March 15, 2000	atimes.com

The Koreas Companies brace for 'Bloody Friday' SEOUL - The outlook of major South Korean economic issues this week (March 13-18). Shareholders' meetings ''Bloody Friday'' is expected with 228 companies, more than half of the 424 companies which have set dates for shareholders' meetings, scheduled to hold their meetings on the same day. Among them are heavyweight companies like LG and SK units, the Korea Electric Power Corp and Pohang Iron and Steel. The upcoming meetings are expected to be their hardest so far with minority shareholders backed by consumer and civic organizations determined to fight for a greater voice and dividend return. Listed companies have a lot to explain to their shareholders. Share prices are sluggish and everyone is rushing to the technology-focused Kosdaq market in a losing war between the ''old'' and ''new'' economies. Dacom and Hyundai Motor, in their shareholders' meetings last week, promised to fill up half of their board seats with outside directors. Other listed companies and banks have pledged to buy out shares to pump up their stock prices, and brokerage houses have offered to return dividends at current market value rather than face value to pacify shareholders. The moves to pacify and retain shareholders by companies that held meetings last week are likely to affect this week's shareholders' meetings as well. The center of attention among companies holding shareholders' meetings on Friday is SK Telecom, one of the major listed companies under target by the People's Solidarity for Participatory Democracy (PSPD). The PSPD serves as strong advocate of minority shareholders and is determined to change owner-driven corporate governance. The PSPD wants SK and Samsung Electronics to fill up half of their board seats with outside directors and to name a few members at their recommendation. SK, the most expensive stock on the exchange, agreed to increase the number of outside directors by one or two but not more. The PSPD is demanding a cumulative voting system under which minor shareholders can wield their rights in electing directors by voting together to support a certain candidate. SK wants to introduce the system recommended by the government three years later. SK said it will accept the PSPD's demand of introducing stock splits but is against naming outside directors at the recommendation of the civil group. Samsung Electronics, with its shareholders' meeting on Thursday, has been warned of a battle with the PSPD which says it will use all of its power to stop the company's move to appoint former senior tax authorities as outside directors. ''Samsung could be seen as lobbying with tax authorities looking into the suspected illegal transfer of assets by group chairman Lee Kun-hee to his son Jae-yong,'' the PSPD said. The PSPD said it will not fight the company in the Thursday meeting. However, Jang Ha-sung, the head of the PSPD, said his group will take legal action against the company to enhance rights of minority shareholders. Samsung may have escaped a clash with the PSPD, but may yet face a greater challenge from the organization, possibly in court. Unstable Economic Indices The government is expected to hold meetings this week to map out countermeasures against soaring oil prices, wages and other unstable economic indices. The Bank of Korea will maintain inter-bank call rates at their current level this month, saying cost-push factors are not fanning consumer prices yet. Bank governor Chon Chol-hwan, however, warned that sharp rises in imports and wages can affect prices and the current-account balance. The prices of oil, rent and public utilities are rising, and monetary authorities will keep close watch on inflation. But many analysts say interest rates should go up in order to fend off inflationary pressure. The government, however, maintains that it will keep interest rates low at least until signs of market instability and rising oil prices calm down. Some experts suspect the government of trying to hide inflationary concerns because of next month's general elections. The government came under fire last week after the vice-finance minister hinted at a hike in oil prices from April to reflect soaring international prices, and then reversed the policy a few hours later by announcing it will keep oil prices at their current levels. The government predicts international prices to settle down after the Opec meeting March 27. Other factors causing dark prospects for the economy include the yield on three-year corporate bonds, the benchmark for long-term interest rate, returning to over 10 percent. Wages are also rising fast, with actual pay returning to the levels of pre-IMF days. The corporate and labor sectors are already in a war of nerves over pay rises, with management offering raises of 5.4 percent while labor demands 13.2 to 15.2 percent. The rise of the won is also cause for concern. With net foreign stock investment reaching $4 billion, the value of the local currency rose 2.2 percent against the US dollar and hit the highest level among exporting rivals apart from Taiwan. Authorities are interfering in order to slow the won's appreciation. Analysts predict the US dollar to float in the 1,120-won range this week. Experts also warn of a speculative flow of foreign capital, with foreign stock investment increasingly turning short term. The government says it is working on measures to prepare for a possible sudden exodus of foreign funds, but has yet to come up with them. The stock market Analysts predict the composite Kosdaq to glide into the 300-point range this week, buoyed by the Nasdaq's record close above 5,000 on Thursday. ''The Kosdaq index will sway between 290 and 320,'' said Chon Hyon-bom, an analyst with LG Investment and Securities. But some expect a correction may be ahead because the index hit record highs of above 280 last week. Experts generally agree that high-tech and biotech stocks will fly high this week. The stock exchange, on the other hand, is expected to see a correction with the US Federal Reserve Board expected to raise Fed Fund rates further in a Federal Open Market Committee meeting on March 21. (Asia Pulse/Yonhap)

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