South Korea Sees Won-to-Bond Risks as U.S. Impasse Adds Stress

South Korea Sees Won-to-Bond Risks as U.S. Impasse Adds Stress

South Korea warned of risks of volatility in the won and stresses within the nation’s bond market as the U.S. grapples with the threat of a default that could roil the global economy. Prolonged tension over U.S. fiscal policy adds to the danger of increased volatility in financial markets, the finance ministry said in a report prepared for a parliamentary audit today. Bond issuance by companies with low credit ratings may wither, the report said, amid a criminal probe and financial crisis at the Tong Yang Group.South Korea will strengthen monitoring of financial markets and act quickly if necessary to curb volatility in its currency, the finance ministry said. Speaking in the city of Sejong, Finance Minister Hyun Oh Seok highlighted concern over the effect of Federal Reserve plans to reduce monetary stimulus when the U.S. economy strengthens sufficiently.

The won was little changed at 1,066.2 per dollar as of 1:36 p.m. in Seoul.

In the U.S., Senate leaders are reopening talks aimed at avoiding a default and ending a 15-day-old government shutdown, while Fitch Ratings has put the world’s biggest economy on watch for a possible credit downgrade.

The outlook for U.S. monetary policy is “causing volatility in financial markets, especially in the emerging economies,” Hyun said.

“We are concerned that bond issuance of low credit-rating companies may wither,” the finance ministry said in the report. “We’re concerned that marginal firms may have difficulties in their corporate financing.” The ministry said it will “closely inspect the corporate financing market and support refinancing of viable firms through creditor banks.”

To contact the reporter on this story: Cynthia Kim in Seoul at ckim170@bloomberg.net

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.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: