Fourth Week of March 2021

2021.03.22.

□ In Europe, signs of a third wave are becoming increasingly clear despite vaccination, amid the spread of the UK variant … new confirmed cases are also rising in 21 U.S. states.
▶ Mobility restrictions have been reimposed in places such as France and Germany. In Poland, 52% of new confirmed cases are infections with the UK variant. In the United States, 20-30% of new confirmed cases are variant infections.

□ Renesas, Japan’s auto-chip company ranked third globally, halts operations at a facility after a fire, dealing a direct blow to automakers such as Toyota … the shortage of automotive semiconductors continues.

□ Average daily trading value: KRW 18.8 trillion for cryptocurrencies, KRW 15.4 trillion for the KOSPI … price volatility is 4-5 times the KOSDAQ average.

□ Corporate surplus funds are moving in large volume from safe assets into equities … corporate stock purchases surged from KRW 16.1 trillion in 2019 to KRW 39.2 trillion in 2020, up 143.5%.
▶ MMF balances invested in ultra-short-term financial products such as short-term bonds and CDs also rose by KRW 18.1 trillion over the same period.

□ As stronger security technology converges with the contactless trend and cost-efficiency drive brought on by COVID-19, Korea’s public cloud-services market is expanding … global research firm Gartner says, “Korea’s open cloud market will exceed KRW 3 trillion for the first time this year and reach KRW 3.8 trillion next year."

□ Hana Financial Group decides to raise its lending and investment target in K-New Deal and innovative finance through 2025 from the existing KRW 60 trillion to KRW 83 trillion, adding another KRW 23 trillion.
▶ Lending and investment areas: digital, eco-friendly, low-carbon, technology finance, intellectual-property lending, and chattel-backed lending.

□ Naver invested KRW 1.3 trillion in R&D last year, equal to 25.1% of revenue … major R&D areas include blockchain platforms, multilingual processing, AI, and cloud.
▶ Rival Kakao invested KRW 535.4 billion, about half of Naver both in amount and as a share of revenue (12.9% of revenue).
▶ In this area, it is ultimately a battle for talent, so from an investment perspective SG&A may matter more.

□ Amid the economic downturn, the employment rate for specialized high-school graduates falls below half … from 74.9% in 2017 to 49.2% in 2020.

□ As U.S. Treasury yields rise, financial-sector funds rank first with a one-month return of +8.2% … Hana Financial Group is +21.4% YTD, KB Financial Group +14.5% YTD, etc.
▶ See the 2021.03.09. news clipping.

□ Public-offering subscription funds have already reached KRW 150 trillion this year … first-quarter subscription funds alone amount to roughly half of last year’s full-year total of KRW 295.5 trillion.

□ LG Electronics is expected to ship 759,000 OLED TVs in 1Q21, supporting earnings growth in its HE division … panel supply is also stabilizing as LG Display’s Guangzhou plant in China comes fully on line.
▶ LG Display is the sole supplier of OLED TV panels. Panel supply is expected to rise from 4.5 million units last year to 8 million this year.

□ Hyundai Motor invests KRW 5.7 billion in Canadian robotics startup Clearpath … synergies are expected with Boston Dynamics, the world’s leading robotics company, which Hyundai acquired last year.

□ Pre-orders for the Ioniq 5 exceed 40,000 units, far above this year’s full-year sales target of 26,500 … as eco-friendly vehicle sales surge and headcount is cut in legacy internal-combustion operations, labor-management conflict is also intensifying.
▶ Global EV sales exceeded 2 million units for the first time in 2020. Total eco-friendly vehicle sales reached 2.94 million. Hyundai-Kia ranked fourth globally.

□ Coupang plans to use the KRW 5 trillion raised through its NYSE listing to expand logistics centers by 3.3 million $$m^2$$.

□ In the wake of the “LH scandal," loan regulation for ordinary borrowers at NongHyup and credit unions is tightened … membership qualification is now required.


2021.03.23.

□ U.S. and EU growth forecasts diverge depending on COVID-19 control … the U.S., where vaccine rollout is gaining speed, raises its 2021 growth forecast from 3.9% to 5.6%. The EU, where fears of a third resurgence are spreading, cuts its 1Q21 growth forecast from -0.8% to -1.5%.
▶ Vaccination rates in major regions: UK 40%, U.S. 25%, EU average 12%.

□ The People’s Bank of China keeps its one-year loan prime rate unchanged for an eleventh consecutive month and emphasizes that “there is still room to supply liquidity” … judging from, among other things, the recent replacement of two members of the central bank’s monetary policy committee, some also expect rate hikes from the second half, when the economic recovery is likely to become more pronounced.

□ Aramco says at the China Development Forum, “We will make China our top energy-supply priority for the next 50 years … and we will further expand clean-energy technology collaboration now under way with Chinese universities and companies."
▶ Since last year, Saudi Arabia has overtaken Russia as China’s No. 1 crude supplier.

□ Bank of Korea, “Producer Price Index for February 2021”: expected producer price inflation in February rises 0.2 percentage points month on month to 2.0% … inflation concerns push up government-bond yields, and market rates rise in tandem. This is emerging as a variable that could weigh on the still-fragile recovery in the real economy.

□ National Assembly Budget Office, “2021 Republic of Korea Fiscal Outlook”: “Deficit-financed debt this year is projected at KRW 603.8 trillion, up 16.5% from last year’s KRW 518 trillion." … financial debt backed by recoverable assets rises 33.3%, from KRW 246.7 trillion to KRW 328.9 trillion.

□ Korea’s manufacturing sector goes on alert under a strengthened emissions-trading system … with a sharp reduction in free carbon-emissions allowances allocated to each company, “emissions liabilities” are expected to surge.
▶ Emissions liability: the cost of purchasing carbon credits for emissions exceeding the free allocation.
▶ The private-sector companies with the largest greenhouse-gas emissions are Hyundai Steel and POSCO. In 2020, Hyundai Steel’s emissions liability was KRW 157.1 billion, more than double its operating profit (KRW 73.0 billion). POSCO’s was KRW 78.6 billion. Kia’s was also KRW 152.0 billion. The 2019 emissions liability of five KEPCO power-generation subsidiaries, whose carbon emissions exceed even POSCO’s, totaled KRW 682.2 billion.
▶ Starting this year, the paid-allocation share that companies must purchase in the market rises from 3% to 10%, more than tripling. There are now forecasts that carbon-credit prices, currently KRW 18,000 per ton, could rise into the KRW 30,000 range.
▶ The EU accounts for 90% of the global carbon-credit market, worth KRW 315 trillion. Unlike Korea, the EU allows securities firms and retail investors to invest in carbon credits. EU carbon-credit prices are +29.3% YTD.
▶ The U.S. is also planning to introduce a “carbon border tax” by 2025, imposing tariffs on products from countries and companies that emit more carbon than the United States.

□ Retailers form an alliance against Coupang Rocket Delivery … using offline stores and courier partners to enable immediate delivery.
▶ Shinsegae: SSG.com logistics centers + E-Mart stores + CJ Logistics
▶ Lotte: Lotte logistics centers + Lotte Mart stores + delivery-platform startup PLZ
▶ GS Retail: GS25 stores + GS Supermarket stores + Hanjin Express
▶ E-commerce companies without in-house logistics facilities, such as TMON and WeMakePrice: use third-party logistics centers established by Giosoft.

□ Korea Aerospace Research Institute, together with domestic aerospace firms, successfully launches the first next-generation medium-sized satellite built with mass-production technology … the significance lies in securing the first domestically developed standard platform.

□ National Pension Service acquires a stake worth several hundred billion won in British private-equity manager BC Partners … by 2024 it plans to expand alternative investments from KRW 90 trillion to KRW 150 trillion and raise the overseas-investment share from 34% to above 50%.

□ GS Energy is selected as the operator of a KRW 3.5 trillion mega-scale LNG power project in Vietnam equivalent to three nuclear plants … GS plans to launch Southeast Asian energy operations in earnest through cooperation with other GS affiliates already in Vietnam, including GS Caltex, which has signed an agreement with Vietnam’s state oil company to upgrade gas-station operations.

□ Hanwha General Chemicals acquires two Italian companies with technology for hydrogen co-firing power generation.

□ Lotte enters the bio industry for the first time in its 73-year history … it is considering acquiring a stake in KOSDAQ-listed Enzychem Life Sciences and establishing a separate joint venture.
▶ The idea is to use capital strength and chemical-manufacturing know-how to enter new-drug development and contract manufacturing of biopharmaceuticals (CMO), thereby reshaping its existing portfolio centered on cyclical sectors such as retail and chemicals.
▶ Small and mid-sized manufacturers are also jumping from their core businesses into bio and healthcare simply because the outlook appears bright. One should consider whether this is not business diversification in Peter Lynch’s sense, but business dilution.

□ KEPCO withdraws, just three months after announcing a fuel-cost linkage system, as oil prices jump more than 20% this year … in calculating 2Q electricity rates, it decides to exclude the impact of higher oil and LNG prices.
▶ The real issue begins in 3Q this year, when oil demand is expected to rise further as the global recovery takes hold. Bank of America and JPMorgan forecast that oil, currently in the mid-USD 60s per barrel, could rise to around USD 100 within the year.

□ Mando wins a KRW 1.4 trillion suspension order from Volkswagen, equal to 50 million units … as a leader in advanced driver-assistance systems (ADAS), it can also expect additional orders.
▶ As technological capability in electronic components for autonomous vehicles improves, profitability should rise not only in suspension systems but also in other electronic components where Mando has strengths. With its acquisition on 2021.02.03. of Mando Hella Electronics, the joint venture between Hella’s German subsidiary and Halla Holdings, overseas orders have also become possible.


2021.03.24.

□ U.S. President Joe Biden is pursuing a second ultra-large stimulus package worth USD 3 trillion … Republican support and inflation concerns are the variables.

□ Federal Reserve Chair Jerome Powell, in written testimony to the House Financial Services Committee, says “It is true that the recovery has proceeded faster than originally expected, but it is still a long way from a full recovery. The employment crisis is being underestimated." … at a BIS virtual forum, he also says “Cryptocurrencies are too volatile to be useful stores of value and are not substitutes for the dollar. They are closer to speculative assets that have some of the character of a substitute for gold."
▶ The head of the central bank that prints dollars officially acknowledges that “they at least qualify as digital gold." If he is signaling that more dollars will be printed, and if cryptocurrencies can at least count as digital gold, then holding some as a means of defending nominal prices may be reasonable. For that kind of hedging purpose, sticking to Bitcoin alone would seem safer.

□ Japanese Prime Minister Yoshihide Suga says, “To stimulate consumption, which accounts for half of GDP, we will raise the nationwide average minimum wage to 1,000 yen as soon as possible."

□ Taiwan’s Foxconn, an iPhone supplier, and Japan’s Nidec, the world’s No. 1 maker of precision motors for hard drives, sign an EV production agreement … Nidec plans to invest about KRW 11.3 trillion in EV components over the next five years, aiming for a 40-45% share of the EV motor market by 2030.

□ Under pressure from the FSS’s “blunt aggregate-loan controls," banks cut preferential rates by 0.2-0.3 percentage points … additional rate increases driven by inflation pressure could become the trigger for jeonse loans, which have risen by KRW 3.8 trillion in 50 days.

□ NongHyup Bank’s “Nongsimpoong Green Growth Loan," the first such lending product launched by a Korean bank in line with the government’s Green New Deal policy last October, surpasses KRW 500 billion in just four months.

□ As benchmark rates were cut and liquidity injected because of COVID-19, dishonored-bill rates paradoxically hit an all-time low.
▶ This is a distortion created by the deferment of repayment on KRW 130 trillion in loans to SMEs and small merchants. If the government’s financial-support measures end while market rates are rising, the dishonor rate will explode. See the 2021.02.17. news clipping.

□ Ministry of Environment, “Partial Amendment Notice to the 2020 Annual Low-Emission Vehicle Supply Targets”: “If a certain proportion of the three-year average sales volume is not met with low-emission and zero-emission vehicles, a contribution must be paid." … subsidies are available for 116,000 zero-emission vehicles, but 160,000 sales are needed to avoid paying the contribution.
▶ Under the draft notice, the low-emission vehicle sales ratio is 18% this year and 20% next year.
▶ Under the draft notice, the zero-emission vehicle sales ratio is 10% this year and 12% next year. In 2020, zero-emission vehicles accounted for 3.09% of Hyundai Motor’s sales and 1.61% of Kia’s sales.
▶ Since fines on automakers that exceed greenhouse-gas emissions limits are also being maintained, there is criticism that this amounts to double penalties.

□ As contactless work spreads, meeting time doubles and monthly email volume increases by 40 billion messages.

□ Value-stock funds (+7.43%) outperform equity funds (YTD +4.97%) … as higher rates increase valuation pressure, value stocks become more attractive than growth stocks.
▶ See the 2021.02.28. weekly trends.

□ As vaccination begins, post-COVID travel products are being launched one after another … Lotte Hotel introduces a package under which customers who honeymoon at a domestic Lotte Hotel this year can stay free at an overseas Lotte Hotel next year.

□ Samsung Electronics signs a contract to supply 5G telecom equipment to NTT Docomo (Japan’s largest telecom carrier, with 82 million subscribers).

□ Demand for OLED materials rises sharply for smartphones, large TVs, laptops, and tablet PCs … there is also a possibility that OLED will be adopted in the iPad and MacBook scheduled for release next year.
▶ OLED-related stocks: LG Display, Duk San Neolux, SFA, Wonik IPS, and Innox Advanced Materials.

□ The three major battery companies are differentiating their R&D strategies … LG Chem is investing KRW 1.1 trillion in production facilities, Samsung SDI KRW 808.3 billion in solid-state batteries, and SK Innovation KRW 253.9 billion in materials internalization.

□ KT will invest KRW 400 billion over three years in the production of dramas, films, and entertainment content … CEO Koo Hyeon-mo says, “In platform business, investment in content is not optional but essential."
▶ KT tends to make a visible push around whatever the CEO is emphasizing, so it remains to be seen whether this actually translates into earnings.

□ Yuhan Corporation makes an additional KRW 10 billion investment in AprilBio, which has antibody-drug development technology, becoming its second-largest shareholder … AprilBio plans a KOSDAQ listing within the year through the technology-special listing track.

□ United Pharmaceutical says animal efficacy tests of UI030, its COVID-19 treatment candidate under development, confirm 90% suppression of viral replication.

□ CJ CheilJedang succeeds in mass-producing cysteine by a natural method, mainly used in halal, vegetarian, and alternative-meat products … development focused on the fact that the standard for what qualifies as “natural” in food ingredients is rising steadily in markets such as the U.S. and Europe.
▶ The halal food market is estimated to grow to KRW 3,281.4 trillion by 2024.

□ Daekyo, having failed in digital transformation, faces the risk of a fifth consecutive loss-making quarter … Woongjin ThinkBig, by contrast, is expected to post KRW 29.5 billion in operating profit this year (YoY +47%) on the success of its tablet-based study product “Smart All."

□ Lotte Shopping acquires Joonggonara for KRW 115 billion, bringing in Eugene Asset Management and NH Investment & Securities as financial investors … it is also participating in the bidding war for eBay Korea, whose annual transaction value is about KRW 20 trillion.
▶ Korea’s used-goods market grew from around KRW 4 trillion in 2008 to about KRW 20 trillion in 2020. The logic seems to be to combine the local nature of second-hand trading with the nationwide distribution and logistics channels Lotte already owns.
▶ Not a three-way fight but a four-way one? See the 2021.03.09. news clipping.

□ Disney+, Disney’s dedicated OTT service, says “We will produce original content specifically for Koreans in their 20s to 40s." … Disney possesses the world’s largest portfolio of IP, including Disney, Pixar, Marvel, Star Wars, and National Geographic.
▶ Negotiations are under way over which of the three telecom-company IPTV platforms will carry Disney+ content. Netflix is currently available through KT and LG U+.

□ Big Hit, hit by COVID-19, records only KRW 3.4 billion in revenue from concerts and fan meetings last year (YoY -98%) … even though the share of performance revenue in total revenue shrank from 32.6% to 0.4%, total revenue still reached KRW 796.3 billion (YoY +36%).
▶ Album and music revenue: KRW 320.6 billion (YoY +196%).
▶ Revenue from the fan-community platform Weverse and intellectual-property businesses: KRW 259.0 billion (YoY +54%). See the 2021.01.19. news clipping.
▶ The increase in online-performance revenue (+KRW 55.4 billion) falls far short of the decline in offline-performance revenue (-KRW 187.7 billion).

□ Parking Cloud, operator of an AI-based unmanned parking-control system that connects unmanned parking lots nationwide through a cloud service, attracted KRW 25 billion in investment from NHN Chairman Lee Jun-ho through History Venture Investment.

□ SsangYong Motor receives a “disclaimer of opinion” from Samjong KPMG … faces delisting risk.

□ As apartment prices rise, the market value of mid- to large-sized officetels (exclusive area 60-85㎡) is seeing a balloon effect … the premium alone on Hillstate Ilsan has reached KRW 700 million.
▶ Officetels should not be bought for any purpose other than office use, whether for residence or for investment.


2021.03.25.

□ Federal Reserve Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen tell the House Financial Services Committee, “The U.S. economy will rebound strongly this year. Because it remains far from a full recovery, policy support must continue. Inflation is temporary, and even if excessive price increases appear, we have the means to respond." … Fed Governor Lael Brainard says, “Over the next two months, prices could temporarily surge as pent-up demand drives revenge consumption while base effects from the price collapse of March-April last year overlap."

□ Intel CEO Pat Gelsinger says, “Most semiconductor production facilities are concentrated in Asia. It is important to secure manufacturing capacity in the U.S. and Europe as well." … Intel announces plans to build foundry plants in Arizona with KRW 22.5 trillion in investment.
▶ This concretizes a core agenda of the Biden administration aimed at strengthening the competitiveness of the U.S. semiconductor industry.
▶ The EU is also pursuing a KRW 180 trillion semiconductor promotion policy over the next decade, aiming to raise the share of semiconductors produced within Europe from under 10% to 30%.

□ As the global recovery in consumption becomes more pronounced, surging cargo demand is creating an extreme shortage of container-ship supply … Brazil, the world’s largest exporter of sugar, coffee, and soybeans, is also being hit by maritime logistics disruption, leaving U.S. coffee-bean inventories at a six-year low, sugar prices at a four-year high, and soybean prices at a seven-year high.

□ Statistics Korea, “Population Trends in January 2021”: the number of births in January falls 6.3% MoM to 25,003, extending the record low for the same month on a YoY basis to 58 consecutive months since April 2016 … the number of marriages also declines 17.9% YoY to 16,280, the lowest January figure on record.

□ Bank of Korea Governor Lee Ju-yeol says, “It is difficult to say that the Korean economy has returned to a normal track. Inflationary pressure is unlikely to persist. It is not a situation requiring a hasty adjustment in the monetary-policy stance … if a central bank digital currency (CBDC) emerges, the value of cryptocurrencies will fall. We will build a pilot research system for a CBDC and conduct tests within the year, and develop follow-up technologies next year."

□ Ministry of Trade, Industry and Energy, “Competitiveness Strengthening Committee for Aging Core Industrial Complexes”, preliminarily selects five industrial-complex regions for large-scale restructuring: Banwol-Sihwa in Gyeonggi, Changwon in South Gyeongsang, Myeongji-Noksan in Busan, Mipo in Ulsan, and Gunsan in North Jeolla.
▶ Gyeonggi: reorganization centered on advanced IT materials, parts, and equipment industries such as next-generation semiconductors.
▶ South Gyeongsang: intensive cultivation of future mobility.
▶ Busan: transformation from traditional manufacturing to eco-friendly future industries through linkage with the Sasang industrial area and the Jinhae Free Economic Zone.
▶ Ulsan: creation of an eco-mobility innovation cluster linked to the Techno Industrial Complex and Maegok Industrial Complex, with a focus on hydrogen EVs and autonomous vehicles.
▶ North Jeolla: development into a future commercial-mobility hub by leveraging existing core industries―including GM and others―.

□ The Ministry of Science and ICT launches the autonomous-driving project group together with the Ministry of Trade, Industry and Energy, the Ministry of Land, Infrastructure and Transport, and the National Police Agency … KRW 1.1 trillion will be invested through 2027 across 83 detailed tasks in five areas, with the goal of commercializing Level 4 autonomous driving that does not require driver intervention even in emergencies.

□ The National Pension Service, which has sold KRW 15.5 trillion worth of domestic equities this year, is set to discuss a proposal to raise the maximum share of domestic stocks from the current 18.8% to 20.3%, under pressure from the “Donghak Ants." … both the Investment Policy Committee and the Working Evaluation Committee, which review agenda items in advance for the fund management committee, oppose the move.
▶ Supply-demand conditions are expected to improve, especially in large-cap names that pension funds have been mechanically net-selling.

□ As demand for 5G equipment rises globally with the expansion of the contactless economy, Samsung Electronics’ global telecom-equipment market share is projected to rise from 7.1% last year to 20% this year … expectations are growing that domestic suppliers, from which Samsung sources 40-60% of its 5G-equipment parts, will benefit.
▶ Related stocks: RFHIC, KMW, Seojin System, Ace Technologies, Oi Solution, etc.

□ As support rises for Seoul mayoral candidate Oh Se-hoon, who pledged “I will ease reconstruction and redevelopment regulations within one week of taking office," shares of construction-material companies such as cement and paint rise across the board … there is also a view that construction stocks will continue to rise regardless of who wins, since the underlying policy direction is expanded housing supply.

□ Hyundai Heavy Industries signs an agreement with Korea Investment Corporation (KIC) to invest KRW 1 trillion in M&A in AI and robotics, digital healthcare, autonomous ship navigation, and hydrogen fuel cells … Chairman Kwon Oh-gap says, “We will work to secure proprietary technology and commercialization in carbon-free-fuel ships, and to advance smart ships using cutting-edge IT."

□ Traditional pharmaceutical companies add “angel investment” to their stated business purposes, building a side business through investment in bio ventures … by taking equity stakes, they can secure additional pipelines, raise corporate value, and also realize capital gains on disposal.

□ Naver grants KRW 673.5 billion worth of stock options to strengthen talent competitiveness … KRW 311.1 billion worth goes to 119 executives, and KRW 362.4 billion worth to 3,253 employees.

□ SK affiliates, which stood out in last year’s growth-stock rally with portfolios centered on secondary batteries, batteries, and biotech, plunge as rising market rates combine with company-specific negatives … there is also a view that this is simply a short-term correction after last year’s surge.
▶ The group was mentioned more frequently than any other in these January-February news clippings. Having absorbed much of the capital that came in during the bull market and aggressively redeployed it into new ventures and M&A, the group now likely faces a multi-year wait before those strategic bets begin to yield tangible returns.

□ LG International is incorporated into LX Group, which is being separated from LG Group together with LG Hausys, Silicon Works, and LG MMA … after amending its articles of incorporation for the first time in 12 years, it is reorganizing its business around secondary batteries, healthcare (medical testing and analysis), and eco-friendly (waste) areas to secure new growth engines.

□ Auto-parts makers Hwaseung, Dongil, I-A and Youil are ordered to take corrective action and fined KRW 82.44 billion by the Fair Trade Commission … it was found that, over 12 years, the four suppliers colluded in bidding to Hyundai and Kia, with 81 of 99 tenders awarded according to prior agreement.


2021.03.26.

□ The Suez Canal, which handles 12% of global trade volume, is blocked by the grounding of the ultra-large container ship Ever Given of Taiwan’s Evergreen line, freezing KRW 11 trillion worth of trade per day … with maritime logistics already under strain, a shutdown extended beyond five days could trigger a global logistics crisis.
▶ Shipping? See the 2021.03.05. and 2021.03.25. news clippings.

□ Chinese tech stocks such as Alibaba, Tencent, and Baidu plunge across the board as investors are hit by China’s antitrust crackdown and the prospect that Chinese companies refusing U.S.-style audits could be delisted from U.S. exchanges … 238 Chinese companies are listed in the U.S.

□ Dan Fineman, Credit Suisse’s Asia-Pacific head of investment strategy, says, “Korea is our top Asian equity pick. The boom in memory semiconductors and DRAM, combined with the global recovery, will lead the market through semiconductors, autos, and industrials … improved corporate governance will raise payout ratios, remove the Korea discount, and mark the start of a structural growth phase. The rally in value stocks with still-lower valuations, rather than in growth stocks, will continue."

□ Didi Chuxing, China’s largest ride-hailing company, decides to pursue a New York Stock Exchange listing with a target post-listing market cap of KRW 113 trillion … it plans to list in New York as early as 2Q and then pursue a secondary listing in Hong Kong.
▶ A signal of easing U.S.-China tensions?

□ The U.S. IRS says, “If you buy a Tesla with Bitcoin, you must also pay capital-gains tax on the Bitcoin." … because Bitcoin is classified as an asset, capital gains are added to annual income, which could even push the taxpayer into a higher bracket.
▶ The legendary American mafia boss Al Capone was ultimately sent to prison by the IRS.

□ The NFT market, which uses blockchain technology to prevent duplication of online content, is growing rapidly … from USD 40 million in 2018 to USD 340 million in 2020.

□ At its regular MPC meeting, the Bank of Korea says in its “March 2021 Financial Stability Report”, “Financial firms should reduce their KRW 411 trillion exposure (i.e. loans and bond/equity investments) to high-carbon industries." … it also extends by six months the term of financial-intermediation support loans for small merchants and SMEs.
▶ The nine high-carbon industries: primary metals (steel, metal casting, etc.), coal-fired power and related sectors (thermal power plants, etc.), non-metallic mineral products (cement, etc.), chemicals and chemical products (petrochemicals, compounds, etc.), coke, briquettes, and refined petroleum products (refining, etc.), other transport-equipment manufacturing (ships, aircraft, etc.), metal mining (iron and nonferrous metals, etc.), textile manufacturing (spinning, weaving, dyeing, etc.), and fabricated-metal products manufacturing (metal structures, plating, etc.).

□ A full-duration integrated combustion test is conducted on the first-stage rocket of Nuri, Korea’s launch vehicle … President Moon Jae-in says, “We will leap forward into the ranks of the world’s seven leading space powers. To strengthen the external standing of space policy and establish space-development plans, we will elevate the chair of the National Space Committee from ministerial to prime-ministerial level."
▶ See the 2021.02.19. news clipping.

□ With the KOSPI moving sideways around the 3,000 level for more than two months, and with the surge in rates stabilizing alongside prospects for a higher domestic-equity allocation by the National Pension Service and signs of a return to net foreign buying, a rebound beginning in 2Q may be worth anticipating … EPS consensus has been revised sharply upward for chemicals, steel, and display makers.
▶ In an economic recovery, cyclicals begin to move first. That said, since valuation and consensus are ultimately just number games, it would be unwise to approach investing simply on the point that “the burden of future earnings expectations has eased." One has to ask whether a 40% bubble has merely shrunk to a 20% bubble, or whether the stock price has actually entered undervalued territory.

□ The Korea Cement Association says, “This year’s cement-industry AGMs are focusing on expanding and strengthening eco-friendly businesses." … the industry is pursuing eco-friendly operations through circular-resource recycling, including replacing bituminous coal with waste materials such as waste plastic and used tires.
▶ Rising demand for waste?

□ As the “home economy” spreads because of COVID-19, demand for “second TVs” is rising … 48-inch OLED TVs are priced USD 100 above 55-inch models.
▶ 48-inch OLED panels are produced exclusively by LG Display. Samsung Electronics, which does not produce OLEDs, is responding with 50-inch QLED TVs.

□ Samsung Electronics succeeds in developing a 512GB DDR5 product, the first in the industry to apply the HKMG process and 8-layer TSV technology to a general-purpose product … expectations are growing that this will widen the DRAM gap further and deepen cooperation with Intel, which is developing next-generation platforms for future industries.

□ Market Kurly appoints Goldman Sachs, Morgan Stanley, and JPMorgan as lead underwriters and begins preparing in earnest for a U.S. listing … as with Coupang’s listing, applying a price-to-sales ratio of 4-5x could imply a valuation of up to KRW 5 trillion.

□ SK Telecom, which is seeking a transition to an intermediate holding-company structure, says, “We will reorganize our asset structure and business model into a form that the market can recognize, and in line with global standards we will change semiannual dividends to quarterly dividends."
▶ It needs to raise its stake in SK Hynix from the current 20.07% to 30%.
▶ In the end, this means it wants to boost the stock price—so is it going to lever up again for more M&A?

□ Hyundai Heavy Industries Group says, “We will complete the acquisitions of Daewoo Shipbuilding & Marine Engineering and Doosan Infracore within this year, and by 2030 establish a hydrogen business value chain across land and sea." … it will push ahead with the development of green hydrogen, hydrogen carriers, hydrogen-fuel-cell propulsion ships, hydrogen fuel-cell power-generation equipment, and hydrogen-based mid- to large-sized construction equipment.

□ The three major parcel-delivery companies—Hanjin, Lotte Global Logistics, and CJ Logistics—raise parcel rates in succession in order to cover the cost of staffing increases after the early-year “social agreement on measures to prevent overwork deaths among parcel workers” … large players such as home-shopping and e-commerce companies can absorb it, but small online and offline merchants with weak bargaining power will be hit directly.

□ Doosan Heavy Industries achieves Korea’s first export of a “cask” for spent nuclear fuel storage … the buyer is the TMI nuclear power plant in the United States.

□ Shinsegae Department Store expands its subscription services from bread and premium rice to seasonal fruit as well.

□ SK, while strengthening ESG, gives outside directors authority over CEO and inside-director appointments (through the personnel committee) and group-level investment review authority (through the ESG committee) … from the holding company down through affiliates, it is restructuring board authority around outside directors.

□ Detailed development plans are approved for the former Defense Security Command site in Seocho-dong, purchased in 2019 by real-estate developer MDM Group for KRW 1.1 trillion, under a Seoul special planning district worth KRW 2.3 trillion … by 2025, using access to major business districts such as Teheran-ro, the plan is to build a Silicon Valley-style office town.