Dividend payouts to foreign investors in April this year surpassed eight trillion won, hitting an all time high. The increase was fueled by an improvement in corporate profits, an increase in foreigners’ stakes and, in particular, an increase in the number of hedge funds that demanded higher dividends.
Increased dividend payouts to foreign shareholders reduce Korean companies’ investment capacity, thereby giving rise to an undesirable trend for the Korean economy as a whole. As seen in the Samsung Electronics and Hyundai Motor cases, hedge funds’ demands for a dividend increase are expected to become stronger.
According to the provisional April international balance of payments released by the Bank of Korea (BOK) on June 5, Korea enjoyed a trade surplus of US$1.77 billion in April. The amount was the smallest since April 2012 when the surplus was a mere US$90 million. Dividends paid to foreign investors, which amounted to US$7.57 billion, had a big impact on the results.
"March and April are a period when dividend payouts are concentrated," the BOK said, adding, "Dividends shot up as corporate profitability improved and the proportion of foreigners’ stakes inflated." Korea posted a surplus of US$10.36 billion in the balance of goods, slightly down from the previous year. In addition, as the number of Chinese tourists visiting Korea grew, Korea’s travel account deficit decreased, posting US$1.09 billion in April, the smallest since December 2016.