S. Korea’s top 30 conglomerates owe nearly $557bn; amount excludes debts owed by their financial affiliates.

S. Korea’s top 30 conglomerates owe nearly $557bn

2013.10.01 15:02:33

Aggregate debt of South Korea’s top 30 conglomerates almost doubled from the pre-crisis level to around 600 trillion won ($557 billion), data showed. About half of the 30 large business groups saw their debt to equity ratio rise and their ability to repay debt worsen from five years ago. This prompts calls for them to improve financial stability to avert the spread of liquidity crisis. The nation’s top 30 groups by assets owed a total of 574 trillion won late last year, up 313.8 trillion won or 261.1 trillion from 313.8 trillion won in late 2007, according to an online business data provider Chaebol.com Tuesday. The amount is based on groups’ audit report and excludes debts owed by their financial affiliates.
Debt held by top 30 groups was far higher than that of the government. The government’s debt came in at 443.1 trillion won last year and is expected to reach 480.3 trillion won this year and 515.2 trillion won next year. Debt to equity ratio of top 30 groups declined from 95.3 percent late 2007 to 88.7 percent late last year. Debt to equity ratio measures the degree of soundness of the company. The higher the ratio is, the weaker a company’s financial structure. The problem is excluding some top-ranking groups, most of their financial stability has worsened although the debt to equity ratio went down as a whole.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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