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Korea Securities Dealers Association
Korea Gains and Loses Heft in Market Gauges
(Joong Ang Ilbo)(05.21.2001)
Korea's weighting in Morgan Stanley Capital International's Emerging Markets Free
Index has risen to 14.8 percent from 11.5 percent. But its weighting in the MSCI All
Country World Index has dropped to 0.46 percent from 0.58 percent
MSCI published on Saturday, Geneva time, a provisional index series, in which 17
Korean companies were newly included.
The 17 companies were:
Korea Telecom Freetel (3.6 percent); preferred shares of Samsung Electronics
Co. (1.9 percent); Kia Motors Corp. (1.6 percent); Hyundai Heavy Industries
Co. (0.9 percent); Good Morning Securities Co. (0.6 percent); Kookmin Credit
Card Co.; S-Oil Corp. (0.5 percent); Humax (0.4 percent); NCSoft (0.3
percent); Hankuk Electric Glass Co. (0.3 percent); LG Engineering &
Construction Co. (0.2 percent); Pacific (0.2 percent); Yuhan Corp. (0.2
percent); Nongshim (0.2 percent); Poongsan Corp. (0.2 percent); Asiana
Airlines (0.1 percent); and Hanjin Shipping Co.(0.1 percent).
Samsung Electronics saw its weighting in Korea climb to 26.4 percent from 23.9
percent, while Pohang Iron & Steel Co.'s weighting went up to 9.7 percent to 7.8
percent. The weighting of Shinhan Bank also rose to 2.8 percent to 2.4 percent. In
contrast, Korea Electric Power Corp. suffered a 5.9 percentage point cut in its
weighting, and SK Telecom saw a 5.7 percentage point drop. Korea Telecom Corp.'s
weighting was also reduced but is expected to be readjusted after its planned issuance
of global depository receipts. Nine corporations were dropped from the index:
Daesang, Hyundai Engineering & Construction, Isu Chemical, Korea Express, Kukdo
Chemical, LG Insurance Co., Namhae Chemical Corp., Samyang and Ssangyong
Cement Industrial Co.
Korea 54th in Per Capita Income
(Chosun Ilbo)(05.21.2001)
Korea's per capita Gross National Income as of 1999 stood at US$8,490, 54th in the
world, according to "World Development Indicators 2001," a study released by the
World Bank recently. According to the study, Korea's GNI was far below Hong Kong
($24,570) and Singapore ($24,150). Luxemburg topped the per capita GNI list with
$42,930, five times more than Korea's. Korea, on the other hand, reached US$397.9
billion in terms of nominal gross domestic income, placing it the 13th in the world.
The nominal GNI for the United States was the largest with $8.8 trillion, followed by
Japan's US$4.75 trillion
Korea 1st-Qtr GDP Seen Growing 0.6%, Reversing
Drop: BN Survey (Bloomberg)(05.21.2001)
South Korea's economy probably returned to growth in the first quarter, after
shrinking for the first time in 2 1/2 years, as factories stepped up production and
consumers spent more, economists said. Gross domestic product probably grew 0.6
percent from the previous quarter, seasonally adjusted, according to the median
forecast of seven economists polled by Bloomberg News, after contracting 0.4 percent
in the fourth quarter, The Bank of Korea will report first-quarter GDP tomorrow at 12
p.m., Seoul time. ``I expect the economy made a decent recovery last quarter,'' said
Oh Suktae, an economist at Citibank N.A. in Seoul. ``Stronger industrial production
and wholesale and retail sales figures are signs that first-quarter growth was positive
compared with the previous quarter.'' That is not to say Korea's economic slump is
over. Falling overseas demand for the country's computer chips and other electronics
will probably cut growth by more than half this year, and companies are still holding
back on new investments. From a year earlier, the economy probably grew 3.8 percent
last quarter -- the worst performance since the final quarter of 1998, when GDP
shrank during the country's worst recession in decades. Economists said growth is
expected to slow to 4.2 percent this year, down from last year's 8.8 percent.
Worst Over?
Finance Minister Jin Nyum said last week the economy probably grew between 3.5
percent and 4 percent last quarter, raising an earlier forecast of as little as 3 percent.
There are some signs the economy's worst troubles may be over. Factory production
rose all three months in the first quarter, reversing a two-month slide, led by computer
makers such as Trigem Computer Inc. and automakers such as Hyundai Motor Co.
Retail sales also snapped a decline in March. Consumers and businesses grew less
pessimistic last quarter. The index of consumer expectations, which points to
spending plans over the next six months, rose to 94.1 points in March from a two-year
low of 82.2 in December. Even so, a reading below 100 means more people plan to
cut than increase spending. The Federation of Korean Industries' business confidence
index topped 100 in March after dipping to 62.7 in January, the lowest in almost three
years, as companies said they expected both domestic sales and exports to rebound.
Not Just Yet
While expectations for the economy may be improving, there is plenty of evidence
that a rebound has not happened yet. Industrial production gained 4.9 percent in the
first quarter from a year earlier, about one-fifth the 23.6 percent growth recorded in
the same period last year. Korea's manufacturers are still leaving more than a quarter
of their capacity idle and cutting back on investments. Exports, which made up 45
percent of Korea's GDP last year, grew just 2.4 percent in the first quarter from a year
ago, compared with a 29.8 percent surge a year earlier. A 10.1 percent drop in
semiconductor exports during the quarter is a sign that demand for electronics --
which helped pull the economy out of the 1998 recession -- is faltering in key markets
such as the U.S. and Japan. Factory stockpiles rose 15 percent from a year earlier in
March, a sign companies are making more goods than they can sell. Korean
companies cut overseas investment by more than half last quarter from the fourth
quarter, and the government expects them to scale back spending on factories this
year. A government drive to clean up about $50 billion in companies' bad debt is
putting an added drag on investment.
U.S. Exposure
The International Monetary Fund last month cut its forecast for Korea's economic
growth to 3.5 percent from an earlier 6.5 percent. ``It's difficult to say whether the
economy is settling in for stable growth,'' said Go You Sun, an economist at Meritz
Securities Co. in Seoul. ``There are many uncertain factors in and outside Korea, the
main concern being the U.S. economy.'' Government officials have said the economy
may grow less than 4 percent this year if the U.S. economy slows more sharply than
expected. The finance ministry in December initially forecast 2001 growth of as much
as 6 percent. The central bank cut its key interest rate a quarter-point to 5percent in
February, citing declining industrial production and weaker spending and investment.