Dave,
OT
since I was supposed to have left for Thailand last night, I have zero plans for the weekend so I have plenty of time for some catch up reading.
Does this look like a healthy economic and political system to you?
weeklypost.com
How about all the reported progress in Korea?
I think the US market is totally liquidity driven and all FA are out the window. Having said that, I have no experience in this type of a market so being chicken little may be absolutely the wrong strategy. I did not jump in on the semi eq bandwagon so I am already a "loser" in that respect. Right now, I am just very concerned about capital preservation rather than profits.
Ramsey
scmp.com
Monday November 9 1998
Seoul blasts chaebol for
dragging feet over
reform
AGENCE FRANCE-PRESSE in Seoul
The top five conglomerates dominating the South
Korean economy are taking few steps to reform
their businesses and are gobbling up scarce funds
to keep their empires intact, government statistics
show.
"The reform efforts by the top five groups fell far
short of expectation. They are not so eager to slim
down despite their huge debts," a spokesman from
the presidential Blue House said.
Their debt-equity ratios, which used to be more
than 400 per cent, have changed little, he said.
The five conglomerates, or chaebol, are Hyundai,
Samsung, Daewoo, LG and SK groups.
Statistics show that the five had raised 8.1 trillion
won (about HK$47.76 billion) of fresh funding as
of October 16 after the country slumped into a
severe economic crisis a year ago.
It includes 2.5 trillion won they raised by selling
units and business operations, 536 billion won by
selling assets, 2.23 trillion won by attracting
foreign investment and 2.8 trillion won by issuing
new shares.
The newly raised funds of 8.1 trillion won amount
to a mere 5.5 per cent of the debts owed by the
five chaebol.
The next 25 largest conglomerates raised eight
trillion won, amounting to 11.6 per cent of their
debts.
The amount includes 2.14 trillion won they made by
disposing of assets, four times what was raised by
the top five groups by selling their own assets.
While dragging their feet over restructuring, the
top five groups have been soaking up funds and
crowding out smaller but more competitive firms.
The five have issued bonds worth 22 trillion won,
or 80 per cent of all corporate bonds issued here
in the first eight months of the year when the
country was facing a severe financial crunch.
Commentators said the top five conglomerates
appeared to be merely playing for time and waiting
for the reform pressure to pass.
But Kang Bong-Kyun, presidential adviser on
economic affairs, said the government would not
let up in pushing for reform of the big five.
"There are various ways to attract foreign funds,
including the selling off of assets and holdings and
the establishment of joint ventures," Mr Kang said.
"The five groups are slow in attracting foreign
funds because they either insist on holding on to
management control or demand high prices for
their assets."
To attract foreign funds is the surest way for
them to meet the target of cutting their leverage to
the 200 per cent level by the end of next year, he
said.
Korean conglomerates, once seen as engines for
the country's industrialisation, are now blamed for
contributing to the economic crisis by blindly
expanding on the back of heavy borrowing.
In a bid to untangle the family-controlled
conglomerates, the government is also pushing them
to dispose of cross-unit guarantees on debt
payments, a controversial practice used to finance
their reckless expansion.
Under the initial corporate sector reform plan
approved by the International Monetary Fund, the
conglomerates are supposed to remove cross-unit
debt guarantees by March 2000.
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