South Korea

A subcontractor that supplied Ssangyong Motor with parts for all car models has gone belly up, raising a red flag for the recovery of the automaker, The Chosun Ilbo reported. Representatives of an association of about 250 Ssangyong subcontractors asked the automaker's court receivers for emergency funds in a meeting at Posteel Tower building in Seoul on Wednesday. Ssangyong is receiving components again after moving the parts production machine operated by the supplier that went bankrupt the previous day to another subcontractor.

Ssangyong Motor Co., South Korea’s smallest carmaker, was placed in bankruptcy protection after vehicles sales tumbled 30 percent last year, Bloomberg reported. Park Young Tae, Ssangyong’s current financial director, and Lee Yoo Il, a former Hyundai Motor Co. president, will act as receivership managers, the Seoul Central District Court said in a faxed statement today. The court could still seek liquidation if the managers’ turnaround plan is deemed unviable.

The delinquency rate of South Korean credit card firms rose in the fourth of last year from three months earlier amid the ongoing economic slumping, the Korea Times reported on Thursday. The default ratio of Samsung Card and four other card firms reached 3.43 percent at the end of last year, up 0.15 percentage point from three months earlier, data from the Financial Supervisory Service (FSS) showed.

Ssangyong Motor, which practically ground to a halt on January 9 when it filed for court receivership, will resume operations on February 2, The Chosun Ilbo reported. Judges from the Seoul Central District Court will inspect the automaker's only plant for finished cars on Thursday to determine whether to grant receivership to the automaker sometime in the first week of February. Ssangyong suspended operations after filing for court receivership because some subcontractors refused to supply parts since they had not been paid for goods already delivered when the carmaker hit the skids.

Ailing South Korean automaker Ssangyong Motor, which is seeking court receivership to avoid bankruptcy, announced it has suspended production because of a lack of parts, Agence France-Presse reported. Operations at the company's only plant at Pyeongtak, 70 kilometres (43 miles) south of Seoul, will stop indefinitely, the Chinese-owned firm said. A Ssangyong spokeswoman told AFP the supply of auto parts would likely resume only after a local court gives a final ruling on the firm's application for protection from creditors.

Corporate earnings will continue to slump into the first half of 2009 amid the first simultaneous recessions in the U.S., Japan and Europe since World War II, Bloomberg reported on analyst estimates. While profits will rise 4.3 percent for the full year in the U.S., earnings in Europe are projected to decline for all of 2009 and analysts predict worsening reports out of Asia because the recession hasn’t fully hit there yet. Earnings at European oil companies may drop 21 percent in 2009, compared with a 4.7 percent gain last year, according to estimates.

Export-reliant Asian economies showed more signs of weakness on Friday, with Japan's industrial output diving at a record pace and South Korea warning it faces an "unprecedented crisis" as global demand wilts, Reuters reported. Even the once unstoppable Chinese economy is feeling the strain, with companies recording a sharp slowdown in profit growth in the first 11 months of the year. On top of Japan's steep fall in industrial output in November, core consumer inflation fell faster than forecast last month, putting the shrinking economy on course for a spell of deflation next year.

Ssangyong Motor Co., the South Korean unit of China's largest carmaker, rose the most in three days in Seoul on an Edaily report that the Korean company may get financial aid from parent SAIC Motor Corp. this week, Bloomberg reported. A high-level official from SAIC will be arriving in Seoul tonight and will receive a briefing on the business tomorrow, Internet media Edaily said, citing an unidentified official at Ssangyong. The Pyeongtaek, South Korea-based automaker temporarily suspended production from Dec. 17 to reduce inventory as the global financial crisis weakened demand.

South Korea tackled one big problem, bank liquidity, after the economic crisis went global in recent months. Now another problem is creating uncertainty: high levels of household debt. South Korea in the past five years has built some of the biggest levels of household debt in the world, The Wall Street Journal reported. Household debt increased to 66% of South Korea's gross domestic product last year from 38% a decade earlier, according to a recent study by the International Monetary Fund. As the economy slows, the high level of household debt could lead to more delinquencies.

South Korea's financial watchdog said Wednesday it would set up a task force to advise troubled companies on corporate restructuring to help them ride out the credit crunch, Agence France-Presse reported today. The team of 43 experts will be formed Friday and work for one year, the Financial Services Commission said. South Korea has announced a series of steps to lessen the effect of the global slowdown, including $16 billion in loans to ease a dollar shortage for firms importing raw materials and exporting goods.