South Korea’s August exports tumble for 9th month

The South Korean finance minister said the country is likely to miss this year’s growth target. (Reuters/File)
Updated 01 September 2019

South Korea’s August exports tumble for 9th month

  • Tokyo’s export curbs and the political unrest in HK shake business sentiment

SEOUL: South Korea’s exports tumbled in August for a ninth consecutive month, on sluggish demand from its biggest buyer, China, and depressed prices of computer chips globally, government data showed on Sunday.

The bleak data clouded the outlook for Asia’s fourth-largest economy as a brewing trade dispute with Japan emerged as a new risk to the export-dependent economy on top of the prolonged conflicts between the US and China.

Exports in August plunged 13.6 percent from a year earlier, the Trade Ministry data showed, exactly matching a median 13.6 percent fall forecast in a Reuters survey and marking the third month with a double-digit rate of drop in exports.

That further dented growth prospects for South Korea and strengthened the case for an additional policy easing by the central bank, soon after a surprise interest rate cut in July, for the first time in three years.

“There’s no sign of the export momentum gaining strength as the US-China trade dispute continued while Japan’s export curbs and the political unrest in Hong Kong have shaken business sentiment,” said Lee Sang-jae, an economist at Eugene Investment and Securities.

South Korea is the first major exporting economy to report foreign trade data each month and its companies include some of the world’s top suppliers of chips, smartphones, cars and ships, so providing an early guide to the health of the global economy.

On Sunday, the finance minister also said South Korea was now likely to miss this year’s growth target, just two months after the government downgraded the goal to 2.4-2.5 percent from 2.6-2.7 percent earlier.

The sluggish exports in August were led by a 30.7 percent drop in shipments of semiconductor chips that account for a fifth of the total, while a decline of 21.3 percent in sales to neighboring China also contributed, the ministry data showed. The ministry said in a statement exports, excluding semiconductors, contracted 8.7 percent year-on-year.

Disputes with Japan were hardly a welcome development, although the effect has been negligible. Japan has tightened curbs on exports of high-tech materials to South Korea, and each has stripped the other of fast-track export status.

Imports in August fell 4.2 percent from a year earlier, largely in line with a prediction of a 4.0 percent drop in the Reuters survey. That brought this month’s trade surplus to $1.72 billion, compared with a $2.40-billion surplus in July.

The data came days after the central bank held its policy interest rate unchanged at 1.50 percent on Friday after a 25 basis-point cut in July.

South Korea’s economy grew 1.9 percent during the first half in annual terms and private sector organizations predict full-year growth will fall to as low as 1.4 percent from 2.7 percent last year, one of the worst figures in decades.


Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

Updated 14 October 2019

Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

TOKYO: Under-pressure start-up WeWork is considering two huge bailout plans including a cash injection that could see Japanese investment titan SoftBank take control of the firm, according to reports.
The office-sharing giant had been on course for a massive initial public offering until last month when questions began to be asked over its governance and profit outlook.
The firm’s valuation plunged from $47 billion in January to less than $20 billion in September and the listing plans have been dropped, while co-founder Adam Neumann stepped down as chief executive.
With New York-based parent company We Co. not expected to push for the IPO this year, the cash-strapped firm is looking for a financial lifeline.
The Wall Street Journal, New York Times and Bloomberg News cited unnamed sources close to the talks as saying SoftBank — the US firm’s biggest shareholder — had drawn up a proposal that gives it full control of WeWork.
The move would dilute the voting power of Neumann, who remains as chairman of the company he started in 2010 and also currently maintains control a majority of voting shares.
They also reported that WeWork is looking at a deal with Wall Street giant JP Morgan to raise $5 billion in debt, with the Times saying directors of We would be meeting as soon as Monday afternoon to discuss that.
“WeWork has retained a major Wall Street financial institution to arrange financing,” the Journal reported a company spokesman as saying.
“Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”
The New York-based startup that launched in 2010 has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.
However, the company, which lost $1.9 billion last year, has faced skepticism over its ability to make money, especially if the global economy slows significantly.