Korea Inc. accumulates cash as economic downturn deepens

South Korean companies, led by the country’s most valuable firm Samsung Electronics Co., have rushed to accumulate cash as interest rates kept rising while Asia’s fourth-biggest economy was losing steam.

Cashable assets held by the country’s 20 largest companies totaled 250.3 trillion won ($178.3 billion) as of end-September, up 28.3 trillion won from the end of 2021, according to data from the firms and a financial regulator on Monday.

Local companies scrambled for liquidity as surging interest rates hurt financial markets, sowing trouble for corporate fundraising.

The Bank of Korea may deliver its third 50-basis-point interest rate hike later this month as the US Federal Reserve ratcheted up its policy rate to the highest level since January 2008. Korea’s corporate bond market was dampened by a debt default by the local developer of a Legoland theme park in the country.

CASH KING, SAMSUNG

Samsung, the world’s top memory chipmaker, had a total of 128.8 trillion won in cashable assets as of Sept. 30, about 8 trillion won higher than its level at the end of 2021.

POSCO Holdings Inc., the holding company of the world’s sixth-largest steelmaker, raised its cashable assets by 2.8 trillion won to 20.9 trillion won on a consolidated basis during the same period.

“We need to focus on cash generation in the business,” POSCO Group Chief Executive Choi Jeong-woo told executives in July.

That month, POSCO Holdings issued $1 billion worth of global bonds, while its affiliate POSCO raised 800 billion won through corporate bonds.

Korea’s top chemical company LG Chem Ltd. more than doubled its cashable asset holdings to 9.1 trillion won as of the end of the third quarter, from 3.8 trillion won as of Dec. 31, 2021. HD Hyundai Co., the holding company of the world’s top shipbuilder Hyundai Heavy Industries Group, took a similar step, raising such assets to 5.6 trillion won from 2.4 trillion won over the same period.

Company	As of end-2021	As of end-June 2022	As of end-Sept 2022
Samsung Electronics	1,207.8	1,240.7	1,288.2
POSCO Holdings	181.6	177.7	209.4
Kia Corp.	175.4	200.2	203.1
Hyundai Mobis Co.	108.4	110.9	109.6
SK Innovation Co.	74.1	110	92.9
LG Chem	38.3	115.1	91.3
LG Electronics Inc.	62	66.4	75.7
SK Hynix Inc.	86.7	75	72.1
Samsung C&T Corp.	40.9	72.6	63.2
HD Hyundai	24	74	56
Korean Air Lines Co.	37.4	47.8	54.4
Samsung SDS	45.9	50	52.9
Lotte Shopping Co.	43.4	34	37.8
Hyundai Steel Co.	22.1	25.6	24.2
Hanwha Solutions Corp.	17.7	20.6	24.2
Korea Zinc Co.	21.3	17.3	24
S-Oil Corp.	19.6	13.9	8.6
LG Uplus Corp.	8.4	13.4	7.3
Dongkuk Steel Mill Co.	4.3	5.7	5.7
SeAH Besteel Holdings Corp.	0.6	1.8	2.1
Total	2,219.8	2,472.4	2,502.6

(Sources: Financial Supervisory Service and the companies)

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jongwoo Cheon edited this article.