Increasing Cash Holdings
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 Global R&D Center for 400 billion won and SK Hynix and S-Oil redeemed 140 billion won and 50 billion won of corporate bonds, respectively. Early this month, Hanwha Solutions canceled its 160 billion won investment plan regarding nitric acid production. SK Hynix decided in June not to expand its facilities in Cheongju.
The won-dollar exchange rate is rising rapidly along with interest rates amid another economic recession and this is seriously affecting startups as well. The number of startups in South Korea increased a lot in recent years and most of them are yet to establish their profit structures. Investments from the outside, which are essential for the structures, are becoming harder and harder to obtain.
The government recently told banks to appropriately manage their corporate lending as well as household loans. The banks are tightening the lending with the Fed likely to raise its benchmark rate by 0.75 percentage point four times in a row.