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A weekly service for a more accurate understanding of the Korean economy
Korean Economic Trends
January 5, 2002
Volume 6 No. 1
Containing:
Focus of The Week:
Industrial activities displayed an overall upward trend in November,
signalling the economy has bottomed out
The profitability of domestic manufacturing companies worsened overall during the first nine months of 2001, compared with 2000
Issue Report:
The ten major “hit” products of 2001 in Korea and their implications
Statistics
Samsung Economic Research Institute (SERI)
Seoul, Korea
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Contents
4 .... Focus of the Week
4 .... Industrial activities displayed an overall
upward trend in November, signalling the
economy has bottomed out
6 .... The profitability of domestic manufacturing
companies worsened overall during the first
nine months of 2001, compared with 2000
8 .... Financial Market Trends
8 .... Money & Bond Markets
9 .... Stock Market
10 .. Foreign Exchange Market
11 .. Major Events of the Week
13 .. Issue Report
13 .. The ten major “hit” products of 2001 in Korea
and their implications
Samsung E cono mi c
Resea rch Insti tute (SERI)
Pu blishe r: Woo -sock Ch oi (CE O)
Ed itor -in -Ch ief: Ky eon g-wo n Kim
Ma nag ing Editor : Oak Jung Rh ee
Co pye ditor: Da nie l L ee
Gr aphic Designer : Hee- jung Pa rk
Tr anslation : Jung -ok Mo on
Ch ang e of na me and /or add ress:
Te l: 822 -80 3-2 445 (Jo ng- chu l Cha h)
Te l: 822 -3 780 -80 18
Fa x: 822 -3 780 -80 09
Ge ner al inqu iries abo ut SERI an d/o r the
Ko rea n e co nom y:
Te l: 822 -3 780 -80 00
21 .. Statistics
21 .. Stock Market, Exchange Rates, and Interest
Rates
22 ..
KOREAN ECONOMIC TRENDS
January 5, 2002
Focus of the Week (Dec. 19 ~ Jan. 1)
Industrial activities displayed an overall upward trend in November, signalling the
economy has bottomed out
Industria l production recorded a
positive increase
rate of 4.9% yoy in
November
According to the National Statistical Office (NSO), industrial
production recorded a positive increase rate of 4.9% yoy in
November, turning from the negative figure of -1.9% yoy in
October. On a month-on-month basis, industrial production in
November also posted a positive increase rate of 1.9%, turning
up from the rate of -1.5% mom in October. The positive figures
for November are mainly ascribed to the rise in domestic consumption led by special consumption tax cuts, to an increase in
the production of semiconductors (a 6.4% yoy rise), and to robust growth in the domestic construction industry.
Consequently, the average capacity utilization rate of the manufacturing industry as a whole rose to 73.6% in November, from
71.5% in October.
Recent Trends in Industrial Production
yoy increase rate of
Industrial Production
(% change mom)
Average Capacity
Utilization Rate
May
01
Jun
01
Jul
01
Aug
01
Sep
01
(Unit: %)
Oct
Nov
01
01
2.3
-2.8
-5.7
-4.4
5.1
-1.3
4.9
(-0.1) (-2.0) (-1.3)
(-4.9)
(-2.9) (-1.5) (-1.9)
74.8
73.2
75.0
74.1
71.0
71.4
73.6
Source: National Statistical Office
Shipment of goods
increased by 7.1%
yoy in N ovember
4
In the same vein, shipment of goods increased by 7.1% yoy in
November, turning from the negative rate of -0.9% yoy in
October. Specifically, shipment for export, which had been
showing overall weak growth, increased by 8.0% yoy in November helped by gains in the export of semiconductors, telecommu-
Samsung E conomic Research Institute
KOREAN ECONOMIC TRENDS
January 5, 2002
nications equipment and other transportation equipments. On
the other side, shipment for domestic demand exhibited a growth
rate of 6.2% yoy, led by an increase in the shipment of office
machinery, automobiles, and chemical goods.
The solid domestic
demand is also
eviden ced by
consumer-related
indices
The solid domestic demand is also evidenced by consumer-related indices, which again rose in November. Notably, wholesale/retail sales increased by 6.5% yoy, recording even higher
year-on-year growth from the 4.6% yoy of October, mainly owing to strong sales of automobiles, as well as to a jump in department store sales and in the sale of household electronic
appliances.
Trends in Consumption and Investment
(Unit: %)
01-Jul 01-Aug 01-Sep 01-Oct 01-Nov
Wholesale / Retail Sales
Facilities Investment
2.9
3.6
7.8
4.6
6.5
-10.4
-19.4
-6.4
-4.4
4.4
8.7
23.5
6.3
14.1
Construction Investment
-8.3
Note: % change yoy
Source: National Statistical Office
Investmen t-related
indices exhibited
overall improvement too
Many eco nomists
argue t hat the
economy has
bottomed out
SERI
For their part, investment-related indices exhibited overall improvement too. For example, facilities investment increased by
4.4% yoy in November, turning from the negative figures of the
past thirteen months. Also, although the amount of imported machinery recorded an increase rate of –14.4% yoy, its rate of decline was considerably less than the -34.1% yoy posted in
August. Construction investment and new domestic construction orders received rose as well, marking 14.1% yoy and 80.4%
yoy, respectively, suggesting the continued boom of the domestic
construction industry.
Based on these encouraging figures of November, many economists argue that the economy has bottomed out or already
passed its trough. But some of them claim that, without a solid
revival of export, the current recovery, apparently helped by the
government’s pump-priming policy and the central bank’s easy
monetary policy, will hardly be sound.
5
KOREAN ECONOMIC TRENDS
January 5, 2002
The profitability of domestic manufacturing
companies worsened overall during the first
nine months of 2001, compared with 2000
Domestic manufacturing companies’
profitability deteriorated
The ratio of ordinary prof it to the
sales revenue of
domestic manufacturing companies
recorded 2.0%
Based on its survey of listed domestic manufacturing companies,
the Bank of Korea (BOK) revealed that their profitability and
growth in sales revenue deteriorated during the first nine months
of 2001 from the same period of the previous year.
Taking a closer look, the ratio of ordinary profit to the sales revenue of domestic manufacturing companies recorded 2.0% up to
the end of September 2001, down 0.9% point from a year ago.
The fall is mainly ascribed to the fact that the ratio of operating
profit to sales revenue declined to 6.7%, down 2.4% point from
September 2000, despite the increase in the ratio of non-operating income to sales revenue to -4.7%, up from the -6.2% at the
end of September 2000.
Trends in the Ratios of Ordinary Profit and Operating
Profit to Sales Revenue
(Unit: %)
1997
1998
1999
2000
Operating Profit / Sales 10.0
7.0
7.3
8.2
9.1
6.7
Ordinary Profit / Sales
-2.6
1.6
-0.3
2.9
2.0
-0.1
Sep-00 Sep-01
Note: % change yoy
Source: Bank of Korea
The interest coverage ratio of domestic manufacturers
also declined to
record 141.6%
6
Meanwhile, the interest coverage ratio (operating profit / interest
payments) of domestic manufacturers also declined to record
141.6%, down from the 162.7% of a year ago. More seriously,
36.3% of those companies posted an interest coverage ratio of
less than 1, up from the 26.7% of the same period of the previous
year. This means that more than one-third of domestic manu-
Samsung E conomic Research Institute
KOREAN ECONOMIC TRENDS
January 5, 2002
facturing companies failed to pay their interests from their operating profits during the first nine months of 2001. Their failure
was due to a steep decline in their operating profits, which more
than offset the drop in their interest payments due the decline in
interest rates.
The increa se rate of
the sales revenue of
these co mpanies
recorded a meager
1.0% yoy
The debt-to-equity
ratio (debt/equity
capital) o f domestic
manufacturing
companies dropped
to record 214.9%
Also showing a significant drop was the growth in the revenue of
domestic manufacturers. The increase rate of the sales revenue
of those companies recorded a meager 1.0% yoy as of the end
of September 2001, noticeably down from the 20.2% yoy recorded from the same period of last year.
Despite the deterioration in profitability and sales growth, the
debt-to-equity ratio (debt/equity capital) of domestic manufacturing companies dropped to record 214.9% as of the end of
September 2001, down from the 220.1% of a year ago. The
improvement in capital structure is due to an increase in the equity capital of those companies through stock issuance (a -5.6%
point contribution), and to a decrease in their non-interest bearing
debts (a -4.7 point contribution) such as accounts payable.
Trend in the Debt-to-Equity Ratio of Domestic Companies
(Unit: %)
Debt-to-Equity Ratio
1997
1998
1999
2000
Sep-01
368.6
299.2
199.7
220.1
214.9
Source: Bank of Korea
Many eco nomists
point o ut that
domestic corporate
restructuring still
has a lon g way to
Many economists point out the fact that more than one-third of
domestic companies have an interest coverage ratio of less than
1 as a sign that domestic corporate sector restructuring, although claimed as better than in other emerging economies, still
has a long way to go.
go
SERI
7
KOREAN ECONOMIC TRENDS
January 5, 2002
Financial Market Trends (Dec. 19 ~ Jan. 1)
Money & Bond Markets
During the two-week period, interest rates fell initially due to
concern over the depreciation of the Japanese yen, but later
turned upwards on signs of higher inflation and a jump in stock
prices toward the year’s end.
Major factors behind the movement:
• Fears that the weakened Japanese yen will negatively affect
the recovery of the domestic economy.
• Concerns that prices will be unstable at the beginning of 2002,
due to a rise in international oil prices and a jump in stock
prices, which strongly signals the imminent recovery of the domestic economy.
Next week, interest rates will likely exhibit an upward trend,
caused by anxiety over continued price hikes and widespread
investor sentiment that the Japanese yen will not weaken much
further.
Movements of Market Interest Rates
7
% p.a.
% p.a.
6
12
10
5
8
4
6
3
2
4
Nov-17 Nov-24 Dec-01 Dec-08 Dec-15 Dec-22 Dec-31
8
Call (left axis)
3-yr Gov't Bond (left axis)
3-yr Corp. Bond (AA-)
3-yr Corp. Bond (BBB-)
Samsung E conomic Research Institute
KOREAN ECONOMIC TRENDS
January 5, 2002
Stock Market
During the last two weeks, both the Korea Stock Price Index
(KOSPI) and the KOSDAQ Index experienced corrections at
first, but later rose briskly toward the last days of the year, closing the year at 693.70 (a 7.8% rise from two weeks ago) and 72.
21 (a 4.1% rise from two weeks ago), respectively.
Major factors behind the movement:
• Contracted investor sentiment, due to Argentine’s declaration
of a moratorium on its foreign debt and the riots within the
nation.
• Worries that the weakened Japanese yen will negatively affect
domestic exports.
• Slowdown in foreigners’ net purchasing activities, which totaled 66.0 billion won during the seven trading days of the two
weeks, due to holiday vacations.
• Heightened expectations for an early recovery of the domestic
economy, led by improvements in major real economic
indicators.
• Strong buying activities by institutional investors, influenced by
their high hopes for the coming “January Effect.”
Next week, both stock markets are expected to continue their
bullish trends, though the anticipated unstable movement of the
JPY/USD exchange rate may have countervailing effects.
KOSPI & KOSDAQ Index Movements
730
p
p
670
75
610
70
550
65
490
Nov-15 Nov-22 Nov-29 Dec-06 Dec-13
KOSPI (left axis)
SERI
80
60
Dec-20 Dec-28
KOSDAQ Index (right axis)
9
KOREAN ECONOMIC TRENDS
January 5, 2002
Foreign Exchange Market
During the two-week period, the KRW/USD exchange rate experienced a strong overall upward trend, recording 1,329.1 won
per U.S. dollar on December 27, the highest level in eight months
since April 16, 2001.
Major factors behind the ascent:
• Significant depreciation of the Japanese yen to 131.7 yen per
U.S. dollar, owing to rising fears that the bad loan-laden Japanese banking system may collapse. The rate of 131.7 yen per
U.S. dollar was the highest in approximately three years and
three months since October 1998.
• Worsening economic and political situation in Argentine, including its declaration of a moratorium on its foreign debt.
Next week, the KRW/USD exchange rate will likely rise, albeit
slightly, due to the further small-scale weakening of the Japanese yen, and to the instability in emerging markets.
Movements of Foreign Exchange Rates
1,330
won
yen
1,320
133
130
1,310
1,300
127
1,290
124
1,280
121
1,270
1,260
118
Nov-19 Nov-26 Dec-03 Dec-10 Dec-17 Dec-24 Dec-31
KRW/USD (left axis)
10
JPY/USD (right axis)
Samsung E conomic Research Institute
January 5, 2002
KOREAN ECONOMIC TRENDS
Major Events of the Week (Dec. 19 ~ Jan. 1)
Wednesday, December 19
• According to the Bank of Korea (BOK), the prices of raw
materials and intermediate goods, which are leading indicators
of inflation, dropped by 2.9% mom in November, falling for the
seventh consecutive month.
Thursday, December 20
• The Ministry of Commerce, Industry and Energy (MOCIE)
and the Korea Productivity Center (KPC) jointly announced
that the labor productivity index (output divided by labor input)
of the domestic manufacturing industry posted an increase
rate of a mere 1.0% yoy in the third quarter of 2001, the lowest
year-on-year increase rate in sixteen years since the 0% of the
third quarter of 1985.
Friday, December 21
• The National Statistical Office (NSO) said that the size of the
domestic e-Commerce market stood at 26.645 trillion won in
the second quarter of 2001, up 9.8% from the previous
quarter. The most remarkable growth was shown in the B2B
market, the size of which recorded 24.242 trillion won, accounting for 91% of the entire domestic e-Commerce market.
Saturday, December 22
• The Korea Development Institute (KDI), a state-owned research institute, raised its GDP growth projection for 2002 to
4.1% from its previous forecast of 3.3% in October. It also
forecasted that consumer prices would record an increase rate
of 2.7% yoy in 2002, and that the nation’s current account surplus would reach USD 4.4 billion.
Monday, December 24
• According to a survey conducted by the BOK, the business
survey index (BSI) of the domestic manufacturing industry
posted 90 for the first quarter of 2002, slightly up from the 89
of the previous quarter, implying that domestic companies expect business conditions to remain essentially unchanged in the
first quarter of the new year.
SERI
11
KOREAN ECONOMIC TRENDS
January 5, 2002
Wednesday, December 26
• The Ministry of Finance and Economy (MOFE) stated that the
nation spent 2.3 trillion won on financial sector restructuring in
November, tallying up the total amount of public funds injected
since the currency crisis to 152.9 trillion won as of the end of
November.
Thursday, December 27
• According to the NSO, the output of Kyunggi Province (105.85
trillion won), as measured by gross regional product, surpassed
that of Seoul (96.47 trillion won) for the first time in history in
2001. In terms of per capita output, Ulsan city recorded the
highest, 23.35 million won. In terms of per capita consumption
expenditure, Seoul recorded 7.26 million won, still keeping the
top spot in the nation.
Friday, December 28
• The NSO announced that the consumer price index rose by 0.
2% mom in December. Accordingly, the index recorded an
average increase rate of 4.3% yoy for all of 2001, surpassing
the inflation target of 4% set by the BOK. Similarly, the increase rate of core inflation (excluding items such as agricultural and oil products) posted 4.2% yoy.
Saturday, December 29
• The BOK said the nation’s current account posted a surplus of
USD 700 million in November, up USD 250 million from the
prior month, while the nation’s capital and financial account
posted a surplus of USD 1.22 billion, up USD 1.19 billion from
the previous month.
Monday, December 31
• According to the BOK, the consumer survey index (CSI) for
future living standards recorded 94 in the fourth quarter of
2000, up from the 85 of the third quarter, while the CSI for
future business conditions rose to 94 from 71 over the same
time. The central bank added that, although the figures were
still below the base figure of 100, they are clear signs that consumer sentiment is improving.
12
Samsung E conomic Research Institute
KOREAN ECONOMIC TRENDS
January 5, 2002
Issue Report
The ten major “hit” products of 2001 in Korea
and their implications
I. Review of the domestic consumer market in 2001
In 2001, domestic
In 2001, domestic consumer sentiment became rather chilled due
consumer sentiment
to the foot-dragging recovery of the domestic economy and the
became rather
chilled
terrorist attacks in the U.S. Final consumption expenditure increased a mere 2% yoy, marking 213 trillion won during the first
three quarters of 2001. Furthermore, the GDP growth rate,
which recorded 8% yoy in 2000, plunged to a level of less than
3% yoy in 2001.
But signs of recov-
But signs of recovery in domestic consumer sentiment appeared
ery in d omestic
toward the end of 2001, as shown by the improvement in the
consumer sentiment
appeared toward
the end of 2001
consumer evaluation index in November, and have continued
into the new year. This phenomenon is due to several factors
such as the recent rally in domestic stock markets, and heightened hope for economic recovery in 2002 as a result of anticipation of an imminent successful conclusion to the U.S. attack on
Afghanistan. Of course, there are still dangers to the economy,
such as the sluggish disposal of major ailing companies, weakened political leadership, and resurgent instability in some emerg-
SERI
13
KOREAN ECONOMIC TRENDS
January 5, 2002
ing economies, including Argentine that recently declared a
moratorium on its foreign debt.
Trends in the Consumer Evaluation Index and the Korea Stock Price Index (KOSPI) of 2001
P
120
the U.S.
terrorist attack
700
600
100
500
400
80
300
60
200
Jan01
Mar01
May01
Jul01
Consumer Evaluation Index (left axis)
Sep01
Nov01
KOSPI (right axis)
Samsung Economic
In light of these dangers, it seems appropriate to examine recent
Research Institute
and future trends in consumption patterns, to offer suggestions to
(SERI) co nducted a
survey to determine
domestic companies. For this purpose, the Samsung Economic
the ten ma jor “hit”
Research Institute (SERI) conducted a survey to determine the
products of 2001
ten major “hit” products of 2001. Combining SERI’s information
with lists of hit products released by the press and by experts,
SERI compiled a list of 41 products for respondents to choose
among.
II. Major “hit” products of 2001
There was a signifi-
14
According to the survey results, there was a significant differ-
Samsung E conomic Research Institute
KOREAN ECONOMIC TRENDS
January 5, 2002
cant difference
between t he opinions of experts and
those of netizens
ence between the opinions of experts and those of netizens, although their opinions had been quite similar in previous years.
For example, netizens generally gave high marks to Avatars,
personalizable graphic characters that can be used in chat rooms
or on the web, and to TV home shopping channels. In contrast,
experts relatively preferred high technology-based products like
the “SM5” (a mid-sized car manufactured by RenaultSamsung) or large-size flat screen TVs.
Ten Major “Hit” Products of 2001
Ten Products
Experts' Netizens'
Total
Scores
Scores
1. "Friends" (a movie)
100.0
85.9
92.9
2. "OK Cashbag"
(sales mileage card, SK)
82.6
81.4
82.0
3. "Xylitol Gum"
(tooth protective gum, Lotte)
4. "Combo"
(a combined DVD and VCR unit,
Samsung Electronics)
60.8
100.0
80.4
77.1
50.6
63.9
5. TV home shopping
39.8
67.2
53.5
6. "SM5"
(a mid-size car, Renault-Samsung Motors)
59.9
39.7
49.8
7. Large-size flat screen TV
64.4
29.7
47.0
8. Avatars
(personalizable graphic character on the web)
29.8
62.8
46.3
9. Whole life insurance policies
50.3
24.1
37.2
10. Brand-name rices
30.1
16.5
23.3
Note: ( ) lists the type of product and producing company, respectively
SERI
15
KOREAN ECONOMIC TRENDS
January 5, 2002
This sugg ests that
Although some “hit” products of 2000 like “Dimchae” (a Kimchi
the lifespans of
refrigerator) and “Starbucks” (a coffeeshop chain brand) re-
products a re not at
all gua ranteed
mained popular among respondents, the best hit product of 2000,
“iloveschool.co.kr”, an Internet alumni association site, fell low
on the 2001 candidate list. This suggests that the lifespans of
products are not at all guaranteed due to the many uncertainty
factors of today. But in spite of these differences and changes in
opinion, the following trends could be commonly seen among the
ten most popular products.
III. Characteristics of consumption in 2001 as demonstrated by “hit” products
1. Appeal to the younger generation: “Friends” and Avatars
Two cu ltural
According to the survey, two cultural products, the domestic film
product s, the
“Friends” and Avatars, were hit products. (“Friends” is a gang-
domestic film
“Friend s” and
ster movie whose main setting is in the 1970’s.) The movie
Avatars, were hit
broke the records of “Joint Security Area” and “Swiri” to be-
products
come the most-watched Korean movie in the industry’s history,
with some 8.3 million tickets sold. Riding on its success, many
gangster movies like “My Wife is a Gangster” and “Kick the
Moon” succeeded at the box office in 2001. “Friends” also
negatively influenced Korea’s youth, creating an “organized
gangster syndrome” that led many youngsters to imitate the specific accents or gestures of gangsters. But the movie greatly
appealed to older generations, too. Part of the reason is attrib-
16
Samsung E conomic Research Institute
KOREAN ECONOMIC TRENDS
January 5, 2002
uted to the fact that it reflected people’s longing for the “simpler”
days of a bygone era, in the face of the current economic
depression.
The Avata r concept
has emerged as a
new online business
For their part, the success of Avatars, which are provided by
several domestic Internet-related companies including game
model an d income
software makers and portal providers, is mainly due to current
source fo r dot-com
trends among Korea’s youth that value the expression of
companies that have
individuality. As a result, the market size of the Avatar industry
suffered from
chronic losses
has exploded to 20 billion won, with new designs and characters
being continuously introduced to meet market demand and provide consumers more choice. The Avatar concept has also
emerged as a new online business model and income source for
dot-com companies that have suffered from chronic losses.
2. Sensible consumption: “OK Cash bag” and TV
Homeshopping Channels
Consumers also
In addition, consumers also began to exercise greater discretion
began to exercise
in their purchases in 2001, to save money. They bought products
greater discretion in
their purchases in
2001, to save money
with specific purchase mileage cards for the purpose of accumulating bonus points, or put off their purchases until bargain days.
Such an economical consumption pattern can be seen by the fact
that hit products for 2001 included a product like “OK Cashbag”,
a mileage card that awards credit (that can be used in making
other purchases) for certain purchases made through credit card
or cash. At the same time, stores and credit card companies
SERI
17
KOREAN ECONOMIC TRENDS
January 5, 2002
benefited by attracting more customers and incurring more usage of their cards, respectively. SK Corporation (a giant oil
company that originally issued the card to attract more drivers to
their gas stations), as well as other affiliates of the SK Group
including SK Telecom, also enjoyed the advantage of acquiring
good-quality consumer information for their database marketing.
The industry of TV
The industry of TV home shopping grew rapidly as well in 2001,
home sh opping
being now comprised of five full-time cable TV shopping chan-
grew rapid ly as well
in 2001
nels and numerous spot vendors. Particularly conducive to the
industry’s growth has been the almost-unbelievably fast rise in
the number of subscribers to cable TV and high-speed Internet
access services. Different from traditional retail outlets, TV
home shopping services concentrate on the products of smalland medium-sized firms, strengthening their price competitiveness with the heightened efficiency of their delivery processes.
3. Preference for high quality and technology-based
products, and word-of-mouth marketing: the “Combo”,
“Flat screen TVs”, and the “SM5”
Leading products
based on superior
technolo gy have
While many products’ fortunes are dependent on the ups and
downs of fashion, leading products based on superior technology
always gained
have always gained strong consumer interest in the domestic
strong consumer
market. Samsung Electronics’ “Combo”, a combined DVD and
interest in the
domestic market
VCR unit, has received recognition not only domestically, but
also abroad, from the press and renowned associations like the
18
Samsung E conomic Research Institute
January 5, 2002
KOREAN ECONOMIC TRENDS
EISA (the European Imaging and Sound Association). Similar to
the “Combo”, large-size flat screen TVs (40 ~ 65 inch TVs)
produced by three major domestic makers also fulfilled consumers’ requirements for quality and value for money. Lastly, the
“SM5” emerged as a hit product after initially suffering from
stagnant market sales. Its later success is ascribed to word-ofmouth marketing among taxi drivers who are very sensitive to a
car’s ride comfort and quality, and generously relate their experiences of their own cars to their customers.
4. Growing interest in personal health and safety: “Xylitol
Gum”, brand-name rices, and whole life insurance policies
Interest i n products
related to personal
health or safety also
Interest in products related to personal health or safety also became a noticeable consumption trend in 2001. For example,
became a n oticeable
“Xylitol Gum”(a chewing gum which cleans teeth), brand-name
consumpti on trend
rices, and whole life insurance policies all enjoyed strong
in 2001
popularity. In fact, sales per month of the Xylitol Gum of Lotte
Confectionery exceeded 10 billion won, a remarkable record.
By comparison, even existing successful products like the Choco
Pie made by Tong Yang, another major domestic confectionery,
marked around 5 billion won per month.
Product differentia-
Regarding brand-name rices, product differentiation in market-
tion in marketing
ing has been the key factor for their success. Preparing for the
has been the key
behind th e success
of brand-name rice
SERI
opening of the Korean rice market, Korean farmers enhanced
their quality competitiveness by growing value-added rice
19
KOREAN ECONOMIC TRENDS
January 5, 2002
through organic farming. These days, almost 70% of the Korean
rice market is occupied by brand-name rices. And although their
prices are substantially higher than that of “generic” rice, demand is sharply increasing. This phenomenon is ascribed to the
current widespread awareness of the importance of nutrition and
a healthy life.
Strong in terest in
Finally, strong interest in whole life insurance policies, in which a
whole life insurance
policy holder typically pays monthly premiums that will be able to
policies reflect the
public’s growing
be redeemed as a lump-sum amount or paid as an annuity, while
concern for safety
guaranteeing benefits at his or her death to the beneficiaries, reflect the public’s growing concern for safety. Another factor in
their popularity has been the need for alternative investment instruments during these times of ultra-low interest rates, since
those policies generally provide higher investment returns than
bank deposits.
Originally written by Kwon, Sung-Yong
20
Samsung E conomic Research Institute
KOREAN ECONOMIC TRENDS
January 5, 2002
Statistics
Stock Market, Exchange Rates and Interest Rates
Dec-19
Wednesday
Dec-20
Thursday
Dec-21
Friday
Dec-24
Monday
Dec-25
Tuesday
KOSPI (closing)
647.05
664.51
644.71
646.49
Holiday
Changes
+ 3.29
+ 17.46
- 19.80
+ 1.78
Holiday
Trading Volume (mil. shs)
619.96
503.98
344.03
390.8
Holiday
2,596.4
2,477.9
2,083.6
1,791.3
Holiday
KRW / USD (Closing)
1,292.20
1,300.20
1,308.90
1,308.20
Holiday
KRW / JPY 100 (Base rate)*
1,006.95
1,015.63
1,012.06
1,010.03
Holiday
128.04
128.50
129.51
129.81
130.92
3-Yr Gov't Bond
5.83
5.88
5.87
5.87
Holiday
3-Yr Corporate Bond Yield (AA-)
6.96
7.01
7.01
7.01
Holiday
3-Yr Corporate Bond Yield (BBB-)
11.12
11.17
11.17
11.17
Holiday
Call Rate (Overnight)
4.00
4.05
4.02
4.03
Holiday
Stock Market
Trading Value (bil. won)
Foreign Exchange Rates
JPY / USD (Closing)**
Interest Rates
* Base rate against 100 Japanese yen
** New York Market
SERI
21
KOREAN ECONOMIC TRENDS
January 5, 2002
Stock Market, Exchange Rates and Interest Rates
Dec-26
Wednesday
Dec-27
Thursday
Dec-28
Friday
Dec-31
Monday
Jan-01
Tuesday
KOSPI (closing)
653.87
668.55
693.7
Closed
Closed
Changes
+ 7.38
+ 14.68
+ 25.15
Closed
Closed
Trading Volume (mil. shs)
568.37
541.63
514.8
Closed
Closed
2,345.8
2,612.4
2,706.1
Closed
Closed
KRW / USD (Closing)
1,318.00
1,329.10
1,323.00
1,313.50
Closed
KRW / JPY 100 (Base rate)*
1,008.11
1,009.10
1,007.24
999.62
Closed
130.82
131.69
131.09
131.71
Closed
3-Yr Gov't Bond
5.81
5.84
5.91
5.91
Closed
3-Yr Corporate Bond Yield (AA-)
6.96
6.99
7.04
7.04
Closed
3-Yr Corporate Bond Yield (BBB-)
11.12
11.15
11.20
11.20
Closed
Call Rate (Overnight)
3.99
3.97
3.99
3.98
Closed
Stock Market
Trading Value (bil. won)
Foreign Exchange Rates
JPY / USD (Closing)**
Interest Rates
* Base rate against 100 Japanese yen
** New York Market
22
Samsung E conomic Research Institute