Eastar Jet Co. on Tuesday began the process to find a new owner after Jeju Air Co. scrapped its plan to acquire the smaller budget carrier amid the new coronavirus' impact on the airline industry, YonhapNews reported. Eastar Jet has selected Deloitte Anjin LLC, Yulchon LLC and Heungkuk Securities Co. as lead managers to handle the deal to sell its controlling 51.17 percent stake, Eastar Jet Senior Vice President Kim You-sang said over the phone.
South Korea’s Hyundai Development Co said on Tuesday it wants new terms for its acquisition of Asiana Airlines after the carrier’s already hefty debt burden increased by some $3.8 billion (2.9 billion pounds), Reuters reported. It also called on Asiana’s state-funded creditors to provide support to the long-troubled airline, which must now also contend with the coronavirus pandemic’s crippling impact on travel demand. Hyundai Development and brokerage Mirae Asset Daewoo agreed in December to purchase control of South Korea’s No. 2 airline for about 2.5 trillion won ($2.1 billion).
South Korean bank stocks have gone from cheap to extremely cheap in a matter of months as concerns grow over their loan books tied to the nation’s flagging property sector, Bloomberg News reported. The MSCI Korea Financials Index, in which banks carry a 65% weighting, is trading at 0.34 times its members’ book value, down from about 0.5 times at the end of 2019, according to Bloomberg-compiled data.
South Korean president Moon Jae-in has warned that the economic crisis stemming from coronavirus is only just beginning as he unveiled a sharp increase in spending to deal with the fallout of the pandemic to almost $200bn, the Financial Times reported. The new measures highlight the long-term economic challenge for countries even after they have dealt with the immediate public health crisis. “We are at the beginning stage of a crisis. A hiring freeze together with a corporate crisis is looming,” said Mr Moon.
South Korean structured notes, favored by local retail investors, could face massive losses after European banking shares plunged more than 40% in the past month, Bloomberg News reported. At least four Korean products linked to the Euro Stoxx Banks Index are likely to record losses of more than 50% if the underlying gauge stays at around the current level until their maturity, according to terms compiled by Bloomberg. The gauge has fallen 45% since a mid-February high on disappointment over European Central Bank stimulus measures. Korea Investment & Securities Co.
Seoul-based labor lawyer Lee Seung-yeon’s phone has been ringing almost nonstop since the coronavirus hit South Korea, Bloomberg News reported. One of the calls is from an owner of a restaurant in tourist spot Myeongdong. The restaurateur is thinking of closing his business after revenue dwindled to 200,000 won ($168) a day. Others phone about trouble paying salaries or about getting government assistance. “The situation is really serious,” says Lee.
Two decades after South Korea’s swift economic response helped avert a devastating recession, the country is taking decisive steps to battle another slowdown, this one with a human cost as well, Bloomberg News reported in a commentary. The coronavirus, which has claimed more than 30 lives in South Korea and infected close to 6,000 people, lands new punches on an economy that was just beginning to find its feet after being caught in the U.S.-China trade conflict and a separate spat with Japan. Korea has more Covid-19 cases than anywhere outside China.
With its interest rates back at an all-time low, speculation is mounting that the Bank of Korea may be forced to join other central banks in using unconventional tools to stimulate one of the hardest-hit economies in the trade war, Bloomberg News reported. While Governor Lee Ju-yeol said last week it was too early to consider unconventional steps, he also acknowledged that the BOK was constantly reviewing and updating its “contingency plans” and studying actions previously taken by other nations should it run out of room to lower interest rates.