The Lee Myung-bak administration is considering setting up a team that will help foreign media and investors get a better understanding of the country’s economic situation, Prime Minister Han Seung-soo said Wednesday.
The move reflects complaints among some senior officials that “malicious and incorrect” reporting by some foreign media about the country’s financial health has hurt confidence among global investors in the Korean economy, officials said.
“Not all foreign media speak ill of Korea’s economy. There are also many good stories,” Han said at an economic policy coordination meeting between top policymakers and the governing Grand National Party (GNP) at his residence in Seoul.
“However, we need to set up a team to promote our policies among global investors and help the world better understand the country’s economic situation.”
Promote the Korean economy? Fine. Work to calm investor fears? Great — that’s your job.
Try to tell the Financial Times how to do their reporting, however, and mark my words, it will backfire… especially considering the ham fisted public relations job the administration has done so far.
Good luck, though.
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“Try to tell the Financial Times how to do their reporting, however, and mark my words, it will backfire… especially considering the ham fisted public relations job the administration has done so far.”
well said. let them do it. they just don’t ever learn.
reminds me of phil mickelson this past us open….pulling a tin cup. just constantly failing over and over and over…..
Yep. Sending out PR kits and releases is one thing. Anything else might have the reverse of what is intended. They need to have the best people do this carefully so as to avoid that.
There are a million other things the Korean government should focus on other than telling the WSJ and the FT how to do their reporting.
On the surface of it, this sounds ridiculous.
Well it depends how they do this. They shouldn’t pick a fight with WSJ and FT. A PR team is a good ideal as long as they don’t come off looking like the VANK. But if they do the job to calm the foreign investors overseas, it should be a plus. Korea’s credit default risk rating is higher than any other country’s and almost around the ball park of Hungary’s which I think is ridiculous. Hungary has just been bailed out by the IMF for $24 billion.
Korea is in this situation because the lack of credibility of the Korean government overseas. They’ve had no calm and coherent economic policy to deal with the crisis and in the past, have been very unfriendly toward foreign investors. If foreigners lack a profitable stake in the Korean economy, they would be very quick to dismiss and downgrade the country as an unstable emerging market.
For some reason this reminds me of a tactic that North Korea would use when dealing with outsiders publishing facts they would rather not here about their country. The ROK government might as well have said “These mean guys are spreading smear campaigns against our great nation and will meet nothing but utter failure and destruction in doing so as we remain vigilant as an impregnable fortress!”
Of course, don’t make the mistake of Lone Star and end up making too much money, then you will be criminal. Make a lot of money and then leave in Korea.
Oops: …then leave the money in Korea.
That PR Team may not even be necessary. I’m nearly getting convinced Korea will escape this crisis and the Won will climb back up and strengthen.
For instance encouraging signs like this:
Korea to sign currency swap with the US
http://news.chosun.com/site/da.....00108.html
Korea is headed for a huge surplus in the last quarter as oil/commodity prices go down and low won jump starts the exports at the expense of the Japanese and Chinese. Japanese tourism has also increased noticeably as they flood into Korea to take advantage of bargain sales.
I agree with cm. If “helping foreign media and investors get a better understanding of the country’s economic situation” means bringing Korea’s economic and financial strengths to the attention of media that treats Korea like it’s Hungary or M*A*S*H then this is good. If it goes VANK and sends a thousand emails to the Letters section of the Financial Times then this is bad.
Of course, don’t make the mistake of Lone Star and end up making too much money, then you will be criminal. Make a lot of money and then leave in Korea.
Maybe they should have just paid taxes in Korea.
I asked this question the other day but no no answered: If Lone Star had paid taxes in Korea would it have had these problems?
http://www.rjkoehler.com/2008/.....ent-198404
cm wrote:
For instance encouraging signs like this:
Korea to sign currency swap with the US
I asked about that yesterday. I’d like to see WangKon936 do a post on the currency swap.
Even if he doesn’t give you or me a hat tip.
http://www.rjkoehler.com/2008/.....ent-198627
Currency swap is only for $30 billion. The US has decided to lend a hand to economies that it feels have strong economic fundamentals but is caught up in the global financial turmoil. Countries include Singapore, Brazil, Mexico, and New Zealand. US would never sign a currency swap with a country that has a high chance of financial collapse. It’s a strong stamp of approval from the US government. US already had agreements with EU, Japan, and Australia.
This practically proves that Korea’s problem all along was its low credibility and bad reputation mixed in with irrational fear, rather than the bad economic fundamentals that were sited in FT and WSJ as reasons for possible default in Korea.
Tis true CM.
The Fed swapped dollars for won with the BOK because it doesn’t want to see regional contagion just like I said before. The Korean economy will bend, but it won’t break and Japan and the U.S. will play a hand in it not because they are kind-hearted, but because helping Korea will help them. It’s easier fighting a fire a mile away because if it’s in your backyard, the burning embers will just land on your roof and by that time it will be too late.
As for User-81’s question about what will happen to the Korean currency. There are some Korean experts who think the Won will strengthen to around W1100 to one US dollar. As long as the oil prices and commodity prices stay down, this could be a chance for Korea to break out of this slump of months long trade deficits and rack up some badly needed surpluses.
Yesterday Kookmin, the country’s largest bank, proudly announced that it will be able to get $430 million USD in financing DIRECTLY from the US Fed. Looking at yesterday’s chart, KB dropped 17% by 1 pm, then flatlined. Looks like regulators stepped in to halt trading.
What boneheads. Did it ever occur to the nimrods at Kookmin that admitting you CAN get money directly from the Fed really just means that you NEED money from the Fed? And if you NEED money from the Fed, what the hell does that mean about your reserves? And if you don’t have enough reserves that you’d have to ASK the Fed directly in the first place than what shitty shape is your current balance sheet in the first place?!?!? Please tell me that Kookmin’s management isn’t that stupid…
Something that I make a living at is producing the English words that ‘teams’ like the one mentioned in the article put into print (at the company level, though, not government).
Usually I get a file of Korean text that I have to turn into English text. My current project is different. This company commissioned an Annual Report JUST in English. To write it, I got their 2007 financial statements, complete and signed off by their big-name auditing accounting firm. I also interviewed company executives and submitted written questions. I thought, “Great! Here’s a chance to actually write the type of report that foreign investors WANT to read, one with ACTUAL information.” And it wouldn’t take much spin to make them look good, because their financials are really quite strong.
Yesterday I got back their comments on version 3. The following are cutouts directly from the working copy file:
But I can’t put out a 3-page report; it’s still going to be long, just empty of useful facts. It’s hard to make investment decisions in the absence of actual data.
Linkd,
You have a thankless, frustrating job…
I blame the neo-confucian ajussi mentality. I’m right because it’s my company. How can you possibly offer me advice? Just translate and shut-up you nosy foreigner!
I can sympathize. For over 5 years I tried telling my dad how small little improvements could greatly improve his business… and I was ignored each and every single time.
Some of the investor reports for the barbarian banks are truly a work of art. Reading them you’d think you were investing in a value-adding business, not a trumped up hedge fund.
They have a point about the Chinese walls though, don’t they Linkd? The less said about that, cough, cough, the better.
On the currency swap, doesn’t the Korean Gov’t swap most of their dollar issuance into won anyway? Or have they just been running a big currency punt all these years?
Are the pundits at the Marmot’s Hole putting out a buy recommendation on the Won now? It might be good if some of the K-Ams starting buying some. WangKon, I know you have millions….
Starting with changing the company name, when you realized that “WangKon Drycleaning” made customers wonder if their clothes were being used for jizz rags?
Ha ha ha ha ha! Bwah ha ha ha haaa haa haaa! (wipes tears from eyes) Oh, I kill me….
…started buying some…
# 20,
Days like this gets me thinking that maybe I should shift to Revised Romanization (“Wang Geon”) rather than McCune-Reischauer (“Wang Kon”).
“KB dropped 17% by 1 pm”
If a stock’s value increases or decreases by 15%, regular investors are prevented from trading in that stock while it continues to gain or lose ground…and don’t get me started about the after hours trading. Needless to say, I’ve given up on day trading in the Korean stock market.
Delta and Northwest merge.
http://www.washingtonpost.com/.....id=topnews
Now would probably be a good time to push through all those mergers that the regulators would have nix’ed at other times. What about an AA-BA link up? Has the Lloyd’s-HBOS merger/acquisition be passed yet?
Don’t look now but the Won is at 1297 as we speak. That’s one heck of an appreciation for the day. Look out now, we don’t want it too strong so quickly. KOSPI is up 5.5%, right over the psychological 1000 line. Things are looking up for now.
Don’t expect it to last, cm. It could wildly fluctuate back and forth for at least a week.
Major lag between this rebound and the announcement of a currency swap, would have been a great time to jump into the won, then pull right back out. Instant 7%.
Yeap (the wild fluctuations), I would say the icing will be on the cake once the trade numbers come back at the end of December. Foreign investors just couldn’t believe the Korean government’s explanation that Korea will have a trade surplus in October. Many still remember 1997 when the Korean government played and hid the numbers until the end. Many investors have a suspicions that Korean government maybe hiding more debt or that Korea’s famed 240 billion foreign reserve is also a fictional number.
The only way for this to clear up for sure is time. Time will prove or disprove Korean government’s stand.
Government debt is widely known just by adding up all the bond issuances, so it can’t be hidden. Governments do not have to report their foreign reserves in a timely or accurate manner, though, and in particular, which currencies make up those reserves. Those are the subject of a lot of sleuthing by economists. Korea’s $240 bil has gone down in the past few months, certainly, but of course they’re not telling how much – and neither is anyone else, for now.
What does cause concern is not knowing how much NEW debt governments will issue in response to a crisis, or whether they will be able to afford to make the interest payments on existing debt (default). Also, in normal times, creditors often roll over debt when it comes due, so they can keep collecting interest payments. In bad times, they just ask for the principal back on the due date.
Another unknown is to what extent governments will back up private sector companies. Fannie Mae and Freddie Mac enjoyed low rates on their borrowing because it was assumed the government would support them. That was true. Others assumed the US gov’t would back up the big banks. There is a raging debate now whether it was a good or bad decision to let Lehman fail – and how confusing it was to the markets to let Lehman go, but support WaMu and Bear Stearns as they were taken over by competitors.
# 10,
Likely not because I’ve been busy as of late.
I’ll probably put a post up about the 3rd quarter state of the economy in the coming week or so… when things calm down a little of me.
Does anyone know how much debt Korea has with other sovereigns? Does it have any Paris Club debt outstanding?
And does anyone know how many of Korea’s outstanding bonds have embedded put options in them that allow them to be redeemed early, and what the conditions for those put options are?
Eujin,
Ambitious queries. Most of us are trying to figure out x-rates!
The reason I ask is that someone on this very blog not long ago was saying that one of the problems during the IMF crisis was that all the bondholders tried to redeem their bonds early, all at the same, creating a massive cash-flow problem. I was just trying to get some details about how the situation stands now.
Sometimes this blog can be a very useful source of information. The scientific details during the beef protests were quite useful and the coverage of obscure points about Dokdo is excellent. I guess investing is something people just do with their money. They don’t actually understand it.
eujin,
MOFE publishes current Treasury bond stats all the time on its site.
http://english.mofe.go.kr/
For total government debt, go to Bank of Korea’s system
http://ecos.bok.or.kr/
This site isn’t very user-friendly (Active-X is just the begining), because it doesn’t really try to separate general-purpose stats from huge data files that only serious researchers would want. It’s also not updated often enough. For a quick look, hit “Principal Indicators”, then scroll down to ‘Securities and Government Finance”. Looks like there were 265trillion KRW in Treasury bonds in March 2007. Note that Korea separates its currency sterilization bonds from its T-bills, though. There’s another 150+ trillion worth of those. If you really have time to dig, use the ‘Search Stat’ option, and start downloading some big-ass spreadsheets. If you have a specific question, like, how much USD debt is coming due in the next 6 months or whatever, why not just use the Contact Us phone number and ask someone?
Finally, about those embedded options – do governments actually get into that stuff with sovereign debt? That sounds more like corporate debt to me.
Linkd,
I don’t know. That’s why I was asking. If it’s true that everyone was trying to redeem their bonds early in 1997 then something like that must have been going on. I would call it an embedded put option but it might be marketed as an “early redemption clause”. I could plausibly believe that some emerging market sovereigns were doing this to make their bonds look more appealing and lower their cost of borrowing, but I just don’t know. I’ll go and have a look at your links when I get some time.
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