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KOREA REPORT - JANUARY, 2019.

During his 2017 presidential campaign, candidate Moon Jae-in promised to create 800,000 jobs if elected. His employment pledge appealed to many voters, including among the youth. Moon administration has reportedly poured KW54 tril ($48.2 bil), involving a supplementary budget and stabilization fund, into the employment-related segment over the past 20 months. But the result at the present stage falls far short of the stated goal. As of Nov 2018, “extended unemployment rate” among young people reached 21.6%, the highest since authority started its estimation. The employment rate of 570,000 college graduates stood at 66.2% as of end 2017, down 1.5% on-year. That figure was under 67% for the first time since 2011. In addition, total employment rate for overall generation in 2018 is estimated to post 60.7% with number of jobless people exceeding 1 mil. Amid worse-than-expected employment segment score, President Moon said in New Year’s message that he would prioritize job creation. The outlook on 2019 hiring market is also gloomy, according to Korea Labor Institute.

Defense Ministry said it does not directly refer to NK as an enemy and takes a less hostile tone toward the communist state in its 23rd white paper published on 15th. The ministry’s latest biennial white paper addresses security threats, military policies and the regional security environment. Defense Ministry eliminated the phrase specifically describing NK as SKorea’s “enemy,” a move that reflects SKorea’s efforts to maintain a more peaceful mood with the North. The ministry explained that the relationship with the North had improved as a result of last year’s 3 inter-Korean summits, highlighting NK’s promise to achieve denuclearization of Korean Peninsula.

While the global economy grew 3.7% last year, SKorea’s growth marked a six-year low of 2.7%. Government spending, however, surged 5.6%, the largest increase in 11 years. Growth contribution by government expenditures in the fourth quarter reached 1.2%, the highest since the first quarter of 2009, while the private sector’s contribution shrank to negative 0.3% in the quarter. A recent fall in the Korean economy is alarming. Exports from Jan 1-20 this year plunged 14.6% on-year. Semiconductors, which amount for about 20% of nation’s exports, nose-dived 28.8% during the period. Shipment volume to China, Korea’s largest export market, slumped 22.5%.

Saudi Aramco will become the second-largest shareholder of Hyundai Oilbank with purchase of an up to 19.9% stake in the firm. Hyundai Oilbank expects to raise up to KW1.8 tril ($1.6 bil) in a pre-IPO round. Aramco estimated the firm’s value to be KW10 tril and set the value of each share at around KW36,000. Aramco is currently the largest shareholder of nation’s third-largest refining company S-Oil with a 63.4% stake.

Korea’s Composite Stock Price Index started the month at 2,010, 1.52% fall on China’s drop in China’s manufacturers purchase index and continued to plummet to 1,993 on 3rd, breaking the 2,000 barrier, on Apple’s expectation of poor performance. It was the lowest since Dec, 2016. KOSPI started to recover its strength due to fair wind from USA, including USFED’s dove’s stance, positive negotiation between USA and China on trade, even amid US government partial shutdown and Brexit. KOSPI hit 2,097 on 15th, 2,106 on 16th, 2,177 on 25th to come back to 2,200 level to end the month at 2,204.

KDB announced on 31st the bank signed a conditional MOU for M&A transaction between HHI and DSME. KDB stated that HHI and SHI were two only counterparts for the merger negotiation to build 'Big 2' structure in the Korean shipbuilding industry, but SHI showed less interest in participating. According to the deal, HHI buys KDB’s shares in DSME, 55.7% (worth KW2.15 tril), in cash, while KDB is increasing DSME’s capital by issuing massive new stocks. On 31st, HHI and KDB agreed on a framework agreement. KDB commented that it is necessary to eliminate inefficiencies stemmed from overlapped investments for enhancing DSME’s competitiveness.

TOPICS.

Conflicts between SKorea and Japan are growing [p.2]

Extended unemployment rate among young people reached 21.6%, despite pouring budget [p.3]

Former Supreme Court Justice Yang Sung-tae was arrested on charges abusing his power [p.4]

BTS finished the year 2018 as the second-highest album seller in the US [p.6]

Defense Ministry said it does not directly refer to NK as an enemy [p.7]

SKorea is yet to agree with the US for cost of maintaining US troops [p.7]

Kim Jong-un held talks with Xi Jinping on a second summit with Trump [p.8]

SKorea’s growth marked a six-year low of 2.7% and industrial output fell 0.6% in Dec [p.10]

SKorea's trade surplus came to $1.3 bil in Jan [p.11]

SKorea's exports to countries it has FTA with rose 5.5% on-year in 2018 [p.11]

SEC posted KW243.77 tril ($219 bil) in sales and KW58.89 tril in operating profit last year [p.14]

LG Electronics unveiled the world’s first rollable OLED TV [p.15]

Korea’s 3 battery manufacturers, last year, won a total of KW110 tril ($97.6 bil) global orders [p.16]

Saudi Aramco will become 2nd largest shareholder of Hyundai Oilbank with 19.9% stake [p.17]

Seoul court on 10th slapped BMW Korea with KW14.5 bil ($12.9 mil) fine [p.18]

KOSPI recovered its strength breaking 2,000 level to end the month at 2,204 [p.19]

HHI Group was awarded new orders worth $16.192 bil in 2018, up by 45.2% on-year [p.20]

KDB signed conditional MOU for M&A transaction between HHI and DSME [p.22]

Hanjin Subic yard filed for rehabilitation procedure at the local court [p.25]

Two companies expressed their interest in taking over Daesun Shipbuilding [p.26]

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