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Apr 06, 2011
- Korean Financial Market Update
- 1. Recent trends in the stock marketThe KOSPI index, which once fell to a low point of 1,923.30 on March 15 after the Japanese earthquake, has rebounded to a record-high of 2130.43 on April 5, renewing the highest point of 2,115.69 prior to the earthquake.The recent recovery in stock prices is mainly attributed to foreigners’ net buying based on their optimism that the Korean economy is relatively stable amid ongoing external uncertainties such as Japan’s earthquake and political turmoil in the Middle East.2. Foreign investors’ movement in Korean stock exchangeForeigners sold KRW 3.5 trillion in February, the biggest net sale by monthly basis since May 2010, but made net buying of KRW 1.2 trillion in March: notably, net buying of KRW 2.8 trillion after the Japanese earthquake.(By country)Starting this year, there has been a continued outflow of European funds (including the U.K), reflecting ongoing uncertainties in the European region. By contrasts inflows of funds from the U.S. and Asian region have been increasing since March.*As of March, the U.S made a net purchase of KRW 1.3 trillion, Singapore of KRW 0.7 trillion, China of KRW 0.2 trillion*Despite our concern of Japanese capital being pulled back, Japanese made a net purchase of KRW 155 billion instead(By fund-type)In February, all foreign investors except for Asian sovereign funds were net sellers. Starting March, however, the U.S. funds began to make net buying in large volume. Net buying by foreign investors was mostly made after Japan’s earthquake, and European investors (excluding European funds) also turned net buyers of Korean stocks.(By investment period)It has turned out more than half of foreign net buying made after the Japanese earthquake was made by short-term investors. (i.e. investment banks)*Short-term: IB with investment turnover ratio over 500%3. Grounds for foreign investors’ net buyingWithout wider spread of risk from the recent Japanese earthquake and the regional conflict in the
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Dec 02, 2010
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Nov 24, 2010
- Results of Emergency Economic Meeting after North Korea's Artillery Firing
- Vice Minister of Strategy and Finance Yim Jong-yong called for an emergency economic meeting* on Wednesday, November 24, a day after North Korea’s attack on Yeonpyeong Island to discuss the attack s impact on domestic and overseas financial markets and policy responses to future developments.*attendees: Vice Minister of Strategy and Finance (chair), Vice Minister of Knowledge Economy, Vice Chairman of Fair Trade Commission, Vice Chairman of Financial Services Commission, Senior Deputy Governor of BOK, Senior Deputy Governor of Financial Supervisory ServiceMarket reactionsAs the news of North Korea’s artillery firing was first reported at around 2:58 pm, right before the market close at 3:00 pm, it did not have a substantial and immediate impact on the stock market. However, after-hour markets including the futures market rattled, showing growing volatility.Right after the outbreak of the incident, Korea’s CDS spreads and Non-Deliverable Forward (NDF) rates sharply soared, but over time there has been no further rise.Potential impactThe attack’s impact on financial markets and the real economy may vary with future developments of the incident; however, as long as the situation does not escalate further, the impact is expected to remain temporary as it did when faced with similar geopolitical risks.Considering Korea’s solid economic recovery, fiscal soundness, current account surplus, and large foreign exchange reserves, to which foreign investors give high credibility, the Korean economy has sufficient capacity to absorb external shocks.Market observers and credit rating agencies assess that the incident would not significantly affect Korea’s sovereign credit ratings. *Moody’s said that North Korea’s attack would not negatively affect Korea’s sovereign credit rating.*Fitch maintained Korea’s sovereign rating at A + with the “stable” outlook.*SP said that the incident would not undermine foreign investment in Korea and other indices affecting K
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Nov 01, 2010
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Oct 27, 2010
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Oct 18, 2010
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Oct 15, 2010
- FSB Plenary Meeting and BCBS Meeting held in Seoul
- The 6th Plenary Meeting of Financial Stability Board and the 137th Basel Committee on Banking Supervision Meeting will be held at COEX Convention Center in Seoul on October 20 and 19, respectively.The Financial Stability Board (FSB) was created in April 2009 as the successor to the Financial Stability Forum (FSF) by the Group of 20 in its London summit, which includes FSF members and 12 more countries such as Korea and BRICs. It coordinates financial regulatory and supervisory standards at the international level and Korea has participated since its inaugural meeting in June 2009.The Basel Committee on Banking Supervision (BCBS), established by the central bank Governors of the Group of Ten countries in December 1974, was broadened to include more members in 2009. It formulates broad supervisory standards and guidelines in banking supervision. Korea became a member in March 2009.FSB Plenary MeetingThe Plenary Meeting is aimed at discussing and coordinating opinions among member countries so that the task of financial reform assigned by heads of G20 could be completed in the summit held in Seoul.This meeting will bring together about 70 heads of national authorities responsible for financial policy and supervision and central banks from 24 countries and 12 international financial institutions including IMF, WB, OECD, BCBS, IOSCO, and IAIS.They will discuss reducing moral hazard of systematically importance financial institutions (SIFI), strengthening bank capital and liquidity regulation, reforming OTC derivatives market infrastructure, FSB Outreach program and reducing dependence on external credit ratings and other major financial reform agenda.FSB Outreach program is held with non-member financial authorities to provide information on FSB’s major financial reform agenda and encourage the implementation of the agenda as agreed in G20 Toronto summit.BCBS MeetingThe Basel Committee on Banking Supervision will meet to finalize issues related to its regulatory reform
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Oct 05, 2010
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Sep 29, 2010
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Sep 15, 2010
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Sep 02, 2010
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Aug 26, 2010
- Measures to Support SMEs Hit by International Sanctions against Iran
- In order to support local small-and medium-sized enterprises (SMEs) that suffered losses fromtheir business with Iran due to reinforced international sanctions against Iran, the Korean government has planned measures to support them.1. Providing policy funds for SMEsGovernment funds such as the SME Business Promotion Fund (SBP Fund) and a fast-track lending program will be utilized to support local SMEs trading with Iran.(1) For SMEs with large exposure to Iran, the government will provide emergency loans and defer repayment of principal for outstanding loans.In particular, for those who have a greater chance of recovery from the loss incurred by international sanctions against Iran, the government will offer emergency loans at a 3.7~5.4% interest rate for three years, up to KRW 500 million for one company. Companies who are undergoing corporate restructuring conducted by financial institutions or whose incurred loss exceeds KRW 100 million are qualified for emergency loans.For companies who experienced losses from their trade with Iran, the government will grant a one-and-half-year grace period for their existing debts while leaving their maturity period (5~8 years) unchanged.(2) For SMEs temporarily under liquidity crunch, the government will provide liquidity through a fast-track lending program. If companies trading with Iran apply for the fast-track lending, they will be granted special guarantees by the Korea Credit Guarantee Fund (KODIT) and the Korea Technology Finance Corporation (KTFC) on a preferential basis.**The KODIT and the KTFC will provide 65%~75% guarantees for newly extended loans, up to KRW one billion.The banking sector will also provide liquidity for SMEs by extending new loans or rolling over existing debts. The Korea Trade Insurance Corporation (KTIC) will also launch a liquidity support program for SMEs.(1) To ease liquidity constraints for SMEs, the KTIC is to speed up its review process to provide compensation as soon as possible when expo
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Jul 30, 2010
- Privatization Plan for Woori Financial Group
- The Public Funds Oversight Committee has held the 22nd Meeting today to finalize its plans to sell the remaining shares of Woori Financial Group (WFG) held by the Korea Deposit Insurance Corporation (KDIC), where a consensus has been reached that after successfully making two block sales, once in November 2009 and once in April 2010, totaling 16% of WFG, bringing the total amount of shares held by the KDIC down to a 50% level, an appropriate condition has been set to finalize the privatization of WFG.The privatization will be carried out with the three basic principles: maximizing recovery of injected public funds; making an early privatization; and contributing to sound and productive advancement of the financial industry.(1) Method of privatizationIn line with the three basic principles, the sale of WFG shares will be done through two steps of open competitive bidding process by domestic and foreign investors; first, by preliminary bidding; and second, by final bidding.(2) Simultaneous sale of WFG and regional banksBoth the shares of WFG and the shares of regional banks held by WFG (Kyungnam Bank and Kwangju Bank) will be sold separately but up for the bidding at the same time.Although the two regional banks are under WFG, it has been viewed as more effective to sell them separately due to them not having an integrated data processing network with WFG and with low level of synergy effect. Moreover, because their value would be greater when sold separately taking into account their regional focused businesses.However, the bidding will be carried out simultaneously to prevent any delay in the overall privatization process.The sale of regional banks will be for 50% plus ne share or done through a completemerger. And the actual amount of shares of WFG to be sold or whether it will be done through a merger will be determined and finalized with close discussions with the to-be- selected sales advisory firms. (3) Selection of sales advisory firmsConsidering the size and
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Jun 16, 2010
- Conference on "The Global Financial Crisis and Microfinance: Challenges and International Cooperation"
- The Financial Services Commission (FSC), the World Bank and the Korea DevelopmentInstitute (KDI) co-hosted an international conference on “the Global Financial Crisis andMicrocredit: Challenges and International Cooperation” on June 15.As the first-ever conference on microfinance jointly hosted by the Korean government and aninternational organization, it was attended by Kwon Hyuk-Se, the Vice Chairman of the FSC,Kim Seung-Yoo, the Chairman of the Smile Microcredit Bank, Tunc Uyanik, the SectorManger of the World Bank, and many distinguished guests. Participants had in-depthdiscussions on the impact of the global financial crisis on microfinance, each country’sresponse to the financial crisis, and initiatives to strengthen international cooperation. FSC’s Vice Chairman Kwon pointed out that the global financial crisis increased the numberof the poor and widened the gap between the rich and the poor, which could lead to a social conflict. Against this backdrop, he emphasized that microfinance serves as a social safety net for those who have no access to conventional financial services and an important means for overcoming the global financial crisis. Smile Microcredit project, the Korean model of microfinance, is led by the private sector withprivate donations and dormant savings as funding sources. In the wake of the global financialcrisis, fiscal conditions of many governments have been deteriorated. Vice Chairman Kwonsaid that under such circumstances, microfinance could be a viable option for each government to tackle economic polarization.The Korean government expects the conference to contribute to expanding microfinancebusinesses such as Smile Microcredit. Korea will bring the issue to the G20 summit meetingto urge that microfinance could play a key role in overcoming financial crises. 1. Diversify funding sources, including individuals’ contributions2. Cut operation costs by renting offices from public institutions as Smile Microcredit Bank’s bran
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Jun 03, 2010
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May 19, 2010
- FSC Chairman's Speech - Korea Economic Forum
- Ⅰ. GreetingsGood morning, ladies and gentlemen!I would like to begin with my thanks to Mr. Song Philho, CEO of JoongAng Ilbo, Mr. Lho Cholsoo, publisher of JoongAng Daily, and Mr. Chung Ki-young, president of Samsung Economic Research Institute, for inviting me to speak at today’s forum.I also wish to acknowledge and thank honorable ambassadors, business leaders, and members of the foreign press who are with us today.The global financial crisis, unprecedented in both scale and scope, now appears to have run its course.Troubling new developments in the euro-zone economies, however, remind us that there are still many post-crisis uncertainties we must contend with.So, once again, we must wonder where the euro-zone crisis is headed, and what impact, if any, it may have on Korea’s financial markets and the economy.And it is my hope that today’s forum will shed new light on some of the questions that are on everyone’s mind.This morning, I would like to use my time to outline major financial policy issues we confront and tasks that lie ahead.Ⅱ. Korea’s Financial Policy: Current Issues TasksThere is no question that the global financial crisis forced us to reflect on our past and take stock of what went wrong.The crisis was, in many ways, a heavy blow to our conventional wisdom: namely, a blind faith in market efficiency, innovation and risk-taking.Now, with the benefit of hindsight, the international community is working to introduce wide-ranging financial regulatory reform measures.I believe we must prepare wisely for what lies ahead and maintain our vigilance on changes that are unfolding in the global financial environment.For our part, we are going to formulate financial policies within the context of the new global financial order with a focus on enhancing Korea’s financial capabilities.Addressing Destabilizing FactorsFirst and foremost, we will continue to respond swiftly and preemptively to destabilizing market developments to put out the fire befor
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Mar 31, 2010
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Feb 10, 2010
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Jan 28, 2010
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Jan 13, 2010
- Introduction of Foreign Investor Express Card
- The Financial Services Commission (FSC), the Ministry of Justice and the Fn Hub Korea (the Center) of the Financial Supervisory Service have agreed to issue the "Financial Investor Express Card" with an aim to increase the number of foreign executives of foreign financial institutions eligible for fast-track immigration lanes. Also, the Center has published the "Visa Immigration Guide for Foreign Employees of Financial Institutions" to help meet foreign employees' needs related to immigration and visa issues.Financial Investor Express CardWith the introduction of the Financial Investor Express Card, foreign executives of a Korean branch of a foreign financial firm will become eligible to use fast-track immigration lanes.So far, only the executives of a Korean subsidiary of a foreign-invested enterprise and the holders of the Investor Express Card1 have been permitted to use the fast track.However, to reflect the contribution of branches of foreign financial firms to the Korean economy and to help attract foreign investment, the three organizations have decided to expand the benefits of fast-track immigration lanes.The Financial Investor Express Card will be issued to deputy general managers or higher executives, holding a supervisory intra-company transfer (D-7) visa, of a Korean branch with an operation fund of KRW 7 billion or more.The FSC and the Center will complete the preparations by the end of January 2010 and begin to accept applications and issue the card from February. (Please call Financial Hub Korea at +822-3145-7171 for inquiries)The introduction of the card is expected to improve conveniences of foreign investors and promote foreign investment in the financial industry.Visa Immigration Guide for Foreign Employees of Financial InstitutionsTo make a better living environment for foreigners, the Center, with the cooperation of the Ministry of Justice, has been providing foreign employees of financial institutions and their families with supporting service
