Korea ( South & North ) 01 (May 08 - Nov 10)

[winston]

If you want to invest in Korean stocks, there is the Lyxor Korea listed on the SGX or the Lyxor Korea 2813 listed in HK.

Since Warren Buffett mentioned that Korean shares are cheap, I should start putting Korea on my watchlist now. However, I'm concerned that Korea will be hit by the high oil prices and the slowdown in the US..

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South Korea Keeps Key Rate at 5% on Inflation Concern

May 8 (Bloomberg) -- The Bank of Korea kept interest rates unchanged at the highest in almost seven years, saying rising commodity prices and a declining currency are stoking inflation. Bonds declined.

Governor Lee Seong Tae and his board left the seven-day repurchase rate at 5 percent in Seoul today, as predicted by 13 of 20 economists in a Bloomberg News survey. Seven forecast a cut.

Asian policy makers are battling to balance fallout from the global financial crisis against record prices for food and fuel that have stoked inflation across the region. Indonesia unexpectedly raised borrowing costs this week, while South Korea and Japan have refrained from following U.S., English and Canadian central bankers in cutting rates this year as growth slows.

``The inflation risk is too great to ignore,'' said Oh Suk Tae, an economist at Citibank Korea Inc. in Seoul. ``Policy makers need more time to justify a rate cut.''

Crude oil reached a record $123.93 a barrel in New York yesterday. Global prices for corn, wheat and soybeans have climbed to all-time highs in 2008, and rice prices have more than doubled in the past year.

Rising food and energy costs propelled South Korea's inflation to a four-year high of 4.1 percent in April, breaching the central bank's target for the sixth straight month. Consumer prices in Singapore are rising at the fastest pace in a quarter century and China's inflation rate is close to an 11-year high.

Target Breach

Oil prices, coupled with a weaker won, ``are contributing a lot to inflation, which remains above our target ceiling of 3.5 percent,'' Governor Lee told reporters today. ``Inflation will likely remain above the target ceiling for months ahead.''

The yield on the five-year South Korean government bond climbed 16 basis points to 5.21 percent. The Kospi index of shares slipped 0.3 percent to 1,848.22 at 2:26 p.m. in Seoul.

Adding to the central bank's inflation concerns, the Korean won has dropped 12 percent this year, the most among the world's 16 most active currencies. The won fell 2.3 percent to 1,049.50 against the dollar today, the lowest level since November 2005.

A weaker won has boosted the cost of imported goods, exacerbating the increases in commodity prices. South Korea is the world's fifth-largest importer of crude oil.

``The dilemma between growth and inflation has heightened even further,'' said Kwon Young Sun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. ``The Bank of Korea's policy outlook looks heavily dependent on oil prices and the currency, the key factors for the near-term inflation outlook.''

Government Pressure

Lee has resisted pressure from the government to lower borrowing costs as the U.S. financial crisis cools the global expansion. South Korea's economy grew at the slowest quarterly pace in more than three years in the first three months of 2008 as consumers and companies curtailed spending.

Inflation in South Korea is ``inevitable'' as global food and energy costs climb, and the government should pursue policies to drive growth, Finance Minister Kang Man Soo said in an interview in Madrid this week.

The government is targeting growth of 6 percent this year after the economy advanced 5 percent in 2007.

``The political pressure is on for a cut of 25 basis points to help the economy hit an ambitious growth target,'' said Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong.

Lee said today that the Bank of Korea will forecast the 2008 economic growth rate slowing to 4.5 percent or below when it releases updated estimates in July. The bank in December predicted the economy would expand 4.7 percent this year.

Exports Climb

As well as stoking inflation, the won's drop versus the dollar this year has helped Samsung Electronics Co. and other exporters by making their products cheaper abroad and increasing the value of their overseas sales translated into the local currency.

Exports jumped 27 percent in April from a year earlier. Overseas shipments were the engine of more than half of the economy's 0.7 percent expansion in the first quarter.

``The case for any easing at all for the remainder of the year is entirely data dependent,'' Neumann said. ``Rate cuts this year in Korea? No longer a slam dunk.''

Source: Bloomberg

[kennynah]

((deleted))...

just read winston's post on korean won...and realized i got my facts all wrong .... lucky w posted korean won thread, else, i'd still be holding onto wrong impression....hahah..

[winston]

If you want to invest in Korean stocks, there is the Lyxor Korea listed on the SGX or the Lyxor Korea 2813 listed in HK.

Warren Buffett also mentioned that Korean stocks are cheap..

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Mobius Says Korean Stocks Will Outperform, Won Cheap (Update3)

By Kevin Cho and Chan Tien Hin
Enlarge Image/Details

May 9 (Bloomberg) -- South Korea's won, the world's worst performing major currency this year, is undervalued by about 8 percent and the nation's stocks should outperform, said Mark Mobius, who manages emerging-market shares at Templeton Asset Management Ltd.

``Korean stocks are cheaper than the average emerging markets,'' Mobius said at briefing in Seoul today. ``The currency is somewhat undervalued.''

The benchmark Kospi index fell 3.9 percent this year to trade at 13 times estimated earnings, compared with a multiple of 15 for the MSCI Asia Pacific Index. South Korea's won has dropped 12 percent in 2008 while five-year government bond yields have fallen almost half a percentage point. The central bank yesterday said it plans to lower its growth forecast and signaled it wants a weaker currency to help boost exports.

President Lee Myung Bak, who won a landslide victory on Dec. 19, wants to boost economic growth to 7 percent and double per capita income to $40,000 by 2017. He pledged in February to cut taxes and speed up deregulation in South Korea, which was forced to seek a bailout from the International Monetary Fund in the 1997-98 Asian finical crisis.

``Since 1997, Korea has actually outperformed emerging markets in general and I think that is going to continue, especially as a result of the kind of reforms that the government is instituting now,'' Mobius said.

Templeton prefers materials, chemicals and capital goods- related stocks in South Korea, and likes GS Holdings Corp., which operates unlisted GS Caltex, the nation's second-largest oil refiner, Mobius said.

Bonds Decline

The won is set for its biggest weekly decline in two months after Bank of Korea Governor Lee Seong Tae yesterday said the country's trade deficit will widen. Korean bonds are headed for their biggest decline in six weeks as investors stepped up sales after the central bank said record oil prices and a weakening currency are adding to inflation.

``Economic growth seems to be slowing significantly,'' Lee said yesterday at a media conference in Seoul. ``It seems rising oil, food and other commodity prices, coupled with a U.S. economic slowdown, are gradually affecting the domestic economy. The trend of slowing growth would continue.''

The benchmark five-year yield has dropped to 5.29 percent from 5.78 percent at the start of the year. Bank of Korea policy makers left the nation's interest rate at 5 percent yesterday.

Market ``Shock''

``The market is still in shock, digesting the signal from the governor yesterday that rate cuts won't come anytime soon,'' said Kong Dong Rak, a fixed income strategist with SK Securities Co. in Seoul. ``Those who aggressively bet on a cut are rushing to dump their holdings.''

South Korea's producer-price inflation accelerated 9.7 percent in April from a year ago, the fastest pace in more than nine years, because of rising raw-material costs, the Bank of Korea said today.

Separately, Mobius said the gap between prices of Chinese shares listed in Hong Kong and on the mainland will narrow. Yesterday he said in a Bloomberg Television interview in Seoul that he plans to invest 20 percent of his fund's emerging-markets assets in the Middle East, North Africa and Central Asia in the next three to five years, compared with about 2 percent now.

[winston]

Korean Stocks Cheap, May Gain on U.S., Merrill Says (Update1)

By Chen Shiyin and Liza Lin

May 16 (Bloomberg) -- South Korean stocks are cheap and may rally should the U.S. economy recover, said Merrill Lynch & Co.'s global emerging markets equity strategist.

Merrill, which lists the nation as its top pick among Asian emerging markets, has an ``overweight'' recommendation on South Korea. China and India, the region's largest emerging markets, are relatively expensive despite declines from records last year, Merrill's Michael Hartnett, 41, said in an interview in Singapore.

``Year to date, Asia has had a perfect storm,'' said Hartnett, who is based in New York. ``It looked pricey to begin with, the U.S. recession became a reality and commodity prices spiked. We like Korea because it's cheap.''

Companies in South Korea's Kospi index trade at an average 12 times estimated 2009 earnings, the third-lowest ratio in Asia after the Philippines and Thailand. Foreign investors sold a net $17.3 billion of South Korean stocks this year, the most among Asian emerging markets that release fund flow information, according to data compiled by Bloomberg.

The Kospi has fallen 0.6 percent this year, less than the 8.5 percent retreat in the MSCI Emerging Markets Asia Index. China's CSI 300 Index has slid 26 percent while India's Sensitive Index has lost 14 percent.

Mark Mobius, who manages emerging-market equities at Templeton Asset Management Ltd. in Singapore, said May 9 that South Korean stocks should outperform because they are inexpensive. Templeton prefers materials, chemicals and capital goods-related stocks in South Korea, and recommends GS Holdings Corp., which operates unlisted GS Caltex, the nation's second- largest oil refiner, Mobius said.

`A Real Exodus'

``With foreigners, there's been a real exodus,'' Hartnett said. ``Because Korea and to a certain extent Taiwan were labeled as U.S. plays, as the U.S. situation stabilizes, you're going to start to see Korea and Taiwan discount that.''

South Korea's economy is in its 10th year of expansion as shipments to China, Latin America and the Middle East help Hyundai Motor Co. and other Korean exporters weather faltering U.S. sales.

U.S. gross domestic product grew at a 0.6 percent annual rate during the six months ended March 31. Economists estimate the expansion will accelerate through the end of December, with full-year GDP growth at 1.3 percent, according to the median estimate in a Bloomberg survey.

U.S. Outlook

First-quarter earnings that beat estimates at 68 percent of Standard & Poor's 500 Index companies and lower interest rates have eased concern $342 billion in credit losses will push the U.S. into recession.

``At some stage you have to see a belief that the worst is past so far as the U.S. is concerned, the housing market and the financial sector,'' Hartnett said. ``Maybe that's not today but I do feel in the next six to nine months we're going to be able to say most of the bad news is priced in here.''

The U.S. is the largest market for Asian products. Seoul- based Samsung Electronics Co., Asia's biggest maker of computer chips and mobile phones, gets 21 percent of its revenue from the U.S.

Chinese and Indian equities may lag behind other regions as rising raw-materials costs hurt company earnings and boost inflation, Merrill's Hartnett said. Government measures to contain rising prices in both countries will limit stock-market gains, he said.

China, India

Inflation in China, the world's biggest copper buyer and No. 2 fuel consumer, accelerated to 8.5 percent last month, the country's statistics bureau said on May 12. That pace, close to the fastest since 1996, prompted the government to order banks to set aside more deposits as reserves in order to curb lending.

India's government has scrapped import duties in the past two months on edible oils, steel products and banned certain agricultural exports to contain inflation at the highest in more than three years.

``It's going to be very, very difficult for those markets to rebound on a sustained basis,'' said Hartnett, who has been with Merrill since 1995. He was previously a fund manager at Schroders Plc, the U.K.'s largest publicly traded money manager.

Crude oil futures touched a record $126.98 a barrel in New York on May 13, while copper prices have tripled in the past four years. Meanwhile, global food prices in April surged 53 percent from a year earlier, according to the United Nations.

``If you put a gun to my head and say, `When do I buy Asia?' I'd say it's literally the day before commodity prices peak,'' Hartnett said. ``Until then, you probably want to have a defensive stance within the Asian equity markets.''

[winston]

S. Korea GDP to Grow Less Than Forecast, Kim Says (Update1)

By Seyoon Kim

May 23 (Bloomberg) -- South Korea's economy will grow less than the central bank's forecast of 4.7 percent this year because of higher oil costs and a global economic slowdown, Bank of Korea Deputy Governor Kim Byung Hwa said.

``Indicators show the economy is in a downturn,'' said Kim, who is in charge of economic statistics and forecasts at the central bank. Private consumption recovery will be ``weak'' and rising crude oil prices will add inflationary pressure, Kim said at a seminar in Seoul today.

Rising energy and food prices are stoking inflation and crimping domestic consumption across the region as a U.S. slowdown saps demand for Asian exports. The Bank of Korea will forecast a slowing in 2008 economic growth to 4.5 percent or below when it releases updated estimates in July, Governor Lee Seong Tae said on May 8.

South Korea's inflation rate rose to a four-year high of 4.1 percent in April, exceeding the central bank's target for the sixth straight month. The authority has an inflation target of 2.5 percent to 3.5 percent.

``The economy faces difficulty,'' Vice Finance Minister Choi Joong Kyung said at the same seminar, citing ``rising oil and raw material prices.''

An ``overestimated'' foreign exchange policy over the years helped boost South Korea's domestic demand, but can cause a recession in the economy, Choi said. The won gained about 8 percent against the dollar in the 2006-07 period and a stronger won makes imported goods less expensive.

Oil, Grains

Crude oil surged to a record $135.09 a barrel yesterday amid speculation rising demand, led by China and India, may outstrip supply increases. Oil in New York has almost doubled in the past year. Prices of grains such as rice and wheat also reached unprecedented levels in 2008.

Kim said export growth may miss the central bank's initial forecast of 10.3 percent for this year, but ``will remain solid,'' partially helped by a weaker currency. Consumer price inflation will remain faster than 3.5 percent for ``quite some time,'' Kim said.

The current account deficit will likely exceed the $3 billion forecast, he said. The current account deficit, along with rising external debt, is a ``problem,'' Vice Finance Minister Choi said.

The Bank of Korea on May 8 kept its key interest rate unchanged at 5 percent, the highest in almost seven years, saying rising commodity prices and a declining currency are spurring inflation.

South Korea's economy grew at the slowest quarterly pace in more than three years in the first quarter as consumers and companies cut spending.

[kennynah]

29 May 2008 07:34 GMT


South Korea resumes U.S. beef imports - agriculture minister
SEOUL (Thomson Financial) - South Korea on Thursday lifted a ban on U.S. beef imports, Agriculture Minister Chung Woon-Chun said, despite mounting protests sparked by fears of mad cow disease.

"The government has fixed new sanitary conditions for importing beef," Chung said in a live televised speech, adding the government would thoroughly inspect U.S. beef imports to protect public health.

[winston]

South Korea Manufacturer Confidence Falls From Six-Month High
By William Sim

May 29 (Bloomberg) -- South Korean manufacturers' confidence fell from a six-month high on concerns about weaker domestic demand and soaring fuel costs.

An index measuring expectations for June fell to 88 from 92 the previous month, according to a survey of 1,563 manufacturers released by the Bank of Korea today. A score lower than 100 means pessimists outnumber optimists.

Record oil and commodity prices are driving up costs and eroding the buying power of consumers and businesses in Asia's fourth-largest economy, which grew at the slowest pace in more than three years in the first quarter. The government plans to cut taxes and is seeking to increase its spending by 4.9 trillion won ($4.7 billion) to spur domestic demand.

An index measuring manufacturers' outlook for domestic sales fell to 105 from 107, while that for exports declined to 113 from 115. Exporters have weathered a slowdown in the U.S. by boosting sales to China, the Middle East and other emerging markets.

Overseas shipments probably rose 22.6 percent in May from a year ago, after climbing 26.4 percent in April, according to the median estimate of 14 economists surveyed by Bloomberg News.

An index of non-manufacturing companies' expectations for June dropped to 82 from 89 on growing concern that sales and profits may slow. Construction and transport companies led the decline.

The Bank of Korea surveyed the manufacturers and 798 non- manufacturers from May 15 to May 21.

[winston]

South Korea to Cut Corporate Taxes, Expand Tax Breaks (Update1)
By Seyoon Kim

June 3 (Bloomberg) -- South Korea's government will cut corporate taxes as planned and expand tax breaks for companies investing in research and development in an effort to spur economic growth amid a global slowdown.

The government will lower corporate tax rates ranging from 13 percent to 25 percent to as low as 11 percent to 22 percent this year, the Ministry of Strategy and Finance said in a statement from Gwacheon. The tax rate will be lowered to as much as 10 percent to 20 percent in 2010, it said.

``The move is likely to help spur investment and employment in the longer term,'' said Lim Jiwon, an economist at JPMorgan Chase & Co. in Seoul. ``South Korea has room to cut taxes more aggressively to help the economy, after running a fiscal surplus.''

The economy may weaken further from this quarter as the global slowdown deepens, Vice Finance Minister Choi Joong Kyung said last week. Record oil and commodity prices are sapping household purchasing power and eroding corporate profits. Factory spending fell in April for the third time in four months.

``The immediate tax cuts are aimed at activating an economic recovery,'' the ministry said. The government plans to submit the plan to parliament on June 30 and the changes will be effective from the current business year, it said. The cut in corporate taxes will save companies 8.7 trillion won ($8.6 billion) through 2011, the government estimates.

Research and Development

Companies investing in their laboratories and other research and development facilities will get a tax break of 10 percent of the investment made, up from 7 percent, the ministry said. The government will also extend the tax breaks to include books purchased for scientific research.

To boost employment, the government will provide companies with a tax break of 300,000 won for each worker whose status changes from temporary to regular. It will exempt income taxes for smaller start-up companies including cinema operators.

South Korea also plans to waive consumption taxes on golfing green fees for clubs in provincial areas. The government has been trying to reduce the service-account deficit, which has been expanding because of rising number of Koreans going abroad to study, travel and play golf.

South Korean President Lee Myung Bak has been counting on increased spending by companies and consumers to help the economy from slowing further. Lee won an election in December after pledging to encourage investment, cut taxes and deregulate industries to help meet his goal of increasing economic growth to 7 percent and double per capita income to $40,000 by 2017.

The government has been seeking to use some of last year's 15.3 trillion won in unspent money to spur growth. Finance Minister Kang Man Soo said in April it'll be ``difficult'' to meet the government's 2008 economic-growth target of 6 percent. The economy expanded 5 percent in 2007.

[kennynah]

commodities longists at work again...
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15 Jun 2008 09:20 GMT
Striking truckers cripple SKorean ports

SEOUL (Thomson Financial) - South Korea's ports threatened to grind to a halt Sunday as thousands of truck drivers extended their damaging strike action over soaring fuel prices, officials said.

Port operators were handling just 20 percent of the average volume of cargo, the ministry of land, transport and maritime affairs said, as 13,000 truckers entered day three of their stoppage.

Some freight yards at the country's biggest port of Busan were already overloaded with stalled shipping containers, as trucks stood idle in protest against rising oil costs, the ministry said.

"If things get worse, we may have to redirect cargo ships to different ports," an official with the Busan port authorities told Agence France-Presse.

Unionised truckers went on strike Friday, demanding steps to cut energy costs or raise transport fees after the diesel price rose more than 30 percent since the beginning of the year.

South Korean steel mills and electronics firms have been forced to delay shipments as the strike has gripped 10 major ports and two inland cargo terminals.

Authorities were mobilising military truck drivers and moving cargo onto trains to try to lessen the strike's impact, while police were forced to escort non-striking truck drivers to work on safety grounds.

After a meeting on Sunday, the government and the ruling party warned any drivers who obstructed movement of cargo from ports would be "sternly" dealt with.

The government has also encouraged talks between the union and cargo owners.

The truckers' union has threatened to seal off Busan, through which three-quarters of South Korea's shipping containers pass, to press for their demands.

Striking truckers have set up tents near the entrances to the Busan port, staging street protests.

[winston]

Just noticed that the Lyxor Korea Fund in SGX is down 5% today.

Didn't Warren Buffett said a while back that Korean stocks were cheap ?

Anyway, I am worried about how high commodities, especially oil, will hit them.

The US slowdown may also reduce demand for their gadgets...

Still on my watchlist. Not vested.