South Korean enterprises’ debts are increasing rapidly with their corporate bond market shrinking fast. Their repayment capabilities are deteriorating amid high interest rates, inflation and economic slowdown. The number of companies with an interest coverage ratio of less than 1 is likely to increa
The Korea Securities Depository announced on Oct. 29 that Korea Electric Power Corp. (KEPCO) issued 23.5 trillion won worth of bonds this year, whereas its annual issuance was 10.32 trillion won last year. The state-run power company is financing its deficits by selling corporate bonds. Its cost is
The author is an analyst of NH Investment & Securities. He can be reached at sw.kang@nhqv.com. -- Ed. The author is an analyst of NH Investment & Securities. He can be reached at sw.kang@nhqv.com. -- Ed. Central banks face a dilemma between restoring trust in their professionalism (inflation control
The author is an analyst of KB Securities. He can be reached at cygun101@kbfg.com. -- Ed. Maintain BUY; Lower TP by 6.0% to KRW47,000 We maintain BUY on Shinhan FG, but lower our TP by 6.0% to KRW47,000. We reiterate BUY, given that: (1) despite slower QoQ growth in 3Q22, NIM is still on a solid upw
Liquidity supply from the South Korean government stabilized the domestic bond market to some extent on Oct. 24, when the three-year government bond yield fell 0.19 percentage point to close at 4.305 percent and 10-year fell 0.129 percentage point to close at 4.503 percent.Likewise, five-, two-, 20-
The South Korean government and the Bank of Korea announced on Oct. 23 that they would supply at least 50 trillion won to the bond market.The amount includes a bond market stabilization fund of 20 trillion won. Corporate bond and commercial paper purchase will be resumed on Oct. 24 using 1.6 trillio
Deputy Prime Minister Choo Kyung-ho announced on Oct. 14 that non-taxation on non-residents’ and foreign corporations’ interest income and transfer income derived from government and monetary stabilization bond investment would become effective on Oct. 17.The measure was scheduled to take effect nex
The possibility of South Korea’s credit crisis is rising, with interest rates going up and its economy slowing down. Its default risk indicators are surging, along with both household and corporate debts and interest burdens. Bloomberg recently reported that the Japanese and Chinese currencies are d
Financial Supervisory Service (FSS) Chairman Lee Bok-hyun remarked on Oct. 11 that the FSS can take any measures for stock market stabilization in the event of further instability and the options include a complete ban on short selling.The South Korean government implemented the complete ban in Marc
The author is an analyst of KB Securities. He can be reached at jk.lim@kbfg.com. -- Ed. Near-term concerns easing, but fundamental issues remainKTB yields should retreat for a while on hopes for a U.S. Fed pivot amid slowing economic indicators and the U.K.’s efforts to stabilize its financial marke
The author is an analyst of KB Securities. He can be reached at newday@kbfg.com. -- Ed. Lower target price to KRW37,500; maintain BUY We lower our 12m TP by 11.8% from KRW42,500 to KRW37,500 (12m fwd BVPS x 0.78x target P/B). Changes in beta and yields on 1y monetary stabilization bond (RFR) and 30y
The author is an analyst of NH Investment & Securities. He can be reached at sw.kang@nhqv.com. -- Ed. We view the sharp rise in bond market volatility in September as being the cost of losing trust in CBs. But, after the September FOMC, a massive sell-off of TIPS was verified at end month. This sign
FTSE Russell put South Korea on the World Government Bond Index (WGBI) watch list on Sept. 29.The subsidiary of London Stock Exchange Group classifies government bond market accessibility into Levels to 2. Only Level 2 countries can join the index. A country being on the watch list means that its go
The author is a fixed income strategist of Shinhan Investment Corp. He can be reached at jk.ahn@shinhan.com. -- Ed. BOK needs to follow the Fed's lead and pick up the pace of tighteningKRW depreciation is now a growing problem for the Bank of Korea (BOK), with unprecedented rate hikes by the US
The author is an analyst of KB Securities. He can be reached at cygun101@kbfg.com. -- Ed. Maintain BUY; revise target price down 16.0% to KRW68,000 We revise our TP on KIH down 16.0% to KRW68,000. Our TP reflects KRW143,296 12m fwd BVPS and 0.47x target P/B (sustainable ROE: 9.4%→8.6%; COE: 13.9%→14
The Bank of Korea purchased three trillion won of government bonds on Sept. 29. This is because yields are rapidly rising along with global financial market uncertainties. The Ministry of Economy and Finance also buys back two trillion won of government bonds on Sept. 30.The yields are rising as the
The National Pension Service (NPS) Investment Management announced on Sept. 29 that its overall return on investment was negative 4.69 percent at the end of July this year, up 3.31 percentage points from the previous month.Its return on investment was negative 15.39 percent in the domestic stock mar
Both large and non-large companies are increasing their cash holdings in a hurry with economic conditions deteriorating.Major enterprises are postponing investments while selling real estate assets. KAL Hotel Network sold its Jeju KAL Hotel for 95 billion won in August, when Mando sold its Pangyo Gl
The author is an analyst of KB Securities. He can be reached at cygun101@kbfg.com. -- Ed. Revise down TP by 10.0% to KRW99,000; Maintain BUY, top Securities pick We cut our target price by 10.0% to KRW99,000 for Kiwoom Securities as we reflect downward revisions to: (1) daily average trading value f
The Ministry of Economy and Finance announced on Sept. 28 that it would buy back two trillion won of government bonds on Sept. 30.That day, the Bank of Korea also announced a government bond purchase of three trillion won. 10-minute competitive bids for 10-, 5- and 3-year bonds start at 10:00, Sept.