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KOREA REPORT - DECEMBER, 2022.
TOPICS.
2022
IN NUMBERS. 1. Tough living
conditions. The
number of COVID-19 cases grew by 28.2 mil this year due to highly transmissible
omicron subvariant. The figure was 635,253 on Jan 1st but surged to 28.7 mil at
the end of this year. SKorea has been no exception to global inflation, with
¡°everything has risen except my salary¡± becoming a popular catchphrase. Read more¡¦
CHANGES
TO COME IN 2023. 1. Minimum
wage increase. The minimum hourly wage will
rise by KW460 from Jan 1st to KW9,620 ($7.60) an hour. Employees working eight
hours, five days a week, will earn over KW2 mil a month, including KW346,000 of
holiday pay. Read more¡¦
The
National Assembly on 24th passed the KW638.7 tril ($497 bil) of government
budget for 2023. The ruling People Power Party (PPP) and
main opposition Democratic Party (DP) approved Yoon administration¡®s first
budget, 22 days after its legal deadline. The bill passed 251-4, in an assembly
where DP holds majority of 169 out of 300 seats. The final package was down
KW314.2 bil from government proposal of KW639.4 tril. It marks first time in
three years that the budget was decreased by the parliament.
SKorea¡¯s
trade volume is expected to stand at 6th in the world, the highest ranking in
Korean history, according to Korea International Trade
Association on 5th. SKorea¡¯s annual export this year is expected to increase by
7.1% to $690 bil. Samsung Electronics was recognized with a $120 bil Tower of
Export, breaking its own record of reaching $110 bil just last year. During Jan
to Sept, the export amount jumped 12.2% on-year to $524.7 bil, mainly due to
three industries, semiconductors, automobiles, and petroleum products, that
have been actively exporting to four markets, ASEAN, US, the EU and India.
China, US, Germany, the Netherlands and Japan are the top five countries that
are expected to be ranked higher than SKorea.
SKorea's
exports rose 6.1% on-year to $683.9 bil in 2022 to reach an all-time high, on the back of solid global demand for major export items,
including semiconductors and petro products, as well as largest-ever sales of
electric vehicles and secondary cells. The performance put the country at
world's sixth-largest exporter, up one notch on-year, following China, the US,
Germany, the Netherlands and Japan. Imports spiked 18.9% on-year to $731.2 bil
on high global energy prices, resulting in a trade deficit of $47.2 bil. Read
more¡¦
SKorean
battery giants, LG Energy Solutions, Samsung SDI and SK On, are expected to see
a combined sales of KW50 tril ($39 bil),
marking a record-breaking year amid burgeoning demand for electric vehicles
overseas. LGES¡¯ revenue this year is estimated to surge on-year by 41.4% to
KW25.2 tril. Net profit would skyrocket 95.3% to KW1.5 tril, surpassing KW1
tril mark for the first time. Samsung SDI¡¯s revenue and net profit are
estimated at KW20.1 tril and KW1.9 tril, up 48.5% and 81.1% on-year. SK On is
expected to log KW6 tril in revenue, turning a profit since its split-off from
SK Innovation last year. Read more¡¦
SKorea's
foreign reserves came to $423.16 bil as of end Dec, up
$7.06 bil on-month, as weakening dollar resulted in rise in the converted value
of holdings denominated in other currencies, according to Bank of Korea.
Foreign securities, such as US Treasuries, were valued at $369.69 bil,
accounting for 87.4% of total foreign reserves. The value of deposits stood at
$29.35 bil. SKorea was ranked world's ninth-largest holder of foreign reserves
as of end of Nov.
SKorea's
consumer prices grew at the fastest pace in more than two decades in 2022, as the country felt the pinch of soaring prices of raw materials
and energy sources following Russia-Ukraine war. Consumer prices rose 5.1%
on-year in 2022, accelerating from 2.5% gain in 2021, according to Statistics
Korea on 30th. The price of utility services gained 12.6% on-year in 2022, a
drastic turnaround from a 2.1% on-year decline posted in 2021. The price of
agricultural, fisheries and livestock products increased 3.8% in 2022, slowing
from 8.7% spike tallied a year earlier. Read more¡¦
It has
been a very eventful year for SKorean shipbuilding industry which experienced
global economic depression, geopolitical impact of the conflict in Ukraine,
supply chain disruptions, strike risks and so on. Nevertheless, they have
secured three-year order to cover this year with cherry-picking profit. They
have successfully escaped from low-price contracting competition which gave
them hard times for past several years. Korean
shipyards have recently removed unfavorable factors like disagree on yearly
wage talks and stranded assets. Against a backdrop of demands for older vessel
replacement, which result from strengthening environmental regulations,
moreover, it is expected that the current order boom will last for a while.
It is
expected that shipowners are reluctant to make newbuilding investment in 2023
in line with shrinking demands for freight shipping. However, it is unlikely to
cause burden to SKorean shipyards as they have already secured ample backlog. According to Clarksons Research, global shipbuilders have vessels
worth 107.19 mil cgt (3,708 units) in their orderbook, as of end Nov. Among
them, Korean shipyards' shares are 35%, 37.42 mil cgt (716 units). In terms of
deliveries, in other words, they have 3.6-year order cover. Read more¡¦
Hanwha
Group inked a formal contract to acquire its compatriot DSME. DSME announced on
16th that it entered into an agreement with Hanwha Group for issuing new shares
equivalent to 49.3% of its stakes. Hanwha Group has become the largest
shareholder by taking over new shares worth about KW2 tril ($1.53 bil). In
Sept, two parties made an agreement for strategic investment attraction with
the goal of achieving the fundamental management normalization of DSME. With
this, KDB, DSME's former biggest shareholder, picked Hanwha Group as preferred
bidder for the sale of DSME. KDB left open chances for other potential buyers
to make their bids in a stalking horse offer, but no additional bid was
submitted. On 6th, Hanwha Group was finally selected as the final bidder. Hanwha
Group recently completed six-week due diligence on DSME.
Korean
shipbuilding and steel industries are finalizing discussions on thick plate
prices for 2H 2022. According to industry sources,
SKorean shipbuilders have reached an agreement with steel industry players, POSCO
and Hyundai Steel, on the price of thick plates. The 2H discussion, which used
to conclude in Sept, took additional three months to reach an agreement this
year. Although the precise price of the consultation has not been revealed,
industry officials believe that the two sides are close to finalizing a deal to
reduce the price by KW100,000 ($78) to a rate of KW1.1 mil per ton. Read more¡¦
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