Seoul stocks likely to lose ground on global economy woes

South Korean stocks may suffer further losses next week as foreign investors are likely to maintain their net selling position amid rising concerns about the global economy, analysts said Saturday.

   The benchmark Korea Composite Stock Price Index finished at an eight-month low of 1,900.66 on Friday, down 2.07 percent, or 40.26 points, from a week earlier.

   The drop came as the U.S., European and Chinese economies are showing signs of slower than expected growth, offsetting the Bank of Korea's key interest rate cut to a record low of 2 percent. 

   Market watchers said the bourse lacked upward momentum this week as investors took a wait-and-see approach ahead of corporate earnings report season next week and amid mixed signals from the United States.

   Analysts predicted that while there may be some bargain hunting to push up the stock market next week, the overall trend will be a further dip below the psychologically-important level of 1,900 points. 

   "The market in the past responded to small issues, but overall uncertainty surrounding the global economy seems to be swaying the stock prices at present," said Lim Dong-rak, a researcher at Hanyang Securities Co.

   He said that under these conditions, there is little chance of the KOSPI recovering lost ground unless there is a sharp turnaround in economic data or a move by the Seoul government to drastically prop up the economy.

   Lim, in particular, expected foreign investors to continue to offload shares for the most part.

   "The overall weakness may continue at least up until late this month when the Federal Open Market Committee meets to discuss how it will respond to new developments," he said.

   There has been speculation that, in light of slower than anticipated growth, the Fed may extend its bond-buying economic stimulus program.

   Others such as Kang Hyun-gie, an analyst at I'M Securities & Investment Co., said the Korean stock market is currently undergoing a correction period with the benchmark index better reflecting overall economic fundamentals. He, too, said that the KOSPI will face an additional drop at least for the time being.

   KDB Daewoo Securities said that South Korea's producer prices, China's third-quarter growth figures and the U.S. consumers' price index to be released next week need to be monitored carefully for indications of where the market is heading. (Yonhap)

[Editorial] Spoiling public offices Unqualified political appointees take key posts

One of the first steps President Park Geun-hye and her government took after the Sewol ferry disaster in April was to put the brakes on revolving door appointments. 

This was because collusive links between retired officials who moved to the private sector they had regulated and their former colleagues in government offices turned out to be one of the root causes of the maritime calamity that claimed more than 300 lives. 

The government moved fast to tighten the rules on revolving door appointments, including the Civil Service Ethics Law. As a result, the revolving door is now firmly shut to more retired government employees than ever. 

Then what about the “parachutists,” political appointees who land coveted jobs at state-run enterprises and public corporations? As it turns out, Cheong Wa Dae continues to drop the parachutes indiscriminately, as if to fill many of the posts that otherwise would have gone to retired government employees. 

This practice is still rampant, especially in public corporations and state-controlled enterprises, including those in the financial sector. 

For instance, the positions of auditors and outside directors at major public financial institutions have gone to political appointees. They include the Industrial Bank of Korea, Export-Import Bank of Korea, Korea Technology Finance Corporation, Korea Exchange, Korea Deposit Insurance Corporation and Korea Asset Management Corporation. 

These political appointees are former and active politicians close to the president and the ruling party ― those who participated in the last presidential campaign for Park, former lawmakers and those who lost recent elections. 

Few of them have professional experience or expertise in the financial sector. Even the auditor’s seats at such commercial financial services firms like Woori Bank and Daewoo Securities are taken by these unqualified political appointees only because the government holds some stake in them. 

It would be too much to expect them to do their job properly. To be brutally honest, it would be better to reopen the revolving door for former government employees, because they at least know more about the industry than the parachutists. 

Park often said one of her jobs as president is “normalizing the abnormal.” That should include cutting the tradition of sending political appointees to public corporations. Not all their offices should be the spoils of her election victory.

GS Group sets eye on Indonesian market

GS Group, one of the top 10 conglomerates in Korea focusing on energy, construction and retail businesses, said Thursday it has finished hosting its fourth overseas CEO meeting in Indonesia on Wednesday and Thursday.

“During the CEO meeting, attendants visited business sites of the group’s affiliates in the emerging Indonesian market to better understand the market and to search for new business opportunities,” the group said in a press release. 

High-ranking officials of the group who joined the meeting included GS Holdings Corp. vice chairman Suh Kyung-suk, GS Caltex vice chairman Huh Jin-soo, GS Energy vice chairman Rha Wan-bae and GS Engineering & Construction vice chairman Huh Myung-soo.

Group chairman Huh Chang-soo skipped the meeting as he had to lead the business delegation during President Park Geun-hye’s visit to Italy this week. Huh currently serves as chairman of the Federation of Korean Industries. 

GS Group executives, including GS Holdings Corp. vice chairman Suh Kyung-suk (second from left) and GS Caltex vice chairman Huh Jin-soo (third from right), visit MNC GS Home Shopping in Indonesia on Wednesday in an effort to gain hands-on experience in one of the group’s target overseas markets. (GS Group)

GS Group has increased its presence in Indonesia through its core affiliates over the past few years as part of its globalization efforts. 

In 2012, GS Home Shopping, the nation’s largest home shopping channel, entered the market, setting up MNC GS Home Shopping as a joint venture with Indonesia’s largest media group GMC. 

“With the investments, the group’s retail arm has supported Korea’s small and mid-sized firms to expose their products to Indonesian consumers via the 24-hour shopping channel,” a group official said. 

Infrastructure and energy are two other key sectors that GS Group has focused on for the market expansion in Indonesia. 

GS E&C has proceeded with several construction projects, including a multipurpose shopping mall in Jakarta. GS Global, the trading unit, has imported natural resources and energy like wood pellets and biomass from Indonesia.

Industry watchers have forecast that GS Group, in the face of a saturating market at home, will further encourage affiliates to capitalize on their experience in the Chinese market so they can expand their reach into Southeast Asian countries. 

Samsung must change: Chambers Cisco to maintain ‘solid business ties’ with Korean firms

CHICAGO ― John Chambers, the chairman of Cisco, the world’s leading networking company, said manufacturing powerhouses in the IT sector including Samsung Electronics should constantly seek change in order to survive in the Internet of Things era.

“Every company, including Cisco, if we don’t change we will get left behind,” said Chambers at a press meeting of the Internet of Things World Forum in Chicago Thursday (local time), responding to a question about the fate of Samsung Electronics, which is struggling in the face of declining revenues. 

Cisco chairman John Chambers delivers a speech at the Internet of Things World Forum in Chicago on Thursday. (Kim Bo-young)

The South Korean smartphone-maker saw its third-quarter operating profit drop by around 60 percent to 4.1 trillion won ($3.85 billion) compared to the same period last year due to the sluggish performance of its flagship smartphone business.

The Cisco chairman did not elaborate on the changes that Samsung would have to implement to get back on track. 

Vowing to maintain solid business ties with Korean companies including Samsung and LG, he praised South Korean President Park Geun-hye’s deep understanding of the importance of the IoT and the government’s efforts to embrace the technology as part of its creative economy policy. 

Asked about the possibility of the IoT boom becoming a repeat of the dot-com bubble disaster of the ’90s, Chambers doubted that such a fiasco would reoccur. 

“The market, however, should watch as there will be some companies that will have a good market cap but not achieve their financial goals,” he added.

Cisco held the second IoTWF in Chicago from Tuesday through Thursday, drawing more than 1,500 attendees including government officials and executives of private companies across the world. 

The U.S. firm will hold the third IoT conference in Dubai next year. 

By Kim Young-won, Korea Herald correspondent
(wone0102@heraldcorp.com)

CNN) Sewol ferry disaster: 6 months of pain

http://edition.cnn.com/video/data/2.0/video/world/2014/10/15/pkg-hancocks-south-korea-ferry-disaster-6-months.cnn.html

Sewol ferry disaster: 6 months of pain

6 months after the Sewol ferry sank off South Korea, 

many still wait for the bodies of loved ones. 

Paula Hancocks reports.

Park calls for bigger biz partnership with Italy

Published : 2014-10-15 20:45
Updated : 2014-10-15 21:57

MILAN -- President Park Geun-hye on Wednesday urged businessmen and authorities from South Korea and Italy to expand bilateral cooperation, so that the two countries could together attain new global business opportunities through strengthening partnership.

Highlighting Italy‘s role in leading industrial innovation and also Korea’s advanced IT technology and manufacturing capability, Park said the two nations could produce outstanding business outcomes if they work together.

“If the two nations could collaborate with each other‘s strength through industrial and technological cooperation, creative ideas could become manufactured goods targeting global markets,” Park said at a forum in Milan, cohosted by businessmen from Italy and South Korea.

The president also brought up a case of industrial cooperation currently under discussion between two nations on integrating IT technology in next-generation automobiles. Such cases will benefit both countries in the future, she added.

The forum was her first official event in Italy. Later in the afternoon, Park attended a meeting with Korean residents in Italy and thanked them for their dedication to promoting their mother country in the European country. Park arrived in the Italian industrial city on Tuesday evening to attend the 10th Asia-Europe Meeting summit. 

President Park Geun-hye speaks at an economic forum cohosted by Korean and Italian businessmen in Milan, Italy, on Wednesday. (Yonhap)

The South Korean president also presented her vision of a creative economy, which she believes could become a new growth engine and create more jobs in the future. Park urged representatives to share ideas on such economic reforms and seek a new growth engine together.

“I hope to have a new opportunity to help the two nations promote an economic take-off by establishing creative economy partnership,” she said during a meeting with Korean residents.

The creative economy is Park’s core economic strategy, one that she has been pushing to implement in Asia’s fourth-largest economy as part of efforts to stimulate its sluggish growth. The vision is aimed at nurturing creative ideas from across society, and assimilating them with ICT, science and technology and other industries to eventually create new technology and jobs.

Park is currently in Italy as the country hosts the biennial ASEM meeting this week. More than 40 business representatives accompanied her to seek partnership with their counterparts in Italy. The list includes Huh Chang-soo, chairman of the Federation of Korean Industries, Hyun Jeong-eun, chairwoman of Hyundai Group and Skott Ahn, president of LG Electronics.

At the ASEM summit, leaders are expected to open dialogues to enhance “connectivity” between Asia and Europe on economic cooperation and global matters.

On the sidelines of the Summit, Park plans to hold three separate meetings with French President Francois Hollande, Chinese Premier Li Keqiang and Danish Prime Minister Helle Thorning-Schmidt.

After the ASEM, Park will visit Rome to hold a summit with Italian President Giorgio Napolitano and Prime Minister Matteo Renzi to discuss ways to seek strategic partnerships in a wide range of fields including the economy, culture, and science and technology.

Park’s government believes that expanding cooperation with Italy could benefit small and medium-sized companies in Korea. SMEs in Italy comprise 99 percent of the country’s industrial forces. Most have less than 250 employees but together they produce 65 percent of the country’s exports and account for 80 percent of the country’s jobs.

The Korean government is reportedly considering entering new markets in Africa and the Middle East jointly with Italy by combining Korea’s information technology with Italy’s global fashion brands.

During the envisioned summit, leaders of South Korea and Italy on Friday are expected to sign a number of MOUs to expand economic cooperation.

The two nations are among the top 10 exporters in the world. Korea is the eighth-largest trading nation, followed by Italy. But the trade volume between the two countries is relatively low, standing at $6.5 billion as of August this year. Among Korea’s export destinations, Italy ranks 29th.

By Cho Chung-un, Korea Herald correspondent
(christory@heraldcorp.com)