Dividend Payment Likely to Lead to Current Account Deficit

The Financial Supervisory Service and Korea Exchange announced on April 6 that the top 20 South Korean companies in terms of dividend payment are scheduled to pay foreigners a total dividend of US$4.37 billion this month.

In the case of Samsung Electronics, which pays quarterly dividends, the upcoming payment totals 2,405.4 billion won. With foreigners’ shareholding in the company at 56.9 percent as of the end of last year, they are scheduled to receive 1,368.6 billion won in the middle of this month. POSCO, which also pays quarterly dividends, pays 164.7 billion won to foreigners this month.

Shinhan Financial Group, KB Financial Group, Hyundai Motor Company and SK Hynix pay dividends once a year. Their payments to foreigners, which are scheduled for this month, are 569.2 billion won, 572.6 billion won, 315.4 billion won and 345.4 billion won, respectively.

Many companies such as Samsung Electronics, SK Telecom and Samsung C&T increased their dividends this year and the 20 companies’ combined dividend payment to foreigners is likely to exceed last year’s amount. Under the circumstances, South Korea is likely to post a current account deficit this month as the U.S. dollar will flow out in the form of dividends.

Back in April last year, the outflow added up to US$6.7 billion amid a poor export performance and, as a result, South Korea posted its first current account deficit, US$390 million, since April 2012. The same is likely to occur this month according to the financial investment industry.