrastructure market is burgeoning
at a tremendous pace and is expected to
grow to 8.2 trillion won ($7.3 billion) from
2010- 2020.
The Maeil Business Newspaper held the
24th Korea National Conference at Lotte
Hotel in Sogong-dong, Seoul, on Thursday,
to mark the 49th anniversary of its
publication and it announced the ‘one Asia
infrastructure project V’ centering on a
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Monday, March 23, 2015
While delivering the salutatory in the
opening ceremony on the day, Chang Daehwan, chairman of the Maekyung Media
Group said, “we could find decent jobs and
a breakthrough to escape from low growth
at the three percent level in the Asian
infrastructure market.” He also suggested
that the nation should aggressively tap
into the Asian market to lay groundwork
for the era of $50,000 income per capita.
Korea has knowledge of industrialization
and know-how of successful construction of
new towns. The country also has the world
class IT capacity to make Smart City, the
intention point of the evolution of
infrastructure.
by front-loading its budget spending of
three trillion won in the first half of this
year and luring seven trillion won
investment from the public and private
sectors. The move comes as part of efforts
to maximize the effect of the interest rate
cut and stimulate the economy.
The government on Friday held a meeting
with economic ministers, presided by ChoiKyung-hwan, deputy prime minister and
minister of Strategy and Finance, and
announced additional measures to increase
demand.
The abrupt stimulus by the government
seems to reflect its resolve that it would
not miss the ‘timeline’ for economic
revitalization, as the effect of the interest
rate cut by the Bank of Kroea kicks in.
Most of all, the government is planning to
raise the amount of early budget execution
of the execution management target project
budget except personnel expense, basic
security and interior transaction by about
two trillion won in the first half of the year.
In addition, the execution amount in the
first half this year of the ‘46 trillion won
policy package,’ which has been operated
since the current economic team was
launched in July last year, would be
expanded by 1.1 trillion won. This means
3.1 trillion won would be front-loaded in
the first six months of this year.
The Maekyung team propsed that the
nation should integrate strenghts and
create a ‘Korea package’ covering a wide
range of sectors from innovative finance to
legal, accounting and medical services, in
cooperation with the public sector and the
private sector.
The government also released plans to
invite new investments worth 6.9 trillion
won from public agencies and the private
sector
to
stimulate
spending
and
investment. It would make upward
adjustment of investment of business
investment promotion programs created by
the Korea Development Bank and private
companies from the existing 10 trillion won
to 15 trillion won, up five trillion won.
Public organizations, who have enough
funds thanks to the oil price slide, would
invest 1.4 trillion won to keep step with the
government.
Gov’t to inject $9bn to stimulate
economy
By Noh Young-woo, Choi Seung-jin
Source: Yonhap News
The South Korean government is set to
pump a total of 10 trillion won ($8.8 billion)
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Monday, March 23, 2015
FM says labor, mgmt, gov’t
should reach high level of
compromise
would come up with measures for the
young people to make forays into the
overseas markets by the end of the first
half.”
By Choi Seung-jin
Mr Choi analyzed that, even though
indicators of the real economy in the
country
have
slightly
improved,
consumption reached the limit because of
wage freezes and investment because of
lack of effective demand. Therefore, the
nation should accomplish the four
structural reforms and make efforts to
activate the economy aiming to create
effective demand.
Choi Kyung-hwan, deputy prime minister
and minister of Strategy and Finance, said
on Friday, “the high level of grand
compromise among labor, management and
the government should be achieved by late
March, the deadline for agreement, with a
resolve of saving the youth in South Korea.”
In the introductory remark for the
economic ministers’ meeting held at the
Government Complex Gwacheon on the
day, Mr Choi said, “the dual structure of
the labor market is one of major factors
hindering the employment of the youth.”
He stressed, “I’m concerned about the high
unemployment rate for youth in February.
The labor market reform, which is almost
heading towards last-minute talks, is the
most urgent and indispensable to give
young people jobs and the hope of the
future.”
Then, he made a remark on plans for the
youth to land a job in foreign countries,
which was discussed at the trade
investment
promotion
meeting
on
Thursday.
He said, “the second Middle East boom is
expected to present an opportunity for
young talents in professional fields to get a
job especially in high value-added sectors,
such as health and medical field, IT,
finance and culture rather than the
construction sector as did in the past,”
adding, “Hopefully, each relative ministry
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Monday, March 23, 2015
COMPANY
Consultative
committee
says,
‘Hyundai
Motor
should simplify complex
wage structure’
Additionally, it is critical for the labor and
management to conduct joint job survey to
reflect the level of difficulty, expertise and
competency. The report also suggested
Hyundai to overhaul its criteria and way of
giving allowances based on the survey
result.
By Kim Dong-eun
Outside experts called on Hyundai Motor
to
simplify
its
complicated
and
unreasonable wage system.
At Ulsan plants on Friday, Hyundai Motor
held its fourth meeting to improve wage
system and normal wage with the
attendance of 60 participants including
CEO Yoon Gab-han and labor union
director Lee Gyeong-hoon.
At the meeting, the consultancy committee
consisting of four experts delivered
opinions over how to overhaul Hyundai’s
wage
system
to
both
labor
and
management.
“Hyundai should block wage fall and
ensure ‘cost neutrality’ which prevents
additional labor cost from pressuring the
company,” the committee advised.
The committee suggested, simplifying wage
system and wage structure with the focus
on basic pay, simplify wage items based on
task and role, adopt wage system based on
expertise, and embrace payment by the
result system.
Specifically, to ensure simplicity in wage
structure, Hyundai should combine or
abolish diverse allowances and eliminate
unnecessary items in wage structure.
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Monday, March 23, 2015
MARKET
Unison wins $1.96mn wind
power plant order
Cosmo Chemical asked to
confirm whether it is looking for
new owner
Unison said Friday it has signed a 22
billion won ($1.96 million) contract to
provide wind power plants to Korea
Western Power Co.
By Choi Ik-ho
KOSPI-listed Cosmo Chemical was Friday
asked by the Korea Exchange to confirm
news reports that the company is looking
for a new owner.
The deal represents 53.9 percent of the
company’s revenue last year.
Unison shares fell 3.71 percent to trade at
3,500 won at 1:50 p.m.
A local media reported the chemical
company’s largest shareholder is seeking to
sell its stake.
Copyrightsⓒ Yonhap News
Cosmo Chemical should respond by 6 p.m.
Friday.
U.S. stocks fall on profit-taking
Cosmo Chemical advanced 6.77 percent to
end at 5,360 won.
By MK Staff
U.S. stocks ended mostly lower Thursday,
taking a breather a day after a Federal
Reserve-inspired rally.
$1.33bn corporate bonds to be
issued next week
The S&P 500 lost 10.23 points, or 0.49
percent, to close at 2,089.27. The Dow
Jones Industrial Average slid 117.16 points,
or 0.65 percent, to end at 17,959.03. In
contrast, the Nasdaq Composite edged up
by 9.55 points, or 0.19 percent, to close at
4,992.38.
Corporate bonds to be issued next week
will amount to 1.5 trillion won ($1.33
billion) in 61 cases, according to the Korea
Financial Investment Association (KOFIA)
Friday.
That’s an increase by 50 cases or 482.8
billion won from this week.
Among those bonds, asset-backed securities
amount to 912.8 billion won, and nonguaranteed ones represent 590 billion won.
H.K. investor raises stake in Inet School
About 1.35 trillion won worth of bonds will
be issued to finance business operation,
with another 150 billion won for debt
repayment.
By Choi Ik-ho
Hong
Kong-based
King
Power
International said Friday its stake in
KOSDAQ-listed I-net School has expanded
to 11.3 percent, or 2,067,200 shares.
Copyrightsⓒ Yonhap News
King Power International participated in
the Korean company’s new share sale on
March 16 to additionally buy new I-net
School shares for 2,185 won per share.
KOSPI almost flat on profittaking
I-net School shares jumped more than 12
percent at 2:40 p.m.
South Korean stocks closed slightly lower
Friday, as the major index bobbed in and
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Monday, March 23, 2015
out of negative terrain over the session
with some investors taking profit.
million) through its online auction site
www.onbid.co.kr for three days from March
23.
The Korea Composite Stock Price Index
(KOSPI) edged down 0.65 point, or 0.03
percent, to 2,037.24. But tech-heavy
KOSDAQ soared 1.31 percent to end at
640.08.
The assets, consisting of 955 items that
include 83 residential buildings across the
nation, have been seized by tax agencies,
local governments and National Health
Insurance Service due to overdue taxes.
Among these, 547 items are set at 70
percent or lower of their original appraisal
values.
Offshore investors snapped up more shares
than they sold at a net 217.4 billion won
($193.3 million), with retail investors also
buying a net 21.5 billion won. Institutions
dumped a net 223.1 billion won, driving
down the index.
Applicants should pay a 10 percent bidding
deposit in advance.
Large caps ended lower across the board.
Samsung Electronics fell 0.41 percent to
1,464,000 won, and Hyundai Motor slid
1.63 percent.
Copyrightsⓒ Yonhap News
The Korean currency ended at 1,123.00
won against the greenback, down 5.8 won
from Thursday’s close.
Copyrightsⓒ Yonhap News
KAMCO to auction off seized
assets worth $86mn
South Korea’s state-run debt clearing
house KAMCO said Friday it will sell
seized assets worth 97 billion won ($86.26
GENERAL
Public servant pension fund
reform to enter new phase
While giving an interview to the Maeil
Business Newspaper on Thursday, Lee
Geun-myeon, head of the ministry, said,
“we would devise the government’s official
plan by adding public finance forecasting to
the basic plan presented last month for the
discussion
of
the
compromising
organization on the civil servant pension
fund reform at the National Assembly,”
adding, “as early as the beginning of next
week when the forecasting is completed, we
would submit the government’s plan.”
By Kim Jung-hwan
With the public servant pension fund
reform emerging as a hot potato of state
affairs,
the Ministry of Personnel
Management (MPM) in charge of the
reform would release the government’s
pension fund reform scheme next week.
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Monday, March 23, 2015
The ruling and opposition parties put
pressure on the ministry to submit the
government’s plan after the tripartite
meeting with the presidential office on
Tuesday but the ministry did not take a
clear posture. However, as Mr Lee said in
an interview with the newspaper that the
government plan would be released early
next week, the discussion on the public
official pension fund reform is expected to
enter a new phase.
dust include retail and leisure sectors.
According to a research by the team led by
Kim Jung-in, an industrial economics
professor at Chung-ang University, with
yellow dust storm walloping the nation,
sales at department stores fall 10 percent
while leisure industry including theme
park saw their sales down 20 percent. On
the contrary, PC rooms, eyeglass stores
and home-shopping enjoyed rising sales in
the face of yellow dust storm.
Still, the disadvantages of yellow sand far
outweigh the advantages. According to the
Korea Environment Institute’s report titled
‘damages from yellow storm in the North
East Asia and cooperative measures for
reduced damages,’ the dust incurred
economic loss worth around 5.5 trillion won
($4.8 billion) in 2002, which equates to 0.8
percent of the nation’s GDP in that year.
Considering inflation rate up until now, the
storm cost the nation about 7.8 trillion won
as of 2015.
The government’s plan is predicted to
maintain the basic plan presented in the
national compromising organization on
February 5 in a large frame. He said, “the
basic plan includes structural reform plans
and was made by gathering opinions of
stakeholders and the public opinion,”
indicating that the basic plan with the
finance analysis would be an official plan of
the government. However, formalizing the
plan, which has been little changed in
substance, is expected to face opposition
from the opposition party and public
servant unions.
Chu Jang-mon, a researcher at Korea
Environment Institute, explained, “even
amid weak dust storms, we’re seeing
declining number of park visitors and
leisure activity participants.”
“The financial reduction effects of the
government’s plan do not fall short of the
reform plan of the Saenuri Party at all. I
think the opposition party agrees on the
necessity of the pension structural reform,”
he explained.
Yellow dust causes huge
economic loss in S. Korea
By Won Yo-hwan, Park Chang-young, Park
Yoon-ye
Some sectors suffer from yellow dust while
others do not. Those hit hardest by yellow-
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Monday, March 23, 2015
Press Release
[Press Release] Real Estate Trust Companies’ Earnings, 2014 (Mar 19. 2015) [Source: Financial
Supervisory Service]
[Press Release] Producer Price Index during February 2015 (Mar 19. 2015) [Source: The Bank of Korea]
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