Korea's AA Rating: Populism Vs Population

Corporate Credit Analyst

Alan Greene

Thematic (Sector/Industry)

South korea Financials / Thematic (Sector/Industry)

<p lang="en">Recently announced industrial output figures for June suggest that Korea may be able to trade its way towards higher growth rates. However, at the same time, on 30 June, the Korea Times carried a headline <em>“Bedroom shock: Korea's sexless rate ranked world's second”</em>. The sovereign rating of its neighbour Japan has seen steady pressure for the last five years driven in part by its demographic profile. Korea's demographic profile is likely to deteriorate more rapidly than Japan's and we should therefore expect a similar debt induced stall in growth. The banking system is under pressure and this could soon translate into pressure on Korea's credit ratings.</p>

Recently announced industrial output figures for June suggest that Korea may be able to trade its way towards higher growth rates. However, at the same time, on 30 June, the Korea Times carried a headline “Bedroom shock: Korea's sexless rate ranked world's second”. The sovereign rating of its neighbour Japan has seen steady pressure for the last five years driven in part by its demographic profile. Korea's demographic profile is likely to deteriorate more rapidly than Japan's and we should therefore expect a similar debt induced stall in growth. The banking system is under pressure and this could soon translate into pressure on Korea's credit ratings.

VinaCapital Vietnam Opportunity Fund (VOF LN)

Bank Tabungan Pensiunan Nasional (BTPN IJ)

Samsung Fire & Marine Insurance (000810 KS)

Vietnam Joint Stock Commercial Bank For Industry and Trade (CTG VN)

Vietnam Joint Stock Commercial Bank For Industry and Trade

Mirae Asset Securities Co, Ltd. (037620 KS)

Pacific Century Regional Developments (PAC SP)

Korea Investment Holdings Co, Ltd. (071050 KS)

Hyundai Marine & Fire Insurance Co., Ltd (001450 KS)