Today’s Korean News summary 06/08/15

Today’s Korean News summary 06.08.15
Summarized and translated from Joseon Daily Post.

Daily MERS situation in Korea!
The government released information regarding the MERS Hospitals
After resisting ever since this whole situation started, the government capitulated under public pressure and released the names of24 hospitals with confirmed MERS outbreaks or hospitals without any outbreaks but had some contact with MERS patients.

These hospitals are seeing a significant and drastic decline in both admittances and outpatients. While some say that this announcement was a relief, some are concerned that many hospitals will not treat patients with any of the symptoms similar to those of MERS.

This Week as the watershed
Currently, the number of confirmed infectees is at 64 and the death toll is at 5. At the present, the only known cases of infection are in a hospital setting and none out in the public. According to the government, this week will be the watershed moment as the incubation period of secondary infectees will be over. It is expected that further infections will reduce from now on.

Government deciding to “monitor” people who are self-quarantined
At the present, the number of people self-quarantined because they came in contact with an infectee is at 2142. This means that they are at home on their own recognizance. The government has decided to track all these   people’s cell phones and assign one government official to one person quarantined to track and observe that person. At the present, there is no plan to put cameras in these people’s houses.

There are many that have issues with how this policy is being executed as it seems not be in practice at the moment. In addition, some others are concerned that there is not plan to compensate those self-quarantined or provide support other than to monitor them. This is also the case for many of the healthcare professionals working with MERS patients and who themselves are quarantined.

MERS is difficult to distinguish from the flu
In many early cases, it has been shown that MERS patients were misdiagnosed with the flu or pneumonia. Patients have shown diverse symptoms depending on their own immune system with 30% of confirmed infectees showing no symptoms at all.  In more serious cases, patients display respiratory distress and high fevers. Some show digestive or kidney issues when symptoms are serious.  At the moment, there is only one easy way to distinguish MERS patients from the flu. It is to see if they have been in contact with a confirmed infectee.

Legal News
Fun Legal news
The courts gave out a verdict in a case in which someone splash another person with a cup of water like in the movies or Korean dramas. The verdict was that this act should be considered “assault” in the eyes of the law.

Not Fun Legal news related to adoption
In 2008, the law was changed to allow legal adoption of a child of divorced by one of the parents’ new spouse when the parent remarried. This made the child change his or her last/family name cutting all legal ties with his or her other parent. A part of this law was a clause to annul this adoption which was not well conceived.

After this law was put in place, two things became more common. First, more parents made his or her new spouse to adopt his or her child when his or her remarry. Second, when the new marriage failed as they tend to do, more and more “adopting” spouses use the loopholes in the law to annul the adoption and take back his or her family name from the adopted child. Once again, the child has to retake the name he or her once discarded.

Some voice are concerned that this puts children under undue distress. Others say that this is unavoidable. Divorce is hard!

Economic News
The Korean National Bank under pressure to lower its interest rates
With a decision scheduled to be made on its interest rates in a few days, the Korean National Bank’s president Lee is in the hot seat. On one hand, the pressure to further reduce its interest rates is mounting with declining Korean economy resulting from low value of the Yen, and the decline of domestic consumer spending over the past few years. This situation is not helped with the whole MERS “epidemic.”

Since last year, the bank has reduced the rate to its lowest ever at an annual 1.75%. However, it has been seen to be not enough as response to the cooling down of the world economy including China and the devaluation of the Yen which makes Japan price competitive relative to Korea.

On the other hand, there are serious domestic political concerns as it has been shown that lowering interest rate encourages domestic household borrowing and thus increases household debt which is a hot button political issue.  In addition, further reduction of the interest rates may cause an exodus of foreign investment out of Korea’s financial market for the relatively more lucrative U.S. markets. Thus, the Korean National Bank is in a tight bind. There are voices also stating that the situation is not something that can be handled with adjusting interest rates alone.

Korean banks going for the conscripted soldier population as new potential customers.
Recently, Korean banks have been vigorously going after conscripted soldiers who will be returning to private life in less than two years.  This does not include career soldiers. Common examples of this include developing dedicated financial products with high interest rates, and directly going out to bases and military training facilities to promote these products.

Considering its high interest rates and the low income of these soldiers, these efforts result in a loss for the short term.  However, in the competitive Korean financial market, getting one’s hands on a customer early on is expected to be worth the short term loss.

SK Hynix’s new labor deal
SK Hynix Inc., a South Korean memory semiconductor supplier, announced a new deal regarding its annual labor arrangements. Simplified, this is what it boils down to. The company has signed a deal with its labor union to increase its workers’ basic salaries across the board by  2.79% and give workers, who were dispatched from subcontractors to work within in SK Hynix’s facilities, a lump sum of what amounts to 0.62% of last years’ total SK Hynix’s basic worker salaries to divide among themselves.

A +A*0.031*(0.9) =2.79%

The article and the company says that this is a new positive development as the unions of Korean conglomerates have been known as “Labor Nobility”. This is because they have been known to hoard all the benefits of salary increases putting the burden on the suppliers and subcontractors.

If I would give my 2 cents, I would say that it is a strategic change on the part of the labor unions to increase their power base by making an alliance with the workers from the subcontractors. This does not benefit anyone beyond those that directly work with SK Hynix’s workers and its union.

The stock prices rise as the merger deal becomes more dramatic
With Elliott management entering the Samsung C&T and  Cheil Industries’ merger deal as a dark horse, the price of Samsung C&T, in which Elliott management recently announced it owned 7.1% of, rose considerably and traded about 30 times more stocks prior to the announcement.

For my 2 cents, I think everyone knows that the owners of the Samsung group, who need the merger to go through, will start going on the buying spree.  They simply do not have enough stock in Samsung C&T to make it happen at the present if Elliott management decides to fight the deal. And they recently did announce their intensions to do exactly that. In other words, Elliott management and the stockholders of Samsung C&T will make some pretty coin.

E-mart starting a new grocery supply initiative
In the current Korean grocery distribution market, most products go through many middlemen or cooperatives. This was also the case for E-mart which is a Korean nationwide discount retail store chain like Walmart. However, recently E-mart decided to try to work directly with the producers in order to increase the quality of its grocery products and reduce costs .

When a producer applies to the program, E-mart dispatches buyers directly to the producer and evaluates the producer and its products. The pass rate is less than 10% at the moment. The customer response to this initiative is positive generally.  Overall, it is expected that this will help push the  Korean agricultural industry into modernizing as it is still based on small and independent farmers.  

Real estate news
Among all the Seoul real-estate transactions conducted last month, it is estimated that 1 in 3 cases were monthly rentals. This is the highest this ratio has risen ever since it started to be tracked. Why is this special?

For a long time, the Korean real-estate market has been dependent on the deposit basis lease system. According to this system, the renter gives the owner a lump sum worth a considerable portion of the real estate‘s price for the period of the lease interest free.

This new phenomenon can be contributed to low interest rates resulting in owners preferring the monthly rent system which guarantees a fixed return. This trend is expected to continue.

Korea’s consumer product companies are entering the U.S. Market
With the rise in popularity of Korean culture worldwide, Korea’s consumer product companies are trying to push into the U.S. Markets including New York. The following companies are just a few examples.

Amore pacific, a leading cosmetic company in South Korea, has opened 26 stores just in New York.  Another cosmetic company LANEIGE started to sell its products in US retail stores. This phenomenon is not limited to cosmetic s. One of the flashier developments is the purchase of “The New York Palace” Hotel by the Lotte Group for a hefty sum. The Entertainment company CJ Group also newly added New York to its Korean entertainment convention “KCON” roster.

While this is a positive development, there are voices concerned with the focus on short term expansion. 

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