Year's Top Events
The Korea Composite Stock Price Index (KOSPI) fluctuated between 1,850 and 2,100 points this year, while continuing to suffer from adverse conditions such as a weak yen and plummeting oil prices. The Korea Exchange recently announced the top 10 stock market news items for 2014.
Opening of New Bourses
The Korea Exchange opened the gold spot market in March, the ETN market in November, and the U.S. dollar futures night market this month. In addition, it launched volatility index futures and sector index futures and remodeled the stock futures and option markets for asset management diversification.
KOSPI Drifting Sideways
The index has moved between 1,850 and 2,100 points this year and failed to break the 2,100 point mark since August 2, 2011, when the market closed at 2,121.27 points. The Korea Securities Dealers Automated Quotations (KOSDAQ) index exceeded 580 points in September, but has dropped since then, failing to top 600.
IPOs One After Another
Major corporations such as Samsung SDS and Cheil Industries have been listed on the stock market this year, along with about 70 companies on the KOSDAQ. Samsung SDS and Cheil Industries attracted more than 15 trillion won (US$13.6 billion) and 30 trillion won (US$27 billion) each during their IPO processes.
Policy for Dividend Expansion
Since taking office in July, Deputy Prime Minister Choi Kyung-hwan has encouraged dividend expansion in the interest of economic growth and shareholder return and reshaped the dividend tax system by, for example, imposing taxes on internal reserves. In step with this, the Korea Exchange released a new dividend index in October and listed a dividend index ETF.
Corporate Ownership Structure Reform in Samsung Group
Issues regarding the succession of the Samsung Group has been highlighted since May, when Chairman Lee Kun-hee was taken to the hospital. Since then, the group listed Samsung SDS and Cheil Industries while selling subsidiaries such as Samsung General Chemicals and Samsung Techwin.
Hyundai Motor Group’s Huge Real Estate Purchase
The group bought the 79,342 m2 Korea Electric Power Corporation (KEPCO) building and site in Samsung-dong, Seoul in September at a price of 10.55 trillion won (US$9.58 billion), more than three times the appraised value of 3.3 trillion won (US$3.0 billion). Since then, the combined market capitalization of the 16 companies in the group dropped by 12.28 percent amid the controversy over the appropriateness of the price.
Key Interest Rate at Record Low
The Bank of Korea cut the key rate from 2.25 percent to 2.0 percent in October. The possibility of an additional downward adjustment is on the rise, as the low prices are continuing and consumer sentiment is showing no signs of recovery.
Cross-trading between Shanghai Stock Exchange and Hong Kong Stock Exchange
The cross-trading started last month. Investors now can buy Shanghai A stocks via the Hong Kong Stock Exchange.
Abenomics and Weak Yen
Japanese Prime Minister Shinzo Abe has moved ahead with an intensive economic stimulus package in order to escape from deflation and a strong yen. This has lowered the yen-dollar exchange rate by more than 30 percent. The trend is likely to continue for a while as the Liberal Democratic Party won the recent general election.
Plummeting Oil Prices
Oil prices have dropped to a five-year low since June due to Iraq’s petroleum price cut and the OPEC’s failure to reach an agreement on production reduction. The downtrend is expected to be ongoing next year owing to the supply-demand imbalance and slowdown of the Chinese economy.