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- Samsung is leader of the pack in terms of stock valuations
Date: December 13, 2010
Source: JoongAng Daily
The 10 largest conglomerates account for 54 percent of the total market capitalization of the local stock market, according to the Korea Exchange yesterday.
The total market capitalization of the nation's 10 leading business groups by assets, which excludes state enterprises, stood at 638.5 trillion won ($562.6 billion) as of Dec. 2, up 29 percent from 494.1 trillion won last year.
With a rise in market capitalization, the top 10 groups account for 54.2 percent of the Kospi market, up 3.41 percentage points from a year earlier.
"This year, Samsung Group has newly listed companies with large market capitalization like Samsung Life Insurance. In addition, some blue-chip companies in the IT and auto sectors have shown relatively stronger performances than small- and mid-cap stocks, which significantly boosted the market capitalization [of the top 10 groups]," explained an official at KRX.
By group, Posco was the only group that posted a decline in market capitalization this year, posting an on-year drop of 19.37 percent this year as of Dec. 4. This reflected an increase in raw material prices while steel demand declined, according to analysts.
"A recovery in steel demand is expected to be slow for the time being while excessive production in the global steel industry is likely to continue for a while," said an industry source, indicating that Posco is expected to suffer weak performances at least until the end of this year.
Nine other groups all posted an increase in their market capitalization this year with Hyundai Heavy Industries showing the highest rise of 113.12 percent from a year ago.
"Stocks in the shipping industry mostly rallied this year as they underperformed in the market last year," said Lee Jae-won, an analyst at Tong Yang Securities.
"Since the share price drop was sharp last year, stocks in the shipping sector have been performing relatively well this year. Although Hyundai Heavy Industries is forecast to continue a robust performance next year, its growth is likely to slow down."
Hyundai Motor Group comes after Hyundai Heavy Industries in terms of growth in market capitalization this year with an on-year rise of 62.46 percent. Market researchers explained that the automaker's strong performance this year was based on the fact that global competitors, including Toyota, General Motors and Ford, showed relatively weak performances during the period following the global financial crisis.
Samsung Group has firmly maintained its No. 1 position, with its market capitalization exceeding the 200 trillion won mark, accounting for one third of the top 10 groups’ market capitalization.
In particular, the listing of Samsung Group affiliate Samsung Life Insurance, with market capitalization of 20 trillion won, greatly expanded the group's market capitalization.
- The middle-aged are a rising customer segment for e-commerce.
Date: December 13, 2010
Source: Mail Economic Newspaper
Recent findings concerning traffic data in Korea’s e-commerce industry reveals that online shopping malls focused on the sale of mobile phones experienced explosive growth in the latter half of this year.
According to a study of visitor traffic for some 12,000 online shopping malls announced yesterday by the Korea Chamber of Commerce and Industry in cooperation with Rankey.com, a web traffic analysis service, user traffic for mobile phone-related shopping malls increased by 192.3 percent between July and October compared to a year ago.
Price-comparison sites, increasingly used by online consumers to find the best bargain, saw notable growth, with a 52.6 percent on-year jump in visitor traffic.
Web-based online shopping malls dealing in baby and children’s products posted a 48.1 percent increase in traffic. “The proliferation of smartphones has led to the rapid increase of consumers visiting shopping malls for mobile phones in the second half of this year,” said the Korea Chamber of Commerce and Industry.
The number of visitors accessing Internet shopping malls increased by 8.4 percent in the latter half of 2010 compared to a year ago.
In terms of traffic volume, Korcham said that “comprehensive” online malls that sell numerous products - a selection of 12 Web sites including open markets like GMarket and Auction and the online arms of brick-and-mortar retailers such as Lotte.com and Shinsegae Mall - were found to host the largest share with an average of 21.85 million visitors per month.
In other words, the equivalent of 44 percent of the entire Korean population visits one of these online malls at least once a month. Those in their 30s were the biggest users comprising 42.1 percent of visitors while online mall visitors in their 40s increased by 2.2 percent.
Visitors in their 20s fell by 3.9 percent, leading Korcham to refer to the phenomenon as “the continued increase of middle-aged and mature users of e-commerce.”
Date: December 7, 2010
Source: Hankyung Economy
The government yesterday announced specific plans to boost the green car industry, which is lagging behind those of other countries, with a goal of becoming the world’s fourth-largest manufacturer.
Based on a joint plan announced by several ministries including Knowledge Economy and the Environment, the government plans to produce 1.2 million green cars by 2015, of which 900,000 will be exported, with an aim of reaching a 21 percent share of the domestic vehicle market.
“The world’s auto industry is facing a major upheaval led by global warming and resource depletion,” the ministries said in a release.
The transportation industry accounts for 25 percent of total carbon emissions in the industry sector and countries around the world are enhancing regulations regarding the auto sector to reduce emissions.
“And naturally, the green car industry is one of the major industry focuses by many countries as part of their green growth plans,” the release said The ministry noted that Korea at this point lacks competence in the green car industry and also doesn’t have a national systematic strategy for improvement.
“Compared to other developed nations like Japan, the United States, Europe and China, Korea lacks competence in developing green car components including electric vehicle motors, batteries, common rail direct injection engines and battery chargers,” the ministry said. Korea plans to promote the green car industry based on four different initiatives: presenting a road map for the mass-production of green cars; developing eight major green car components; planning green car supplies; and expanding the battery-charging infrastructure for motorists.
Highly energy-efficient green cars include electric vehicles, hybrid cars and clean-diesel vehicles. Over the next five years, the government will come up with a road map for boosting the industry by urging the private auto industry to aggressively invest in it.
According to the ministry, the local auto industry invested 1.3 trillion won ($1.1 billion) between 2006 and 2010, while it wants investment from 2011 to 2015 to increase to 3.1 trillion won.
Regarding production plans, the government aims to start mass producing plugged-in hybrid vehicles in 2012, fuel cell vehicles in 2015 and clean-diesel buses in 2015. Currently, the green car product that is furthest along in development is Hyundai Motor’s BlueOn, which will start mass production next year.
Date: December 15, 2010
Source: Yonhap News
President Lee Myung-bak and other members of the cabinet attend a briefing by the Ministry of Finance centered on forecasts for next year and economic policy strategy, yesterday at the Blue House.
The finance ministry estimates that the economy will grow by 5 percent, which is slightly higher than forecasts by private institutions. [YONHAP]
With lingering global economic uncertainties, the government said yesterday that it will manage economic policy more flexibly in the new year.
Economy-related ministries’ four major priorities are to stabilize macroeconomic conditions and improve overall economic fundamentals; improve the life of the working-class by creating jobs; boost domestic demand and find new growth engines; and enhance the country’s reputation and global economic cooperation.
Other goals include limiting excessive capital flows, curtailing household debt and creating jobs for the poor. As part of measures to enhance financial soundness, the government will take additional action to prevent excessive capital flow if necessary, the ministry said. In June, it introduced a limit for currency-forward positions at both domestic and foreign banks in the county, and the ministry said yesterday that it could adjust that limit after observing the effects of the regulation.
The government will try to prevent household debt from growing faster than real economic growth and encourage financial institutions to expand fixed-rate mortgage loans to protect borrowers from volatility in the overall economy. Seoul will limit savings banks’ project financing loans to 20 percent of their total outstanding lending by 2013 from the current 30 percent. Banks will also need to establish more loan-loss provisions for project financing loans.
The ministry said it will consider gradually introducing a fee for the hiring of foreign workers. However, for the time being it will simplify visa regulations and expand the types of employment available for foreign workers.
The government said its policy approach will take broad economic conditions, employment and inflation into account. “We need to be flexible with uncertainties in the global economy,” Minister of Strategy and Finance Yoon Jeung-hyun told the press at the government complex in Gwacheon, Gyeonggi.
“Exports are growing at a steady pace and domestic demand is recovering, and I believe 5 percent growth is possible if the government’s policies are implemented well,” the minister added.
Yoon Jong-won, director general of the ministry, said officials will “make sure that growing liquidity and capital inflows won’t destabilize prices and asset markets.”
The ministry will change the name of the “contingency policy meeting” back to “economic policy meeting,” marking the normalization of economic policy. It will also end economic stimulus packages enacted during the global financial crisis in 2008 and 2009, such as the Hope Works projects that have provided jobs for the poor.
The ministry intends to front-load 55 percent to 60 percent of the budget in the first six months of the year, as it anticipates slower growth in the first half of 2011. The policies are based on economic forecasts that the economy will continue to grow, albeit at a slower pace than this year.
The ministry said this year’s economic growth will be 6.1 percent, which is 0.1 percentage point higher than its previous estimate of 6 percent. Other targets for this year: The current account surplus will be $29 billion and inflation will be 2.9 percent.
Forecasts for next year include 5 percent growth, which is higher than the 4-5 percent forecasted by other institutions; the creation of 280,000 new jobs; and a $16 billion current account surplus. The government expects the global economic recovery to continue on the back of emerging countries, though the recovery will likely be gradual with potential volatility in international financial markets.
The ministry said it expects employment growth and a recovery in the real estate market in the United States to be slow. But it expects the economic recovery there to speed up as debt restructuring enters its final stage.
The Fair Trade Commission said it will further eliminate entry barriers for the broadcasting, medial, education and energy industries in the first half of next year. The antitrust agency said it will increase the number of products it compares from a price standpoint to their counterparts overseas to 100 from the current 80.
Lastly, the Ministry of Land, Transport and Maritime Affairs said it will complete the main sections of the four-rivers restoration project in the first half of this year and that 210,000 housing units for low-income earners will be built, as had been previously announced.
Date: December 16, 2010
Source: JoongAng Daily
The Ministry of Knowledge Economy will focus on boosting the nation’s economy next year and lifting trade volume past the $1 trillion mark by promoting policies that support balanced expansion, cooperation between large and small firms, and green growth.
“Korea managed to become the world’s seventh-largest export nation this year for the first time by aggressively entering emerging markets, and the country will post a record volume of annual exports this year,” Vice Knowledge Economy Minister Ahn Hyun-ho said yesterday during a press briefing held at a government complex in Gwacheon, Gyeonggi.
Based on the rapid growth of various domestic industries this year, Ahn said that Korea’s trade volume “is likely to breach the $1 trillion mark” next year - a level that only eight countries have reached.
In 1992, the United States posted $1 trillion in trade volume for the first time, followed by Germany in 1998, China and Japan in 2004, France in 2006, and Italy, the United Kingdom and the Netherlands in 2007.
Korea recorded $100 million in trade in 1951, $10 billion in 1974, $100 billion in 1988 and $500 billion in 1995. Korea’s trade volume this year is expected to hit $889 billion.
According to the ministry, Korea’s exports next year will increase by an estimated 10.3 percent to hit $513 billion, while imports are expected to surge by roughly 15.1 percent to $488 billion. Ahn said the government can play a key role in helping the business community.
He highlighted some of the fiscal policies promoted by the government after the 2008 global economic crisis broke out, such as moves to provide tax incentives to consumers who purchased new vehicles and to support small and midsize firms.
The ministry also has focused on propping up 17 new growth industries - including the smart power grid and electric vehicle sectors - and promoting low-carbon green growth policies by exporting nuclear reactors and plants overseas.
“To accomplish the goal of becoming one of world’s top trading countries, we will work next year to craft a business culture that supports coexistence between large and small firms and boosts the fundamental competency of small firms,” Ahn said.
Additionally, on Monday the Commission on Shared Growth for Large & Small Companies - led by former Prime Minister Chung Un-chan - was established with the goal of encouraging conglomerates and small enterprises to work closer together and on fostering green growth.
- E-Mart is seeking to enter turf long dominated by Costco Wholesale in Korea
Date: December 17, 2010
Source: Yonhap News
Competition among warehouse-style discount stores is increasing, with one of the newest battlegrounds emerging in the southern region of the Seoul metropolitan area.
E-Mart last month reopened its Guseong outlet in Yongin, Gyeonggi, under the name E-Mart Traders, which boasts that it has the “lowest prices in the nation.” Costco Wholesale Korea’s Yangjae outlet in southern Seoul quickly responded by cutting prices on key products. E-Mart Traders is an offshoot of Shinsegae E-Mart, the nation’s largest domestic discount store chain.
The local unit of U.S.-based Costco ranks as the first warehouse discount store group in Korea, with seven outlets nationwide and 16 years of domestic experience behind it - not to mention a global presence.
The two warehouse discount stores are employing different strategies to attract customers, as a recent visit highlighted. Costco Wholesale’s Yangjae outlet and E-Mart Traders in Yongin are classic warehouse-type discount stores that specialize in selling products in bulk.
Both outlets only have between 4,000 to 5,000 individual products in stock - less than a tenth of the number stocked at large discount stores, which usually sell between 60,000 to 70,000 individual products. That means a large array of products can’t be found in either outlets, and sometimes there is only one brand of a particular product.
At E-Mart Traders, for instance, there was only one brand of ketchup, Ottogi, on the shelves. The biggest difference between the two outlets are membership rules.
Costco Wholesales requires customers who even want to enter the store to sign up for a membership that carries a fee of 35,000 won ($30.73) per year.
The only credit cards it accepts are ones issued by Samsung Card, which has an exclusive arrangement with the retailer. E-Mart Traders, however, does not require membership and therefore is open to everyone.
The outlets also specialize in different product lines. A clothing department with piles of fur coats, shirts and jeans on display is on the ground floor of the Costco Wholesale outlet in Yangjae. On the same floor there are imported perfume brands, such as Bvlgari and Kenzo, as well as luxury items from Burberry and Fendi.
While the store specializes in imported brands and clothing, E-Mart Traders appears to be aiming for owners of small restaurants. Everything a prospective restaurant owner needs is available in one place - including large cooking pots for restaurant kitchens, melamine bowls, restaurant napkins in bulk and even restroom signs.
The E-Mart Traders outlet even has a team of consultants to give free advice about restaurant operations. Pricing competition is fierce between the two outlets. A key product on sale at both stores is the popular Shin Ramyun, the traditional brand of spicy instant noodles from Nongshim.
The noodles are favored by owners of small restaurants. A box of 30 Shin Ramyun packets, which sold for about 16,000 won in both outlets on Nov. 26, were being sold for about 8,000 won at both outlets just two weeks later.
A bottle of 2007 Almaviva, a Chilean wine with a sticker price of 115,000 won, was on sale for a little more than 90,000 won. A pack of 24 500-milliliter bottles of Evian - which normally costs 26,000 won at regular large discount stores - was being sold for 10,000 won.
The price cuts don’t help the bottom line directly but are meant to attract customers. E-Mart, which is planning to enter the wholesale distribution market in the first half of 2011 in cooperation with the state-run Small and Medium Business Administration, sees E-Mart Traders as a means to test the waters for its competitive ability in the wholesale market.
E-Mart estimates that about 15 percent of customers who visit E-Mart Traders are small business owners operating restaurants or supermarkets. E-Mart Traders says it can grow since it offers prices 10 to 15 percent below those in regular discount stores and the prices of some products are even cheaper than those offered by wholesale suppliers.
Kim Si-jae, a 35-year-old owner of a supermarket in Yongsan District, central Seoul, was shopping in E-Mart Traders on Dec. 10. “A can of soda that we get from wholesale suppliers for 450 won costs 290 won here, while a packet of Shin Ramyun that we used to get for 500 won costs 270 won now,” he said. “I think I’ll visit from time to time to buy products cheaply.”
Date: December 18, 2010
Source: Mail Economic Daily
People working in the livestock industry could be banned from entering the country without undergoing a sterilization process after traveling abroad, a policy that is part of the country’s effort to block the source of the foot-and-mouth disease (FMD).
“We are planning on installing sterilizers at international airports and blocking people who work in the livestock industry from entering the country if they don’t have a document proving that they’ve gone through the sterilization process,” a high-ranking official from the Ministry for Food, Agriculture, Forestry and Fisheries said on Thursday.
The plan was recently proposed to the Ministry of Justice, he said. The ministry’s move comes amid rising concerns about the rapid spread of FMD. The disease first appeared in North Gyeongsang last month and has since reached the Gyeonggi area.
Most cases of FMD are suspected of having been caused by viruses entering from overseas. Before the recent FMD outbreak, the ministry proposed an amendment to a bill regarding the prevention of infectious disease in domestic animals.
The amendment would have required people in the livestock industry who have traveled abroad to be sterilized. They would also have had to report their return to Korea to the government. The bill, however, is still pending at the National Assembly.
Now that FMD has spread, however, the ministry has proposed an even stronger measure wherein only those who undergo the sterilization procedure would be allowed to enter the country.
However, the amendment has become controversial, even though the sterilization procedure would completely block the virus. There are concerns that people in the livestock industry may object to the policy because of the limits it would place on their ability to travel.
Source : http://www.depthai.go.th