Big S. Korean companies focused on debt repayment, shy on investment

SEOUL, June 25 (Yonhap) -- South Korea's biggest companies have focused on repaying their debt in the past three years, while shying away from making new investment, a local think tank said Sunday.

According to Korea Economic Research Institute (KERI) the country's 100 largest non-financial sector companies witnessed a steady rise in cash earnings from 2014 through last year.

The companies, all listed on the local bourse reported cash inflow through their corporate activities, hitting 116 trillion won (US$101.8 billion) in 2014, that rose to 164 trillion in the following year and 171 trillion won in 2016.

The large companies, whose combined sales have been on the decline in recent years reported numbers rising to 1,532 trillion won last year.

Despite the rise in sales and cash earnings, investments made by such companies that reached some 143 trillion won in 2013 have remained steady in the low 120 trillion won range in the following three years. It totaled 122.8 trillion won in 2016.

The economic institute under the Federation of Korean Industries said actions by local companies indicate they are taking a very conservative stance in regards to investment. It said many seem to be inclined towards reducing their exposure to debt and shunning risks

"Companies are generally taking a wait a see stance in light of moves by the U.S. to raise interest rates, uncertainties surrounding North Korea and other domestic and global developments that are seen as fueling worries," said a KERI researcher.

On the other hand, he pointed out that coming into this year, companies did increase investment by 18.5 percent on-year in the first quarter.

The expert cited a rise in exports and improvements in consumer sentiment as having triggered more investment, although there is still a need to see if the recent spike is sustainable.

yonngong@yna.co.kr
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