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  Korea Report - December 2021
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KOREA REPORT - DECEMBER, 2021.

TOPICS.

TOP NEWS OF 2021.
COVID-19 pandemic. Kospis new era. Home prices soar. Presidential election. Korean pop culture. Dictators end. Read more

The National Assembly passed 2022 government budget on 3rd, a record high of KW607.7 tril ($516.3 bil), to cope with economic fallout of the COVID-19 pandemic and other expenses. The package is an increase of KW3.3 tril from government proposal, second consecutive year the budget has been expanded by the assembly. Next year's budget includes KW68 tril worth of support measures for small businesses hit by the pandemic. Also included in the budget are additional funds for child care services, funds to establish a response system to supply chain risks, such as recent shortage of urea solution, and an increase in local subsidies following an increase in tax revenues.

SKorea's oldest coal-powered plant will be shut down for good in line with government's plan to shift toward renewable energy and to reduce fine dust. Honam Coal Power Plant, located in Yeosu, 450 kms south of Seoul, will stop operations on 31st, according to Ministry of Trade, Industry and Energy on 28th. The plant has been in operation since 1973. The nation's 10 coal-based reactors have now all been retired since 2017. A new LNG plant will be newly built at the Yeosu site, the ministry said.

SKorea recorded $1.2596 tril in trade in 2021, jumping one notch from ninth place in the world to eighth place. SKorea's exports rose 25.8% on-year to $644.54 bil in 2021, to reach all-time high on the back of solid demand for chips and petroleum products, Ministry of Trade, Industry and Energy said on 31st. Imports spiked 31.5% on-year to $615.05 bil in 2021, resulting in trade surplus of $29.49 bil.

Samsung Electronics (SEC) was recognized with a $110 bil Tower of Export at the 58th Trade Day in SKorea, Ministry of Trade, Industry and Energy said on 6th. This comes as SEC earned $113.2 bil from July 2020 to June this year from exports of semiconductor chips, consumer electronic goods and mobile handsets. This accounted for a fifth of total exports of Korea over the cited period. This is the first time that a single Korean company exceeded $100 bil in annual exports.

Five of Hyundai Motor Groups affiliates have been listed on Dow Jones Sustainability Index, three of which were added for first time. Hyundai E&C and Hyundai Steel have been recognized on worlds first sustainability index for 12 and 4 consecutive years. Hyundai Motor, Hyundai Mobis and Hyundai Glovis were newly added. DJSI picks top 2,544 listed companies based on free-float market capitalization and evaluates companies environment, social and governance performance and only top 10 are added to the index. Five Hyundai affiliates were given top tier points in climate change strategy, human resources management, and risk management. 

SKoreas consumer prices climbed 2.5% on-year in 2021, reaching the highest level in 10 years, aggravating the burden on debt-saddled household sector, according to Statistics Korea on 31st. After reaching 2.2% in 2012, the growth ranged between 0.4-1.9% during 2013-2020 period. The 2021 figure marked the highest since it peaked 4% in 2011. The high growth was led by price surges in agricultural (8.3% growth on-year), livestock (12.7%) and petroleum (15.2%) products. Core inflation rose 1.8%, the fastest increase since 2015. In Dec, consumer prices grew 3.7% on-year. Prices of agricultural, livestock and fisheries goods grew 7.8% on-year. Those of industrial goods rose 4.7%, slowing from 5.2% on-year gain in Nov.

The European Union (EU) is highly likely to veto the proposed merger between HHI Group and DSME. According to industrial sources, HHI did not submit measures to allay competition concerns to the national competition authorities in all EU Member States. Reuters reported, "HHI unofficially showed its intention to sell some of its shipyards, but competition authorities did not satisfy the suggestion. The EU is less likely to give approval without appropriate remedies." The merger has been approved by China, Singapore, and the Republic of Kazakhstan, but is being held up by the EU, SKorea and Japan. The approval by the EU has been considered as crucial for the merger. The European Commission (EC) reported intermediate results for HHI's acquisition of DSME in June 2020, expressing concerns over the possibility that the merger would lead to a mega shipbuilder and less bargaining power in the LNG ship market. HHI noted, "It makes sense for the EU to give an unconditional approval like Kazakhstan, Singapore and China," and added, "We will make all efforts to receive approval from the EU."

Newbuilding contracts worth $46.6 bil have been placed at Korean 'Big3' so far this year, surpassing their yearly order targets by 47%. According to industrial source, KSOE won 224 vessels (including three offshore plants) worth $22.5 bil for the year to date, up sharply from $10 bil posted in 2020. The figure also exceeds KSOE's 2021 order goal $14.9 bil by 51%. SHI secured 80 newbuilds worth $12.2 bil, surpassing its yearly order target $9.1 bil by 34%. SHI logged the highest contracting in eight years since 2013 when the yard was awarded newbuilds of $13.3 bil. DSME won 60 vessels worth $10.8 bil so far this year, achieving over 140% of its 2021 order goal $7.7 bil. DSME surpassed yearly order intakes of a $10 bil level in seven years since 2014 when it was awarded vessels worth $14.9 bil. 

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