Today’s Korean News summary 06.09.15

Today’s Korean News summary 06.09.15
Summarized and translated from Joseon Daily Post.

Daily MERS situation in Korea!
The second fully cured patient
Recently, the second cured MERS infectee left the confinement of his hospital. He was cured by using various anti-virus medications. He said his experience was less painful than his experience with the flu. He was healthy prior to being infected.

The dean of Baylor College of Medicine in Texas, USA visited Korea and said that MERS is not as dangerous a disease as Koreans think.  “Many infectees with healthy immune systems do not experience any symptoms and most of the deaths are from the elderly populations.”

The new phase of the MERS Situation
With the situation dying down, there are several opinions on how to deal with the new phase of this outbreak.  The Korean infectious disease association says that all patients currently admitted to hospitals for pneumonia symptoms should be tested at the same time. This is because many MERS cases were related to pneumonia symptoms.

A side effect of the MERS hype is that many hospitals have started to reject patients with symptoms similar to those of MERS. Even though this is illegal and can result in fines and revoking of medial silence, the trend has been spreading as just the rumor of any kind of contact with the virus may ruin the hospital financially.

The lack of clear control within the Government’s MERS response  

The president of Korea said that she will give the response team composed of experts the authority to handle the situation as they see fit. She was visiting a hospital at the time.

At the present, the number of MERS response organizations within the Korean government is 3 with significant overlap of functions and the overall sense of confusion. This has caused a lot of chaos in the government’s response related Medical policies in the MERS outbreak.  In addition, these organizations are in constant conflict with other non-medial related departments on how the government’s actions would affect non-medical issues. Within the top of the administration, there is a lack of any decisive will to correct this situation as officials play the “pass the buck” game.  

Foreigners’ responses and travel plans to Korea
As the hype regarding the MERS outbreak is high in Korea, many foreigners are showing different responses. The official story is that Korea is a low health risk. The American CDC says that travelers should not alter their plans to visit Korean or other countries. “Just take care of personal hygiene such as washing one’s hands using soap frequently.”

However the people who are the most jumpy about MERS seem to be Koreans and the Chinese. There are many Korean reporters who say that Korea should cancel all of its international events. One of those events was the World Science reporter conference that started yesterday. However, the actual attendees who are Science reporters from all over the world think that the whole “scare” is a joke and are planning to take the opportunity to do a lot of site seeing with family members who accompanied them to Korea.

According to the Korean Tourism Organization, about 40 thousand Chinese tourists decided to cancel their plans to visit Korea because of the MERS outbreak. In contrast, 20 teachers from the American Harvard Westlake high school are still planning to visit Korea. They say that “since all evidence shows low health risks, there is no reason to cancel their plans.”

Economic News
The raising of US interest rates and how to respond
The vice president of IMF, while attending a Korean bank conference, said that the central banks of countries and their governments need to prepare for the raising of US interest rates as 3 hugely negative effects will be generated.

First, the foreign investment that had been directed towards developing countries will change directions and head back towards the US when it raises its interest rates. Second, as the value of the dollar increases, many companies which benefited from the low dollar will be hit hard. Third, as the market becomes colder, many asset management firms will start to flood the market with risky assets which could generate a negative self-sustaining cycle.  “Countries with weak financial fundamentals will be hit” are the words of the vice president of IMF.  

In a situation where the governments and their central bank need to be flexible and active, some say that the governing structure of the central banks need to be improved in order for them to be more independent from the governments who can be easily seduced to use  the banks as a short term stop gap.  Another concern is that the US interest rate raise could negatively affect countries with large amount of debt across the board. This includes Korea with its high amount of public and private debt.

New energy plan announced by the government
For its 7th energy development plan, the Korean government announced that the basic skeleton of the plan is to build more nuclear plants, fund more renewable energy programs, and reduce the number of fossil fuel energy plants. Specifically, Korean will build 13 additional nuclear plants over the lifespan of the 7th plan.

According to the plan, the government is expecting to generate 20% of its total energy production from renewable energy programs in the year 2029. Last year, this figure was at 6.7%. This is stated to reduce the emission of greenhouse gases although in a more conservative manner than the previous administration. However, there is still a lot of regional resistance towards adding both more nuclear plants to already existing nuclear sites and developing totally new sites.

The hype for Samsung C&T merger dies down
After its initial announcement, Elliott management’s negative opinions about the Samsung C&T and Cheil Industries merger deal caused the prices and trade volumes of the stocks involved to rocket towards the outskirts of the atmosphere.

However, things have started to die down as the stocks of both Samsung C&T and  Cheil Industries are down today. It is estimated that the stock prices have rose to their limits as only the stocks acquired up to today will matter in the looming merger vote.

Both Elliott management and the owners of Samsung group have been on a silent campaign to shift support to their sides. It is thought that the owners of the Samsung group need about 50% of the Samsung C&T stocks on their side to be confident of the merger going through without a hitch.

At the present, both Elliott management and Samsung group have nowhere near the stocks, on their own, to make a decisive push when it comes to voting time.  Some voice concerns that, in the case Elliott management loses the vote, it may be possible for them to sue in either Korean or UK courts. However, it is the consensus that the deal with go through as failing to do so would devalue everyone’s stock values.

In response to this whole situation, some industry insiders say that this whole mess was caused by the unorthodox succession practices of Korean conglomerates which go against global standard practices. Others say that Korean law should provide protection against foreign financial incursions by giving more votes to the major domestic stockholders than what their shares entail.

For my 2 cents, a lot of the problem here is caused by the political and legal restrictions put on Korean conglomerates by the Korean government. They are actually behind the global standard practices also.

The increase of millionaire in Korea
According to a recent Korean census of the rich, there are about 180 thousand financial asset millionaires in this country and about 17% of them reside in the Gangnam-Seoul region. This is an 8.7% increase from last year.

According to these rich, investments expected to be profitable are domestic real-estate, foreign funds, and the domestic stock market in that order.  In terms of their rental properties, a huge percent of them are shifting their properties from the traditional but now low profit deposited based system to a monthly rent based system which are more consistent and could be more lucrative. 

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