Investment, Larger Than the Last Year

Out of CEOs of the 100 companies in Korea, 86.7% forecasted that a business performance of the second half of the year would be similar to or exceed one of the first half of the year. CEO of major large companies are optimistic about the economy of the second half of the year based on a confidence on a good business performance of the first half of the year, despite unfavorable factors such as a slack US economy, declining exchange rate, presidential election and a labor dispute. However, the pessimism on the world economy has gained predominance.

Besides, among listed companies, 510 companies of the December settlement had the net incomes of KRW 1,704,370,000 for the first half of the year, and brought the largest performance.

As the result of a survey on the sales-based business prospect of the second half of the year for CEO of 100 companies’ conducted on August 15th, jointly by the dept. of economy of Donga Ilbo and LG Economic Research Institute, the respondents of 54.2% answered ‘it will be similar to the first half of the year’, the respondents of 30.1% answered ‘it will improve a little’, and 2.4% respondents answered ‘it will considerably improve.’ However, the respondents of 12% answered ‘it will stagnate.’ and 1.2% respondents answered ‘it will considerably stagnate.’

As the companies are optimistic about the business prospect of the half of the year, 87.3% of the large companies plan more investments than a level of the last year for the facility extension and research& development (R&D).

In terms of the employment of the second half of the year, 79.5% answered ‘it will be similar to the same period of the last year’. Out of respondents (12.8%) who answered ‘it will increase over the last year’, they will plan to increase the new staff employment of 9.2% and experienced staff employment of 3.6%. It is prospected that the new staff employee market will a little increase over the last year when is focused on the experienced staff employment.

In terms of the most favorable policies for the economy activation of the second half of the year, 42.9% of CEOs answered ‘limitation of total investments and relief of other corporate restrictions’. Choi Byeong-hyeon, the researcher of LG Economic Research Institute analyzed, “The corporate restriction still blocks the domestic economy activation”. Also, there are the interest stabilization (25.3%), minimization of foreign exchange fluctuation(21.7%) and political stabilization(8.4%) in order.

Besides, 510 listed companies obtained the largest performance based on the net income for the first half of the year. According to the Korea Stock Exchange and Korea Listed Companies Association (KLCA), for the listed companies, the net income of the first half of the year increased by 156.68% over the first half of the last year (KRW 6,640,100 million). The sales amounted to KRW 253,392 billion. All listed companies showed profits for the first time.

KOSDAQ gained the largest performance as well. The sales and busies performance of

the first half of the year increased by 17.3% and 21% over the same period of the last

year respectively. For the general companies, the semi-annual net income increased by

213.5%, but the venture companies showed small deficits.

Yeon-Su Shin ysshin@donga.com libra@donga.com