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Oct 04, 2005
- Consumer Credit Card Spending: January-August, 2005
- An analysis of consumer credit card spending by the FSS for the first eight months of the year showed that credit card spending−purchase of goods and services and cash advances−came to KRW184 trillion, down KRW10.7 trillion or 5.5% from KRW194.7 trillion during the same period a year earlier. Credit purchase of goods and services totaled KRW111.1 trillion, up KRW9.5 trillion or 9.3% from a year earlier, while cash advances fell KRW16.8 trillion or 19.6% to KRW68.9 trillion as credit card issuers cut back on cash services and canceled card members with poor payment history. Since the first quarter of 2004, the amount of credit card purchase of goods and services has been greater than that for cash advances.Purchase of Goods and ServicesDuring the Jan.–Aug. period, the amount of goods and services purchased totaled KRW111.1 trillion, compared with KRW101.6 trillion during the same period a year earlier. Consumer purchase of goods and services has increased for four consecutive quarters since the third quarter of 2004.In May and August, credit purchases totaled KRW14.93 trillion and KRW14.88 trillion, respectively, close to the December 2004 record of KRW14.94 trillion.Full-Payment Installment Payment PurchasesCredit purchases paid in full upon the due date have steadily increased since 2002. During the Jan.–Aug. period, purchases paid in full jumped 10.9% from a year earlier. Installment purchases, typically used for durable consumer goods and other high-price goods and services, showed a modest increase of 4.5% during the Jan.– Aug. period.Credit Purchases by Age GroupBy age group, the share of credit card purchases by consumers older than 40 years has risen steadily, while the share of purchases by consumers younger than 30 years has fallen, suggesting that the increase in credit card purchases is being led by older consumers with relatively stable and higher income.Major PurchasesFigures from 15 of the 178 merchant groups that made up approximately 56.4%
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Sep 12, 2005
- Direct Corporate Financing Decreases in August
- Data compiled by the FSS showed that stocks and bonds issued by domestic companies in August totaled KRW3.74 trillion, marking a decrease of 30.9% from a month earlier. The decrease in direct corporate financing was due to the seasonal effect of low demand for corporate financing. Stocks and bonds issued fell 46.4% to KRW290.6 billion and 29.1% to KRW3.45 trillion from a month earlier, respectively.Equity FinancingStocks issued fell 46.4% in August due to temporary adjustments in the stock market. There were two IPOs during August totaling KRW16.8 billion, compared with 14 IPOs of KRW215.4 billion in July. The amount of seasoned equity offerings (SEOs) in August fell 16.3% from a month earlier to KRW273.8 billion.Debt FinancingCorporate BondsExcluding Asset- backed securities (ABS) and financial bonds, corporate debt issues decreased 19.8% to KRW1.40 trillion in August as interest rates in the bond market rose and the amount of maturing bonds decreased KRW618.4 billion from a month earlier. Corporate debt issued for facilities investment and rollovers increased 311.5% and 14.7%, respectively, while corporate debt for operating capital dropped35.6%.Financial BondsFinancial bonds issued in August fell 30.4% to KRW803.0 billion from KRW1,153.0 billion in July due to a rise in bond interest rates. Bonds issued by credit card companies and installment finance companies dropped 34.8% to KRW543.0 billion and 18.8% to KRW260.0 billion, respectively.Asset-Backed SecuritiesAsset-backed securities (ABS) issued by public offering totaled KRW1.24 trillion in August, down 36.6% from July but up 26.1% from the same period last year. The total ABS issuances in August came to KRW2.59 trillion, up 2.0% from July and 19.1% from the same period last year.Direct Financing by Large Companies and SMEsThe amount of debt (excluding ABS and financial bonds) and equity financing by large companies fell 26.5% to KRW1,433.1 billion and that of SMEs also fell 23.9% to KRW259.6 billion from a mon
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Sep 06, 2005
- Equity Disclosure Filings: First Half of 2005
- An analysis of equity ownership disclosure filings during the first half of this year showed that a total of 2,413 investors held together with related parties 5% or more of the outstanding shares of 1,548 publicly-held companies—671 Stock Market (formerly KSE)-listed and 877 KOSDAQ-listed companies—as of the end of June. Five tender offers and 108 proxy solicitations were made during the period, compared with nine and 124, respectively, during the same period a year earlier.Disclosures Related to the 5% RuleThe number of disclosures filed under the 5% rule rose 2,038 or 55% to 5,718 from 3,680 a year earlier. Most of the increase resulted from investors re-filing disclosures as mandated under the amended 5% rule that took effect March 29 this year.A breakdown of the filings by investment purpose showed that, of the 2,413 investors who filed disclosures under the 5% rule, a total of 1,494 investors—1,417 domestic investors and 77 foreign investors—declared Exercising Influence on the Management as the intended investment purpose; the rest declared Investment Only as the intended investment purpose.Disclosures on Tender OffersA total of five tender offer-related disclosures were filed during the first half of the year. Of the five, four were intended for going private and the other as a defensive move against potential hostile takeover bids. All five were filed by local investors and companies. A year earlier, there were a total of nine tender offer filings, of which three were by foreign entities.Disclosures on Proxy SolicitationA total of 108 disclosures were made for proxy solicitations during the first half of the year. Of the total, 93 were for meeting the quorum requirements in the general shareholders’ meetings; the rest was for proxy contests. One of the proxy solicitation disclosures was filed by Crest Securities on behalf of Sovereign for SK Corporation’s general shareholders’ meeting.* Please refer to the attached PDF for details.
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Jul 29, 2005
- Amended Regulation on Outsourcing by Financial Services Companies Takes Effect July 27, 2005
- The FSC/FSS announced on July 26 that the newly amended Regulation on Business Delegation of Financial Institutions took effect July 27, 2005. The newly amended regulation is a major deregulatory step that significantly broadens the range of activities that can be outsourced by financial services companies and help them utilize outsourcing more efficiently. One of the key changes to be implemented under the amended regulation is a shift from a positive regulatory regime that provides for activities financial services companies may outsource to a negative regulatory regime that provides for activities financial services companies may not outsource. Thus, as a general rule, financial services companies will be allowed to outsource activities unless the regulation specifically provides otherwise. The following is a summary of the newly amended regulation on outsourcing.Expanded outsourcing by financial services companies• Adoption of negative regulatory regime for outsourcingAs a rule, outsourcing is to be allowed for financial services companies unless the activity to be outsourced (i) constitutes a part of the core business activities of the financial service company; (ii) is mandated under the law to the financial service company, or (iii) poses risk to the soundness of the financial services company, undermines orderly conduct of their business, or causes consumer harm. In addition, the core business activities of financial services companies are specifically provided for so that non-core activities may be outsourced without undue discretionary intrusion from the regulators.• Back-office support activitiesThe amended regulation newly defines outsourcing as utilizing the services or the facility of a third party in order to perform financial services activities approved by the FSC/FSS and provides that outsourcing encompasses the back-office and other support activities of financial services companies. As a general rule, outsourcing is to be allowed for back-off
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Jul 22, 2005
- SFC to file criminal complaints against two individuals and an investment fund for illegal securities trading
- The Securities and Futures Commission announced on July 22 that it had completed deliberations on the findings of the investigation of trading of a listed company’s shares by an investment fund (“H”)* and decided to file criminal complaints with the Supreme Prosecutors’ Office against H, its former director of emerging markets (“R”), and a broker at an overseas subsidiary of a local securities company (“K”). The complaints will allege that R and K engaged in a scheme to manipulate trading of shares of a listed company (“S”) and that H, as R’s principal, was liable for his illegal activities.Findings of Investigation by Financial Supervisory ServiceThe investigation by the Financial Supervisory Service found that R acquired 7,772,000 common shares (5%) of S through H’s account between November, 2003, and March, 2004, and 8,300 preferred shares of S on his own personal account on March 3, 2004, and conspired with K to manipulate trading of S shares by repeatedly portraying the company as a potential takeover target through the news media. R also repeatedly urged S publicly to buy back its preferred shares and retire them.After S publicly made a share buyback offer for its common and preferred shares on November 26, 2004, R raised the prospect for hostile takeover bids for the company and expressed his support for such attempts in an interview he arranged with a widely circulated local newspaper on November 29, 2004. R also expressed his support for retirement of S’s preferred shares in the interview. The interview, which was published on December 1, 2004, prompted heavy trading and bidding up of S’s shares among investors and effectively provided artificial support for price and trading volume R sought to unload H’s substantial holdings in S two days later.On December 3, 2004, R sold off all of H’s holdings in S and realized gains totaling KRW29.2 billion (US$ 28.0 million). On the same day, R also sold off all of his own preferred shar
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Jul 22, 2005
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Jul 14, 2005
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Jul 07, 2005
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Jul 01, 2005
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Jun 23, 2005
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Jun 22, 2005
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Jun 01, 2005
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May 27, 2005
- FSC Action on Leading Investment & Securities’ Applications for Share Acquisition and Merger with Bridge Securities
- The Financial Supervisory Commission announced on May 27 that it had decided not to give regulatory approval to the applications by Leading Investment Securities Co., Ltd. to acquire shares of Bridge Securities Co., Ltd. and merge with the company.Leading Investment Securities Co., Ltd. stated in the business plan it submitted to the FSC that it envisioned a sharp turnaround after the proposed merger with Bridge Securities (cumulative three-year net income totaling KRW33.9 billion following the merger). Leading Investment Securities also anticipated securities underwriting and investment banking as its key revenue sources.The FSC noted that the two companies incurred large net cumulative losses totaling KRW58.4 billion between April 2002 and December 2004 from mostly engaging in securities brokerage and dealings. The FSC further noted that the amount of financing put forth by Leading Investment Securities to complete the merger (KRW149.4 billion), including share purchases, restructuring expenses, and share buybacks, can be covered only by disposing of nearly all of the liquid assets of the merged company (KRW156.1 billion). Because the merged company would then be left only with illiquid assets such as unlisted shares and physical assets, it is unrealistic to expect the company to engage in normal securities dealings and underwriting activities, both of which typically require substantial financial resources.Furthermore, the recent increase in share buyback price Leading Investment Securities proposed for the shareholders of Bridge Securities as well as other merger expenses raise serious doubts about post-merger liquidity positions of the company. It was also determined that revenue outlook for the company was uncertain given the planned downsizing of branch operations and underwriting business and a lack of experience in and specific business strategies for investment banking.After taking into consideration the asset structure, the underlying business strength an
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May 10, 2005
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Apr 25, 2005
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Apr 07, 2005
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Apr 01, 2005
- Correction to March 31 Financial Times Article "Seoul's new rules anger overseas investors" by Anna Fifield
- The FSC/FSS and the Ministry of Finance and Economy hereby issue a correction to March 31 Financial Times article entitled “Seoul’s new rules anger overseas investors.” The article misinterprets the recently amended “5% rule,” labeling it a “draconian” requirement and a move designed to tighten controls on foreign investors. In particular, the article stretches the 5% rule to suggest that it was connected to the equity investment in SK Corp. by Sovereign Asset Management and the gains recently achieved by Newbridge Capital after selling its stakes in Korea First Bank.The 5% rule was first established with an amendment to the Securities and Exchange Act in 1991. The newly amended 5% rule was passed by the National Assembly on December 31, 2004, promulgated on January 17, 2005, and took effect on March 29, 2005.It is important to note that the 5% rule is widely adopted and enforced in many countries—particularly stringently in the U.S.—and Korea’s 5% rule is modest with respect to the kinds of disclosure compliance it requires from investors. Thus, the assertion made in the FT article that Korea’s 5% rule is “draconian” is a hyperbole and a mischaracterization that can only be expected from uninformed or misinformed observers.Moreover, as the FSC/FSS has pointed out on numerous occasions, the changes adopted to the 5% rule were intended only to replace broadly worded provisions with more specific and unequivocal rules. It was never intended to control the “pernicious” effects of foreign capital as the article falsely asserted.The FSC/FSS and the Ministry of Finance and Economy further note that the amended 5% rule is part of the ongoing effort to raise Korea’s corporate governance to the highest global standards. It is not related in any way to particular foreign investors and is applied equally and fairly to all investors, domestic and foreign. It is certainly not intended to tighten controls on foreign investors.The FSC/FSS and the Mi
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Mar 15, 2005
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Mar 10, 2005
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Feb 17, 2005
