TOP STORY Daum Kakao Head Lambasts Fintech Environment in S

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No. 4636 Monday, May 18, 2015

TOP STORY

TODAY’S HEADLINES Daum Kakao head lambasts

FinTech environment in S. Korea

Shinsegae picks By Hong Jang-won flagship dept store as candidate for duty free shop

Listed firms pay out record dividends to foreigners

Bahn Joo-hyun rejects rumors on deal brokerage involving UN chief

Hana sweetens proposal for KEB union over merger

Samsung vice “Considering Alibaba’s Yu’ebao, based in China, holds 100 trillion chairman picked as won ($92 billion) in mobile payment balance, Bank Wallet Kakao new chief director of which allows transfers up to only 100,000 won cannot be called a Samsung’s two FinTech firm. It is embarrassing to hear Daum Kakao is a foundations FinTech firm. I feel like crying.”

FSC chief suggests Lee Seok-woo, co-CEO of Daum Kakao, complained the South industry-wide Korean FinTech industrial environment and bitterly criticized restructuring regulations which stand in the way of industrial development at a time when the government vowed to nurture the FinTech sector. Kim Moo-sung beats Moon Jae-in in Mr Lee spoke out his mind at the Korea Exchange in Yeoido, approval rating as 2017 Seoul, the place for FinTech academic symposium held on May 15. presidential candidate: poll “Due to regulations, it took two and a half year before we launched Bank Wallet Kakao, a mobile money transfer service,” Corporate restructuring he raised voices. “If the government does not make changes in to embark for regulatory frame, FinTech industry in Korea will be nowhere to shipbuilders be seen.”

‘K-Movie’ fever hits China He added, “it was in March 2012 when the idea of Bank Wallet Kakao first came up from a Kakao Talk user.” He went onto say,

Monday, May 18, 2015

“but we had to wait a year and a half to obtain security approval from the financial authorities.” In other words, when it comes to the idea planning, Korean firms did not fall behind their counterparts in advanced nations in mobile payment race. However, while winning through strict regulations and missing the golden opportunities, they lost out to those in the US, UK and even China.

FINANCE

Listed firms pay out record GS Shop paid dividends worth 18.5 billion won, up 105.6 percent yoy, to foreign dividends to foreigners shareholders. LOEN Entertainment ranked second with 12.3 billion won last By Kang Da-young year even though it did not pay dividends in the previous year. It was followed by Paradise with eight billion won, up 45.5 percent yoy.

By market, dividends to foreign shareholders on the KOSPI market climbed 30.3 percent yoy to 5.9 trillion won. Those on the KOSDAQ market recorded 129.7 billion won, up 34.4 percent yoy. Dividends to foreign shareholders had stayed at the four trillion won level from 2010 to 2013 but the dividends surpassed six trillion won for the first time last year.

Listed companies closing books in

December disbursed a record dividend of over six trillion won ($5.4 billion) to foreign Hana sweetens proposal for stockholders last year. KEB union over merger

The number of companies who paid By By Lee Yoo-sup dividends to foreign shareholders came to 940 last year, up 57 year-on-year (yoy). The total amount of dividends rose 30.4 percent yoy to 6.03 trillion won.

According to the Korea Securities Depository on Thursday, on the Korea Composite Stock Price Index (KOSPI) market, Samsung Electronics paid dividends to foreign shareholders the most with a whopping 1.8 trillion won last year, an increase of 45.1 percent yoy. It was followed by Hyundai Motor with 421 billion won, up 48.3 percent yoy, and Shinhan Financial Group with 296 billion won, up Hana Financial Group has offered an 54.4 percent. unexpected proposal to the Korea Exchange Bank (KEB) union that it can On the Korea Securities Dealers maintain ‘KEB’ name in their combined Automated Quotations (KOSDAQ) market, organization.

Monday, May 18, 2015

Hana bought a controlling stake in KEB in concerns over the possible fiscal cliff in the February 2012, and KEB and its union four quarter. then agreed to complete integration by February 2017, but management at Hana According to a government official Sunday, Bank and KEB want integration to occur the government calculated its tax revenue within this year. shortfall would reach in the range of seven to nine trillion won this year. The figure The union filed for a preliminary injunction represents a sharp decline from last year’s with the Seoul Central District Court to 10.9 trillion won, but is still a huge amount. keep regulators from approving the merger and the merger talks were suspended as As early as a few months ago, the the court accepted the union’s request. government estimated this year’s tax revenue shortfall would be tantamount to Hana released its proposal during a Friday last year’s. This was based on the judgment hearing at the court and the proposal to that economic recovery momentum is still maintain the name of the acquired bank in anemic. the combined entity will be the first such case in the banking M&A history in Korea. However, as pick up in property and stock markets is spurring rosy forecasts for The Friday hearing was held as Hana corporate performance, the government raised an objection to the court’s revised down its previous estimate for tax acceptance of the union’s request. revenue shortfall.

If the proposal is accepted, the combined Albeit a fall in tax revenue shortfall, seven bank will likely be either Hana KEB Bank to nine trillion won worth of shortfall is or KEB Hana Bank. still burdensome. Worse yet, after the government increased its budget spending rate to 58.6 percent in the first half hits Gov’t estimates tax revenue year, most of its spending will be executed in the first half. shortfall to reach $6 to 8bn this year For this reason, concerns are mounting that the economy would suffer from fiscal By Cho Si-young, Choi Seung-jin, Park cliff in the fourth quarter as it did last year. Yoon-soo

Reportedly, the South Korean government would collect tax revenue seven to nine trillion won ($1=1,080 won) less than its spending this year. When the first half this year will see most of fiscal spending, the government would also suffer from a hefty sum of tax revenue shortfall, adding

Monday, May 18, 2015

ECONOMY

FSC chief suggests industry- He said, “it is the only opportunity for the government to intervene in the industry in wide restructuring a tough business situation.” In fact, the Ministry of Finance and Strategy, the FSC By Lee Yoo-sup, Chung Seok-woo, Bae Mi- and the Ministry of Trade, Industry and jung Energy have carried out working-level

discussions to prepare for measures for restructuring by industry based on three industries, shipbuilding, construction and marine transport.

BOK governor says, “yen’s slide weighs down on exporters”

By Noh Young-woo, Kim Tae-joon

Yim Jong-yong, head of the Financial Services Commission (FSC), said, “restructuring should be carried out not at an individual company level but at a industry-wide level,” adding that the sectors that need to be overhauled are shipbuilding, construction and shipping.

This means that he would push ahead with integration, and abolition and amalgamation of companies, a departure from the existing method in which the FSC decided whether to revive an insolvent “The won has reached its highest level company by counting liquidation value and against the yen in two years and seven going concern value. The move aims at months, adding concerns of exporters,” maximizing competitiveness of the whole South Korean central bank governor Lee industries. The FSC is planning to change Ju-yeol worried Saturday. Thereupon, the the existing paradigm of restructuring of won-yen exchange rate will likely be among struggling companies. determinants to set up monetary policies.

In the latest interview with the Maeil At the press conference held after the Business Newspaper, Mr Yim said, “we Monetary Policy Committee decided to need an approach at an industry-wide level freeze the key rate, governor Lee noted, to resolve the issue of the fairness by “auto, steel-making, machinery areas company and revive industries.” which are in rivalry with Japanese counterparts would take a severe blow,” He went on to say, “if creditors save a noted the Bank of Korea’s governor. The shipbuilding company and the company won jumped around 40 percent for two year engages in a competition for low-price and six months from the 1,370 won level in orders with recovered competitiveness, this late 2012 to the 918 won level as of now. will add to woes of the remaining companies,” adding, “the government policy “The latest market share and trend of the [for restructuring by size of companies] domestic auto market indicate our should be reflected in restructuring,” exporters are hit by the exchange rate,” Mr

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Lee stressed. “regarding the issue, we are The movie “one more again, twenty-year- in cooperation with the government and old”, produced by CJ E&M made a big hit will continue to do so.” in China and topped the list in the number of Korea-China joint movies’ viewers, Governor Lee explained, “we’re seeing elevating the expectations that Korea’s signs of pick-up in economic activity movie industry would successfully settle including recovery of our asset market and down there. consumer sentiment,” He added, “so we took into account whether the recovery will CJ CGV also sharply shrank its deficit to continue.” 1.1 billion won in the first quarter from five billion won from the same period a year ago. ‘K-Movie’ fever hits China

By Kim Yoon-jin

‘K-Movie’ fever is sweeping the South

Korean stock market following ‘K-Beauty’ fever which has brought rally for cosmetics shares. On the news that the Korea pop- wave culture has successfully penetrated into the Chinese film market, the nation’s movie-relevant shares are making a sharp headway. After CJ CGV shares set its record high since its listing on May 11, a list of investment distribution companies which set their foot onto China’s film market is enjoying their record highs in share prices.

CJ CGV and CJ E&M, film and media units of CJ Group, saw their shares sharply up 94.4 percent and 76.2 percent, each between January and May 15. As of late last year, CJ CGV remained at 54,000 won ($49.7), but the price outstripped

100,000 won in five months. CJ E&M soared from 38,200 won to 67,300 won, possibly ranking the No.4 in terms of market capitalization on the main bourse.

CJ E&M’s market capitalization recorded

2.60 trillion won as of May 15, snipping at

Paradise’s 2.66 trillion won.

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COMPANY Shinsegae picks flagship dept the whole department store building of the foundation of our business and the first store as candidate for duty free local department store constructed in 1930 shop into a duty free shop to raise it as the world’s ‘landmark’ tourist attraction.” This By Kim Joo-young, Chang Young-suk means the group presented a vision to make the department store a high-class duty free shop with global competitiveness to achieve its long-cherished business pursued for two decades.

Corporate restructuring to embark for shipbuilders

By Chung Seok-woo

Eyes are on whether the move by Lee Myung-hee, chairman of Shinsegae Group, would turn out to be impeccable, as she selected the Shinsegae Department Store in Hoehyeon-dong, Seoul, the flagship store and the first department store in South Korea that boasts its 85 year history, as a candidate of a duty free shop in downtown Seoul.

Ahead of a bid for a duty free license in Industry-wide restructuring will likely Seoul in early June, the conglomerate has begin in earnest with the shipbuilding decided to turn the whole luxury hall of the industry the first to be under such move. head store, a symbol of Shinsegae, into a Notably, Sungdong Shipbuilding & Marine duty free shop of downtown Seoul. After mulls trust management by Samsung weighing its Gangnam store and head store Heavy Industries and Hyundai Heavy for some time, the group would nurture the Industries or merger with STX Offshore & luxury hall of the headquarters in Shipbuilding, another target for corporate Hoehyeon-dong as a high-class premium restructuring. duty free shop while utilizing the building of Jeil Branch of Standard Chartered Bank A high-ranking official at Sungdong next to the department store, which is also Shipbuilding & Marine’s creditor said, “our a cultural heritage, as a museum and basic is to seek trust management by big convenient facility for tourists. three shipbuilders, but when this is impossible, we’ll consider merger with STX Shinsegae Group announced on Thursday Offshore & Shipbuilding.” The official that, after considering both marketability added, “trust management would burden and symbolization, it has made a final the major builders for the moment, but decision to submit an application for the create synergies will be definitely created head store’s duty free license in Hoehyeon- when the shipbuilding industry picks up.” dong. Some suggest Korea Development Bank’s An official of the group stressed, “the trust management on Daewoo Shipbuilding decision shows our strong will to transform and Marine Engineering. However, considering Daewoo is reviewing the joint

Monday, May 18, 2015

management of STX, management of an As the chairman has been lying sick in bed additional troubled shipbuilder will be for more than one year, the appointment is difficult for Daewoo. regarded as a move to prevent temporary vacuum, which could occur in the future, The Export-Import Bank of Korea proposed and smoothly succeed the management providing second rounds of aids for rights. The designation of Lee Jae-yong as Sungdong with 420 billion won ($386 a new chief director by the two foundations million) and 300 billion won from last seems to be the succession work of month. However, the proposal did not management rights of Samsung as a make through in the face of opposition from symbolic meaning. Korea Trade Insurance Corporation and Woori Bank. The foundations explained the background of the appointment, saying “as the new chief director understands the purpose of Samsung vice chairman the establishment better than anybody else, picked as new chief director he is expected to continue and develop management philosophy and will of social of Samsung’s two foundations contribution of Samsung Group.” The business community sees the designation By Kim Dae-young this time as the beginning of the third generation succession work of management rights in full swing. Samsung Life Public Welfare Foundation was established in 1982 as Dongbang Social Welfare Foundation, a social welfare corporation.

Lee Jae-yong, vice chairman of Samsung Electronics, has initiated steps to succeed management control of Samsung Group.

Samsung Life Public Welfare Foundation and Samsung Foundation of Culture on

Friday appointed Mr Lee as a new chief director. Chairman Lee Kun-hee has so far taken the helm of the two foundations as chief director. Samsung Life Public Welfare Foundation held a temporary meeting of a board of directors on the day to designate the vice chairman as the successor of the chief director whose term would expire on May 30 while Samsung Foundation of Culture also appointed him as a new chairman of the board for the smooth job performance of the post of chief director even though Lee Kun-hee would finish his term on August 27. Lee Jae-yong would formally take office on May 30.

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MARKET US stocks rally on bond market Japan and Singapore. K-Stemcell owns a 27 percent stake in Nature Cell. stability The company said its patent registration By MK Staff was already completed in six countries, including Korea, the US and China. With US stocks rallied Thursday, taking cues the additional patent registration, the from gains overseas and stability in the company expects its stem cell bank project bond market. will be on track.

The Dow Jones Industrial Average advanced 191.75, or 1.1 percent, to OCI’s debt rating slashed 18,252.24, just 0.2 percent from a record close. By Jeon Kyung-woon ‘ The S&P 500 index rose to a record, Korea Ratings has cut OCI’s debt rating by gaining 22.62, or 1.1 percent, to 2,121.10. one notch from AA- to A+ with a positive The Nasdaq Composite Index added 69.10, outlook. or 1.4 percent, to 5,050.80. The rating cut was unexpected because the rating agency’s previous outlook remained Price outlook for Kiwoom positive. Securities raised The decision reflects OCI’s profitability and By Kim Jan-dee financial health heavily affected by a global recession and weak demands for solar cell Korea Investment & Securities said Friday business around the world, Korea Ratings it has raised its target price on Kiwoom said on Thursday. Securities from 75,000 won to 84,000 won, maintaining a ‘Buy’ rating, citing Kiwoon OCI’s average borrowing over the past will hit a record net profit this year. three years exceeded its operating cash flow by 6.7 times, suggesting the company’s Kiwoom’s first-quarter net profit came to financial stability got worse despite its 58.8 billion won ($54.11 million), two times cost-saving efforts last year. higher than market estimates, and stock brokerage fee income is expected to continue rising in the second quarter,” said Samsung Life Insurance slides Lee Chul-ho, a researcher at Korea on block deal selloff Investment & Securities. By Kim Jan-dee

K-Stemcell wins patent Shares in Samsung Life Insurance registration in Japan and remained weak Friday after news Shinsegae and E-Mart sold off their stake Singapore through a block deal.

By Choi Ik-ho Samsung Life Insurance lost nearly 4 percent at 112,000 won at 2:40 p.m. K-Stemcell, the parent company of KOSDAQ-listed Nature Cell, said Friday Shinsegae and E-Mart sold a total of 6 its patent registration on placenta stem cell million Samsung Life shares for 116,500 culture technology has been determined in

Wednesday, January 28, 2015

won a piece. The price was 6.27 percent TEGO Science swings to net lower than Thursday’s closing price of 109,200 won. profit

With the block deal, Shinsegae and E-Mart By Kim Jan-dee captured 655.2 billion won in cash. Cell therapy product developer TEGO Science said Friday it has made progress in its turnaround efforts, posting positive BGF Retail rises on strong Q1 earnings in the first quarter. results Q1 revenue came to 1.51 billion won, up 45 By Kim Jan-dee percent from a year ago. Operating and net profit reached 25.43 million won and 94.97 BGF Retail shares jumped Friday after the million won, respectively. company announced strong first-quarter performance. The performance improvement was driven by upbeat sales of cell therapy product At 2:50 p.m., the stock price advanced 5.74 Kaloderm and custom-made burn wound percent at 129,000 won. care product Holoderm.

The company said its operating profit in the January-March period came to 42.31 billion won ($38.94 million), a whopping 278 percent increase from a year ago. Sales rose 20.6 percent to 884.25 billion won and net profit skyrocketed 276.4 percent to 32.06 billion won.

Local stock brokers raised their target price on the company.

GENERAL

Kim Moo-sung beats Moon Party, over Rep. Moon Jae-in, chairman of the main opposition New Politics Alliance Jae-in in approval rating as for Democracy (NPAD) when asked who 2017 presidential candidate: they would vote for if the candidates ran in poll a two-way race in the 2017 presidential election, according to a poll. By Woo Je-yoon According to the result of a survey of 1,001 males and females aged 19 and older in the nation, which was conducted by Gallup Korea from Tuesday to Thursday and released on Friday, Mr Kim’s approval rating came to 42 percent while that of Mr Moon stood at 38 percent. In the second week of February, the rating gap between the two leaders was significant with Mr Kim at 31 percent and Mr Moon at 51

percent. However, the gap has gradually In South Korea, more voters opted for Rep. been whittled down to 33 percent and 50 Kim Moo-sung, leader of the ruling Saenuri percent in March and 33 percent and 47

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percent in April, for Mr Kim and Mr Moon, Keangnam Landmark 72 is the tallest each. The approval ratings were reversed building in Vietnam, built and owned by for the first time since Mr Moon took office Keangnam Enterprises once led by late in February. businessman Sung Wan-jong.

However, the majority of the respondents In an exclusive interview with the Maeil disapproved of the idea that he should step Business Newspaper, Bahn Joo-hyun said down to take responsibility for the defeat in Thursday that “Sung Jung-soo, the second the by-elections. When asked if the son of chairman Sung Wan-jong came to opposition leader should shoulder New York last March and asked me to seek responsibility and resign from his post, 53 help from the secretary general over the percent of the respondents answered ‘no’ property sale. But I have never asked for while 33 percent said he should bear his help regarding the sale.” responsibility and resign. Bahn is also suspected of having faked a In a multi-way race for the next letter from a potential buyer, the Qatar presidential election, Mr Moon still held Investment Authority (QIA), Qatar’s his first place position with a 15 percent sovereign wealth fund, but he denied the approval rating, followed by Saenuri Party suspicion. leader Kim Moo-sung with 12 percent, Seoul Mayor Park Won-soon 11 percent, But the interview confirmed that the Sung former opposition party leader Ahn Cheol- Wan-jong camp tried to lobby Secretary soo 10 percent, former Seoul Mayor Oh Se- General Ban Ki-moon for the deal. hoon seven percent, former Gyeonggi Province governor Kim Moon-soo six Construction of the Landmark 72 was percent and former ruling party leader completed in 2011. Keangnam Enterprises Chung Mong-joon four percent. invested 1.2 trillion won ($1.1 billion) to construct the building, but in 2013, it decided to sell it to relieve its financial Bahn Joo-hyun rejects rumors difficulties. on deal brokerage involving UN Bahn is the first son of Ban Ki-sang, the chief younger brother of the UN secretary general, served as Keangnam Enterprises’ By Park Bong-gwon senior adviser, and he recommended the company give the exclusive right to sell the building to his son when the company decided to sell the building.

Bahn Joo-hyun, a nephew of United Nations Secretary General Ban Ki-moon, and managing director of New York-based real estate firm Colliers International, denied rumors that he asked for help from the secretary general regarding the attempted sale of Keangnam Landmark 72.

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Press Release

[Press Release]Current Economic Developments in Korea(May, 2015) [Source: The Bank of Korea] [Press Release]Monetary Policy Decision(May 15, 2015) [Source: The Bank of Korea]

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