Good times are rolling in South Korea. While most of the world is slowing down, South Korea has witnessed growth beyond any expectations in the past year. This is all the more impressive considering about 40 percent of South Korea’s GDP comes from exports to a less than vibrant US market. With growing indications of a stateside recovery, it’s likely that the good times will continue. As the world’s twelfth largest economy, this country is tipped to be one of the world’s best performing in 2002. The rosy economic outlook has been accompanied by staggering stock market performance. In 2001 Korean stocks gained 37.5 percent – the second largest growth of any market in the world after Russia.
But is this stunning display of investor enthusiasm sustainable? Similar surges have, in the past, been followed by equally spectacular declines. Dominated by chaebols, South Korea has been slow to adopt internationally recognized standards of corporate governance, transparency and disclosure. The market stability associated with foreign ownership has been lacking. Now, the international investment community, encouraged by Korea’s corporate and financial restructuring, is demanding Korean equities. And with foreign ownership comes demand for improvements in corporate governance and investor relations. Domestic shareholders have also become more active, recently winning landmark court cases against Samsung and Hyundai for mismanagement.
The country’s banking sector is also showing new resolve.
In November, Jung-Tae Kim, the CEO of Kookmin, Korea’s largest bank (see last month’s issue, page 44) surprised the investment community by refusing a loan to Hynix Semiconductor. This was a landmark move in a country where companies have traditionally used the banking sector as a private piggy bank. Kim reinforced this radical approach by stating, ‘Our goal is to maximize shareholder value. So we have to do what is in the best interest of shareholders.’ For many Korean companies, the needs of shareholders have not been top of the agenda. This refreshing attitude from Kim is of great comfort to international investors.
This June the eyes of the world will be on Korea when some of the world’s leading talents like Gabriel Batistuta, Rivaldo, Zinedine Zidane and David Beckham will be present in Seoul and will all have the opportunity to attend what is likely to be the event of the summer when Investor Relations magazine will host the 2002 Korean Investor Relations Summit. This event will build on the phenomenal success of Investor Relations magazine’s recent China conference, attended by 250 mainland CEOs, CFOs and IROs. Among the many conference delegates were representatives of mainland China’s eight largest companies.
The Seoul Summit, June 19-20, will be in Korean with simultaneous English translation. The event is understandably one of the first of its kind in the country, and is part of a growing worldwide series of conferences from Investor Relations magazine.
Oh, and there’s also a World Cup going on.
