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  Korea Report - November 2006
  Author : Hwang & Co     Date : 06-12-14 09:04     Hit : 40402    
Topics.
-President Roh reshuffled his entire security and diplomatic team.
-President and ruling party¡¯s approval rate gone to all time low.
-Parliamment passed nonregular workers bill.
-Nationwide rallies against Korea-USA FTA, and school reform bill.
-Soaring home prices resulted public and political outcry.
-Two cases of bird flu confirmed in Korea.
-NK agreed to resume 6 way talks.
-SKorea hesitated to participate PSI and UN resolution against NK.
-SK supported UN¡¯s human rights bill against NK.
-Korea¡¯s export renewed monthly record.
-Prosecutors and court in tug of war on Lone Star case.
-FTC tightened regulation at chaebol, but applies to reduced number of firms.
-POSCO substantially invested in Vietnam and China.
-Overseas construction order renewing the record.
-Kwon exchange rate against USD strengthened to break 930 barrier down.,
-Korean shipbuilders improved their performance in 3Q.
-Cho Soo-ho, chairman of Hanjin Shipping, and Hyun Young-won, advisor of HMM, died.
-Hanjin Shipping and KLC made share swap agreement.
-KLC expands its fleet in wet and dry tonnage.

GOVERNMENT AND SOCIETY

President Roh Moo-hyun reshuffled his entire security and diplomatic team. He nominated Kim Man-bok, 60, the National Intelligence Service deputy director, as the head of NIS to replace outgoing Chief Kim Seung-gyu, resigned in the middle of the NIS investigation into an alleged pro-Pyongyang espionage case. Roh's national security aide and former envoy to nuclear talks Song Min-soon, 58, was named as the new foreign minister. He nominated Army Chief of Staff Kim Jang-soo, 58, as the new defense minister, and Lee Jae-jeong, 62, senior vice president of the National Unification Advisory Council, as the new unification minister. Four of Roh's top men in security and diplomatic affairs, except Foreign Minister Ban Ki-moon, have stepped down closely tied to North Korea's Oct 9 nuclear bomb test.

President Roh's approval ratings plummeted to an all-time-low of 11%, falling almost 2% from last month's 12.9%, in the fears of a power vacuum, until the next presidential election slated for Dec 2007. The popularity of ruling Uri Party has fallen to an all-time low of 8.8%, further widening the gap with the majority opposition GNP that garnered 44.3%.

Korea's national debt rose 2.7-fold in 10 years, rising steadily since 2003 under the Roh administration. The debt ratio stood at 23% in 2003, 26.1% in 2004 and 30.7% last year, and expected to reach 33.4% this year. The debt is expected to reach to KW283 tril this year and surpass KW300 tril next year, as the government looks to spend more for the social security and defense systems. Although the percentage of Korea's debt compared with its GDP is not as high as the 77.7% average for OECD member countries, the speed of its debt growth is enough to raise alarm.

The National Assembly overwhelmingly voted in favor of the nonregular workers bills, despite fierce opposition from the minor Democratic Labor Party. The bills, which have been pending for 2 years, require companies to turn nonregular workers they have hired for more than 2 years, into regular workers. The bills intend to provide non regular workers with legal protection, banning companies from discriminating against nonregular workers in terms of wages, welfare and others. The law also limits the use of dispatched workers, a clause which has invited the most criticism from business circles. The new laws will apply to workplaces with more than 300 employees beginning in July 2007 and with more than 100 workers in July 2008 and less than 100 workers in Sept 2009.

Korea's unionized rate hit an all-time low last year, standing at 10.3% decreasing 0.3% on year, due to the growing public skepticism toward labor unions activities. The rate remained above 20% until 1983, then showed a continuing decrease, becoming a nation with one of the lowest unionized rates in the world.
The radical Korean Confederation of Trade Unions launched a general strike nationwide to voice their opposition to labor and school reforms, and free trade negotiations with USA. They were joined by about 5,000 unionized teachers protesting against the government's plan for teacher evaluation and merit-based bonuses. Separately, a coalition of about 300 civic groups also waged a protest march against the Korea-USA FTA in 13 major cities with about 120,000 members participation in the most violent protests in recent years. The violence left 63 people injured, including 35 police officers, causing a lot of property damages nationwide, when they broke into the provincial government office and attacked the police with steel pipes and bamboo canes.
The government declared a "zero tolerance" policy towards defiant rallies, by using all possible measures of criminal charges, indemnity for damages and disciplinary steps to punish leaders and active participants. About 300 civic groups has been banned from staging further rallies after the turmoil, but the activists are planning even more protests in Dec, as Seoul and Washington prepare to open the fifth round of formal FTA talks, aiming to conclude the talks by March 2007 at the latest.

Soaring home prices in the Seoul metropolitan area, has resulted in a public and political outcry as homes became more and more unaffordable for most people. The government reaffirmed its determination to continue with anti-speculation measures such as heavier transaction taxes for multi-home owners and redemption of windfall gains from the reconstruction of dilapidated homes. It also plans to crack down on possible tax evasion and other breaches of the law in areas where property prices have risen sharply. Mortgage on those homes will be limited to 40% of their value, down from current 60%, as Roh's administration's eighth attempt to rein in overheating property prices. The government unveiled a new set of measures to supply additional 125,000 homes by 2010, lowering the prices of small and mid sized homes by upto 25%. The government plans to develop the plan for more densely packed dormitory towns near Seoul with some 410,000 homes.
Three top officials have stepped down to take responsibility for the latest home prices rise in metropolitan area that stoked public fury over the government's property policies. Construction Minister Choo Byung-jik, presidential senior secretary for public information Lee Baek-man and presidential economic adviser Chung Moon-soo resigned. Choo came under fire last month for prematurely announcing the building of a new town in Incheon City, causing home prices in the area to soar. Lee advised people not to buy home, but a day later, reports showed that he briefly owned 2 expensive homes before selling one of them this year for a multibillion won profit.
The government and the ruling Uri Party urged the builders working on private apartment projects to disclose their costs in order to ensure fair and reasonable home prices. State-run builders are already bound by mandatory disclosure regulations. Investment in the construction sector dipped 3.9% in the second quarter and 1.3% in the third this year. The government designated the whole of Seoul, 2 districts in Incheon, 2 in Ulsan and Siheung in Gyeonggi Province, as a "speculative zone" bound to strict property regulations in the latest measures to curb rising home prices. Korea's recent sizzling property market reminds some experts of Japan's bubble shocks, as an asset bubble goes unrecognized until it bursts. The burst may drive many home owners insolvent on their mortgage loans and cripple the already sluggish Korean economy.

Korea and Nigeria signed a MOU in Seoul for ¡°Agreement on the combining the modernization of Nigerian railway system and development of Nigerian oil fields¡±. Korean consortium, led by POSCO will carry out the modernization of 2 stages railway project with the support of long term low interest loan, and in return Nigeria will render the share of existing oil fields to Korea.
Korean government made an agreement with Qatar for the supply of additional 2.7 mil tons of LNG from 2007, and signed the protocol with Oman to establish a joint venture for the joint storage of LNG.

Japan¡¯s foreign minister declared that it has the technological know-how to produce a nuclear weapon but has no immediate plans to do so, after NK carried out a nuclear test. He also asserted that the pacifist constitution does not forbid possession of the bomb. Japan, the only country ever attacked by atomic bombs, has for decades espoused a strict policy of not possessing, developing or allowing the introduction of nuclear bombs on its territory. Several politicians, however, have argued for a high-level reappraisal of the nuclear policy in the light of NKorean threat.
The Japanese government, in an unprecedented move, has acknowledged the existence of a 19th century document that could prove Japan¡¯s longstanding claim over Dokdo, a set of South Korean islets, to be groundless. The document describes Dokdo and nearby Ulleungdo as not being part of Japan, and says the islands should not be included in its territory official maps.

The Agriculture Ministry has confirmed the cases of bird flu at a poultry farm in Iksan, in the southwest of the country, and in Hwangdeung chicken farm, about 3 km from Iksan. The country is on a high bird flu alert as migratory birds, which can easily spread the life-threatening disease, fly to the Korean peninsula for the winter. Korea reported its first outbreak of H5N1 in Dec 2003, when about 5.3 mil chickens and ducks were slaughtered within 4 months. The H5N1 virus is known to have infected 258 people in 10 countries over the past 3 years, killing 153 of them. 75 deaths have been recorded by the WHO this year, but Korea has reported no human H5N1 cases,.

A brand index released by the Institute for Industrial Policy Studies, the "Korea" brand climbed up 3 notches to No 10 from last year with an estimated value of $866 bil, in a survey of 39 countries. The brand value of Korea is equivalent to 110% of its GDP, $787 bil. More than 500,000 teachers, parents and students submitted a petition declaring a war against junk food to the National Assembly and asking for enforcement of health warning labels on fast food products, like "excessive amount of fast food or carbonated beverage can ruin your health". If the revision is passed, the law will come into effect at the beginning of next year.
The number of mobile phone subscribers in Korea topped 40 mil, in nearly 2 decades after analog cellular services were first introduced into the market. The latest figures put the country's mobile penetration rate at 82.37%.
SKorean Yang Yong-eun rose 39 places to 38th in the world rankings after his win at the Champions Tournament, with the world¡¯s best golfers, including Tiger Woods and Jim Furyk. The 34-year-old claimed a two-stroke victory over the world No 1 Tiger Woods in Shanghai.

NORTH KOREA AND NATIONAL DEFENSE

NK agreed with USA and China on a breakthrough to resume the six-party talks as soon as possible without preconditions. In reply to Pyongyang's vow, USA has agreed to discuss the financial sanctions it imposed against NK to punish alleged money laundering and other illicit activities. But US State Department hoped the resumption of the nuclear talks would lead to a resolution of the nuclear issue first even if the financial issues remain unresolved. Ever since it conducted its first nuclear test, NK has made its wishes clear to be recognized as a legitimate member of the international nuclear club, as well as US acceptance of its regime and lift of the financial sanctions imposed to NK last year.
NK demanded Japan stay away from the negotiations, saying "there is no need for Japan to participate in the talks as a local delegate, because it is no more than a state of USA and it is enough for Tokyo just to be informed of the results of the talks by Washington.

SKorea has decided against full participation in the US led program to stop and search suspicious NKorean vessels, as SKorean government worried that stepping up its role in the PSI could trigger armed clashes with NK. Seoul is also not expected to take further action regarding UN Security Council Resolution 1718 outlining sanctions against NK for its Oct 9 detonation of a nuclear device. They also see the current inter-Korean maritime agreement to be fulfilling the resolution guidelines for undertaking and facilitating the inspection of cargo to and from the North. Washington designed the Proliferation Security Initiative in 2003 to help interdict material related to weapons of mass destruction in international waters, and NK is widely perceived as the regime's key target.

The government decided to maintain the funds allotted for tours to NK's Mt Geumgang and the jointly run industrial complex in Gaeseong City. These projects are expected to receive KW3.05 bil and KW214.3 bil, respectively.
Unification Minister designate Lee Jae-jeong called on USA to be more flexible toward NK and to engage in serious bilateral discussions to resolve the nuclear standoff, saying that It is time for US to step away from a one-sided NK policy and initiate changes through serious negotiations, similar to the dialogue that changed socialist Vietnam.
Former President Kim Dae-jung urged USA to engage in direct talks with NK to resolve the nuclear standoff, saying 2 sides should take more flexible, simultaneous actions with NK giving up its nuclear program and submitting to thorough inspections, and Washington offering a security guarantee and lifting economic sanctions. Kim defended his Sunshine Policy that has been under scrutiny after NK's defiant nuclear test last month, as it is a policy that has seen success to engage with NK .

A panel of the UN General Assembly overwhelmingly adopted a resolution expressing "serious concern" at reports of "systemic, widespread and grave violations of human rights" in NK. For the first time in recent years, SKorea voted to support the text, after abstained in 4 previous UN votes on the issue, under growing pressure to take a tougher stance since NK conducted missile tests in July and its first-ever nuclear test last month. NK criticized SKorea for supporting a UN draft resolution on its human rights record, calling Seoul's decision "a criminal act that creates another obstacle to inter-Korean relations" and "there cannot be a human rights issue in our society where all people are owners of everything and everything exists for all people." The vote in the 192-member assembly's third committee on the human rights was 91-21 with 60 abstentions. NK's deputy UN ambassador blasted the resolution as "a product of a political plot of the USA and its satellite countries."

The government announced its plan to pullout Korean troops from Iraq next year in exchange for extending their deployment by a year halving the number of troops. Korea maintains 2,300 troops in the northern Iraqi town of Irbil to help reconstruction efforts in the Kurdish region. The government also announced that it will withdraw all Korean engineering and medic soldiers from Afghanistan next year in exchange for extending their presence for a further 12 months.
The Korean military concluded a contact with Boeing to purchase 4 airborne early warning aircraft at a price of $1.59 bil between 2011 and 2012. Korea presently depends on US radar aircraft based in Okinawa for its aerial warning.

ECONOMY AND POLICY

BOK assured that the national economy is on track to top its initial growth forecast of an annualized 5%. Goldman Sachs predicted that the Korean economy will grow 5.2% this year, revising upward its earlier forecast of 4.9%. The World Bank cut its growth estimate for Korea next year to 4.5% from its previous projection of 4.8% in March, citing slowing exports and private spending.

Korea's exports, a major economic growth driver for Korea, rose 19.8% on year to $30.9 bil in Nov to a monthly record, driven by strong overseas demand for chips, steel, ships and other key items. It is the first time that monthly exports topped $30 bil, led by an on-year rise in demand for ships (89.3%), chips (49.6%), LCDP (27.7%), steel (37.7%), and cars (17.4%). Demand in China accounted for 19.9% of total exports, followed by Japan¡¯s 14.5%, and EU 15.1%. The authority forecasted the export growth this year will reach a new record of 14.8% on year to total $326 bil, becoming the world's 11th-largest exporter. For the period of Jan-Oct this year, exports totaled $266.2 bil, on year jump of 14%, while imports rose 19.6% to $255 bil.
KWon's continued rally against JYen and USDollar deepens the chronic trade deficit with Japan, estimated to reach a record high of $25 bil this year.
Korea¡¯s current account surplus reached $1.73 bil in Oct, compared with a surplus of $1.4 bil in Sept, as more chips and computers were exported.

State prosecutors and the court played unprecedented showdown with their very queer obstinacy over arrest warrants sought for high-profile personnel involved in Lone Star Funds' 2003 purchase of Korea Exchange Bank. Naturally, the hostilities have been rising between the court and prosecution recently.
The Seoul court approved prosecutors' request to arrest Lee Kang-won, the former head of the KEB, on charges of being responsible for an estimated KW22.6 bil in losses caused to KEB shareholders, and embezzling over KW1 bil in company funds, but refused to approve the prosecution's request to arrest Lone Star vice chairman Ellis Short, general counsel Michael Thomson and Yoo Hoe-won, president of Lone Star Advisors Korea, saying that more convincing reasons are needed to arrest them. Prosecutors on the same day reapplied for arrest warrants with the exactly same wording without any additional evidence. The Seoul District Court issued arrest warrants for 2 American Lone Star executives on additional charge of manipulating the stock price of KEB Credit Service, following the prosecution's third request, but rebuffed the prosecution's fourth request for a warrant for Yoo Hoe-won and Jeong Heon-ju, former head of Lone Star's Seoul office, citing lack of evidence and little possibility of them fleeing. The court also disallowed the arrest of Byeon Yang-ho, former director general at the Finance Ministry.
The Supreme Prosecutors' Office claims the Seoul court's rejection to detain Yoo should be reconsidered because the warrant judge neither interrogated the suspect fully nor gave prosecutors a chance to explain. But the court dismissed the claim, as the Supreme Court in 1997 ruled that an appeal over a rejected warrant request is inappropriate.
The first time an arrest for Yoo was declined was by the district court in May last year. Prosecutors sought to arrest him again on Oct 31, Nov 3 and Nov 15 this year on charges of manipulating the stock price of KEB's credit card service in late 2003. But the Seoul court repeatedly rejected the warrants.

Lone Star at last terminated an agreement with Kookmin Bank to sell its controlling stake in KEB for about $7.3 bil, citing the "politically motivated" prosecutors as the prime reason behind the collapse of the deal, which would have handed it a handsome profit of more than $4 bil. Some foreign investors and the media have expressed worries that the drawn-out probe by Korean prosecutors into Lone Star has the risk of dampening the country's efforts to attract foreign investors.
Senior government officials and regulators are voicing concern over a possible attempt by Lone Star to recover its investment in KEB through a massive dividend payout. Finance Ministry warned that basically shareholders have the right to make a decision on dividends, but it may intervene if Lone Star draws an excessive amount of funds, hurting the financial soundness of banks.
Kookmin Bank suffered a blow when Lone Star scrapped a deal, but is expecting the new buyout opportunities, as there will be plenty of attractive opportunities for mergers and acquisitions in and outside the country. The lender had already secured subordinated bonds worth KW1.9 tril to finance the failed deal. They also believe it is still a strong contender for KEB should it be on the market again.

Korean banks¡¯ bad loan ratio in Sept fell to 0.98%, the lowest in 7 years, the first decline below 1% since 1999 and down from 1.22% at the end of 2005, as the amount of new bad loans fell sharply.
Kookmin Bank, Korea¡¯s biggest bank, sold $500 mil of bonds in London to repay debt. The five-year notes were priced to yield 0.25% above the Libo rate.

The combined net profit of 544 companies that trade on the main bourse reached KW11.46 tril in the third quarter, up 11.3% on quarter, thanks to falling oil prices and the stable currency market. However, the accumulated net profits of the businesses in the first 9 months fell 8.8% on year to KW33.99 tril.
The average ratio of retained earnings to capital at local manufacturers stood at 609.34% at the end of Sept, compared to 578.06% in March and 569.71% in Dec last year, as they are opting to retain their massive earnings instead of investing them in new ventures and projects, amid rising political uncertainty and strict regulations.

CHAEBOL

The Fair Trade Commission tightened regulations on local chaebols aiming at improving corporate governance structures, by banning circulatory share holdings within conglomerates. But the regulators plan to impose the new rules on a lesser number of large firms amid intensifying criticism that the restrictions discourage corporate investments. Currently, over 343 companies from 14 business groups with over KW6 tril in total assets are under the shareholding limit, but FTC considers imposing the cap only on some larger conglomerate affiliates. Only 24 individual firms with over KW2 tril in total assets will be prohibited from overly investing in their group affiliates. The shareholding limit will be also raised up to 40% of a company's net assets. The antitrust regulator also eased the rules on the establishment of holding companies, to prompt the conglomerates to voluntarily clear up their complex ownership structures. Holding companies will be allowed to hold a 20% stake at minimum in their subsidiaries, down from 30% helping chaebols set up more transparent holding company systems with less cost.

Kim Woo-choong, founder of the now-defunct Daewoo Group, decided not to appeal to the Supreme Court over his conviction earlier this month of accounting fraud and embezzlement. Kim's final verdict, therefore, will be 8.5 years in prison and KW17.91 tril in fines. Daewoo Group, once the country's second-largest conglomerate, collapsed in 1999 under heavy debts of $80 bil after the Asian financial crisis.
Daewoo Electronics Corp plans to build a $200 mil National Industries Complex in Dubai, a UAE –Jordanian joint venture, holding a majority stake in the factory, and DEC will provide facilities and technologies worth $85 mil to the project. The plant is scheduled to be completed by the first half of 2008, aiming to produce 3.5 mil refrigerators, air coolers and washing machines.

Samsung Electronics (SEC) unveiled a new convergence gadget topped with Korea's wireless internet platform WiBro, which was named "Deluxe MITs" to enable wireless calls, video conferencing, internet and various multimedia data applications such as MP3 player, movie viewing, a 1.3 megapixel digital camera and camcorder. It realizes both PC and mobile phone functions at WiBro speeds of 2-3 Mbps to a user who is moving up to 120 km per hour.
Booze Allen Hamilton ranked SEC 11th in R&D spending among the world's 1,000 most innovative companies in 2005. SEC spent $5.42 bil on innovation last year, which amounts to about 7% of its total revenue. The company ranked 17th with an R&D budget of $4.32 bil in 2004.
SEC launched the thinnest mobile phone model, measuring 12.9 mm in width and capable of receiving terrestrial digital multimedia broadcasting signals that offer free-of-charge programs. It is the Korean version of Samsung¡¯s mega-selling ¡°Ultra Edition 12.9¡± or the ¡°D900¡± that has sold over 2 mil units in just 4 months in overseas markets.
SEC signed the contract with Abril, Brazil¡¯s largest media group, for commercialization of Wibro, which will be used in 4 major cities for 3 years.
SEC signed MOU with Tamilladu provincial government in India to construct No 2 electronic appliances factory by investment of $100 mil for coming 5 years to produce 1.5 mil units of color TV and 1 mil color monitors. SEC has already operated No 1 factory in Noida.
SEC ageed with BAA to supply Navigational Information System, consisting 1300 units of 46¡± and 57¡± size monitors for Heathrow New Terminal 5, which will be completed by March 2008. SEC has also won the similar project for Netherland Schipol airport and LCD TV to Hilton Hotel.
Samsung Card, Korea¡¯s third-largest card issuer, signed a contract to sell $300 mil of bonds backed by credit-card receivables, to bolster its working capital.

LG Electronics (LGE) unveiled a new laptop with the 3.5G wireless technology specification called high-speed downlink packet access (HSDPA). The "XNOTE A1" notebook allows users to use wireless internet at up to 3.6 megabits per second while on the move.
LG International Corp, the energy exploration and trading arm of LG Group, is to start commercial production from an oil field in the West Bukha field in Oman from 2008. The company estimated daily turnout of 12,000 barrels of oil and 22 mil cft of natural gas. LG takes 50% stake, while England¡¯s Indago Petroleum holds 40% and Eagle Energy 10%, respectively.

The Vietnam government approved POSCO's $1.13 bil project to build a hot-rolled steel plant in Vung Tau near Ho Chi Minh City. The first phase of the construction will be completed by the end of 2009, to begin annual production of 700,000 tons of cold-rolled coil for commercial vehicles, motor bikes and steel products used in construction. Between 2010-2012, it plans to add a plant capable of producing 3 mil tons of hot-rolled coil, a continuous galvanizing line, and expand existing facilities to produce 1.5 mil tons of cold-rolled steel products.
POSCO has completed the construction of its $720 mil Chinese mill with an annual capacity of 600,000 tons, making the company the world's third-largest stainless steel producer. The new facility in the eastern port city of Zhangjiagang increases POSCO's total stainless steel output to 2.6 mil tons. POSCO became the first foreign steelmaker to produce melted iron in China by adding a new 140-ton electric furnace, continuous slab casting and hot-rolling lines, to the existing cold-rolling plant.

A US International Trade Commission judged Hynix Semiconductor did not infringe patents owned by Toshiba Corp, rejecting Toshiba¡¯s claims that Hynix infringed 3 patents for to NAND flash memory chips in consumer electronics.
Chunghwa Picture Tubes, Taiwan¡¯s third-biggest maker of LCD, was told by a US jury to pay $53.5 mil to LG Philips LCD, as Chunghwa and its parent Tatung infringed 2 LG Philips patents for semiconductors to the manufacturing of LCDs.

The nation's first hydrogen fuel-cell bus began a three-year test operation. The KW3 bil bus, developed by Hyundai-Kia, is the world's third to run on hydrogen fuel-cells. The ministry and Hyundai-Kia plan to spend KW48 bil by 2008 to run 4 buses and 30 cars to test the fuel cell system and establishment of infrastructure required for commercialization. Hyundai Motor concluded contract with Comfort Delgro, Singapore¡¯s biggest transportation firm, to supply annually 2000-3000 units of Sonata diesel taxi upto 2010. HMC Finance, HMC US subsidy, issued ABS worth $960 mil, the biggest of the kind issued in USA.
Mando Corp, Korea¡¯s second largest auto parts manufacturer, has won a $1 bil auto parts orders from GM Corp, to provide steering equipment for 5 years.

The volume of order for overseas contruction project this year until the end of Nov exceeds $14 bil, for the first time in its 41 years history, posting $14.13 bil, 144% up on year. Mid East leads the orders with $8.2 bil contracts. Hyundai Construction received $2.3 bil for the unshakable top in order volume, followed by GS with $1.58 bil, HHI $1.4 bil and Daewoo $1.3 bil,
Daewoo Construction won the order from Libya National Electric Power Corp to build 2 Thermal Power plant worth $787 mil each in Misurat and Bengazi, for the completion of June 2010 and July 2010 respectively.
wit Samsung Engineering signed the contract with Saudi National Petroleum Corp, SABIC, to build a polypropylene plant of 500,000 tons annual production capacity worth $300 mil for the completion by Sept 2008. Samsung Engineering also agreed with MOC of Thailand for the project worth $350 mil to produce 800,000 tons of Ethylene in Mapdaput Industrial Complex, for the completion by the end of 2009.
Kumho Asiana Consortium was awarded to procure 72.1% stake in Daewoo Construction from Korea Asset Management Corp for KW6.4 tril.
Korean Air signed a contract with Boeing to purchase 10 units of B777-300ER and 5 x B737-700/900ER passenger planes, and 5 x B747-8F and 5 x B777F cargo planes.

MONETARY AND ECONOMIC INDICES

Korea Composite Stock Price Index has constantly climbed up from 1374 at the beginning, breaking 1420 level first time in 6 months and ended the month at 1432.
Kwon has strengthened thoughout the month from 939 to 929 breaking 930 barrier. The nation¡¯s foreign reserves were tallied at $234.3 bil as of the end of November, up $4.8 bil from a month earlier. Defying political pressures and claims that an immediate rate hike may be needed to absorb excessive liquidity, BOK decided to keep the interest rate untouched at 4.5%, citing slower economic growth and moderate inflationary pressures. It is the third straight month to freeze the overnight call rate. The consumer price index in Nov slipped 0.6% from Oct, on cheaper fuel and as the cost of dairy products and farm produce fell. Korea¡¯s commodity prices fell for a second month in Oct from Sept due to a decline in oil prices. The unemployment rate in Oct declined 0.4% from 3.9% a year earlier. The yield on 3 years corporate bond has been steadily arisen from 4.97% to 5.16% through the month.

SHIPBUILDING AND SHIPPING

Clarkson predicted Korea's shipbuilding exports are to jump from $17.7 bil in 2005 to more than $30 bil in 2015, on continued rise in demand after replacement of old tonnage, projecting the Korea¡¯s combined production volume of 16.7 mil GT in 2015. Combined orders clinched by Korean shipbuilders are likely to top 20 mil CGTs this year on the back of increased high-value-added ship orders. The local shipyards received orders for 380 vessels amounting to 15.58 mil CGTs in the Jan-Sept period, up 61.2% on year, outpacing the 11.97 mil CGTs recorded for all of 2005.
Korean shipbuilders have, in general, improved their performance in third quarter. HHI posted operating profit of KW226.7 bil on the sale of KW3.14 tril. DSME recorded operating and net loss of KW60.9 bil and KW70.6 bil turning into red, due to the expenses for legal suite, on the turnover KW1.44 tril up 37.4% on year. SHI made operating profit of KW24 bil and net profit KW42.6 bil, up 71.4% and 36.1% respectively, on the sale KW1.6 tril up 18.2% on year. Hanjin posted sale of KW469 bil up 26%, operating profit KW36.5 bil up 150% on year and net profit of 18.4 bil from the loss KW5.7 bil last year. HMD made brilliant record with operating profit KW58.4 bil up15.7% and net profit of KW48.4 bil up141% on the turnover of KW611.6 bil up 26.6% on year. STX turned into profit, posting operating profit KW13.3 bil and net profit KW3.37 bil on the sale of 408.5 bil up 54% on year.

HHI received order from Primorsk Shipping for 2 x 104K tankers and SK Shipping 3 x 318K VLCC. Hyundai Samho got the order from NYK Line for 4 x 4,900-teu and SCI 2 x 4400 teu container ships. HHI successfully delivered 2 super large under water LNG tank of 250,000 cum storage capacity, for the first time in the world. HHI received the order from Exxon Mobile last year. It will be installed at the bed of Adiriatic Sea.
DSME won the order with Hoegh Autoliners for 2 x 6100 PCTC.
SHI secured order from Premuda for 3 x 115K aframaxes coated tankers.
STX agreed with Liquimar Tankers to build 2 x 115K tanker, Korea Line 2 x 49.9K pc, Evangelos Marinakis's Capital Maritime 2 x 51K tankers, Ionia Management 1 x 51K pc, STX Pan Ocean 2 x 4900 PCTC, and  STX Pan Ocean 3 x MR tankers. STX lept to world No 6 in terms of order backlog for the first time since its establishment, with 2.9 mil CGT in order, pushing Dalian yard to 7th. It expects easily to climb to No 5, as the gap between Hanjin is only 140,000 CGT.
SLS got the order from NCC of Saudi for 2 x 45K pc, Daesun with  European for 4 x 13K chemical carrier, Hyundai Chingtao with Aegean Shipping for 7 x 5.5K tanker, and Nokbong with HeungA 2 x 12K chemical  carrier and Gagasan Carriers of Malaysia for 3 x 10.8K chemical tankers.

HMM reported a net loss KW1 bil for the third quarter, a turnaround from a net profit of KW45.7 bil the previous year, due to high oil prices and KWon¡¯s gain to the USDollar. It posted operating profit of KW12.5 bil on the sale of KW1.23 tril up 12.6% on year. Hanjin Shipping posted KW43.1 bil and KW32.5 bil in operating and net profit down 70.4% and 81.6% respectively, on the sale of KW1.6 tril up 13.9% on year. Korea Line recorded better performance with operating profit KW14.8 bil up 208.3% and net profit of KW11.2 bil up 69.7%, on the revenue of KW282.9 bil up 5.8% on quarter.

Hanjin Shipping¡¯s chairman and CEO, Soo-ho Cho, the third son of the late Hanjin Group founder, died at age of 53, after a prolonged illness. During his helm, Hanjin led Korean shipping industry by introducing 4,000 teu boxships and start to operate the 8,000teu ships in late 2005 for the first time in Korea. Observers speculate that his death may spark the battles in corporate governance among family members, as the stake held by him was minor and no discussion has been made on the successor. The late Cho Soo-ho held 6.87%, company owning 7.11%, his elder brother in Korean Air 6.25%, Korea Airport 4.33%, and Korea Line has 1.67%. Considering Semy Ofer¡¯s recently expanded stake of 12.76%, the biggest single share holder, Hanjin¡¯s aggregated friendly stake of 26.78% is still fragile against the hostile M&A. The company decided to maintain the management under current helm by president Park Jung-won
Hyun Young-won, ex chairman and adviser to HMM and father of chairwoman of the company, died, after served for Korea¡¯s shipping industry for past 50 years.

Hanjin Shipping agreed a share swap with Korea Line, by acquiring he stakes in each other. KLC bought 1.2 mil shares in Hanjin for KW30.8 bil and Hanjin purchased 750,000 shares in KLC for KW32.3 bil. Hanjin is to involve in the bulk sector where KLC is the best for the partnership.
Renewing speculation that it may bid for control of the shipping line, HHI Group subscribed for shares in HMM¡¯s right offer. HHI Group purchased a combined 25.5% stake in HMM in April from Golar LNG.
Cash rich Korea Line invested around $230m on bulker and tanker newbuildings, it has placed orders for 2 x 200K bulkers at Universal Shipbuilding of Japan and 2 x 51K pc at STX Shipbuilding. The contract brings the total number of MR vessels to 4 with the delivery of 1Q/2008-1H/2009. The company also has 2 x 107K aframax tankers on order at Namura Zosen for delivery of 2/2008 and early 2009. The latest bulker contract for 2 x caper at Universal ups the company's tally to 3 for the delivery of 1H/2009- 2011 and 2012.