FSC Vice Chairman Jeong Eun-bo convened a meeting with relevant agencies on August 31 immediately after Hanjin Shipping’s decision to file for court receivership. They assessed the decision’s impact on financial markets and discussed measures to minimize market uncertainties.
The meeting concluded that Hanjin’s filing for court receivership will have only limited impact as the event has been already expected during the restructuring process. Moreover, given the size of Hanjin Shipping’s share in the stock market, 0.03% of Kospi’s market capitalization, damages will be limited.
Impact on financial institutions and corporate bond investors will be limited as well. Creditor banks have set aside enough cash stock to weather most of possible losses. The outstanding issuance of corporate bonds has continuously deceased in the restructuring process which now only accounts for 22% of the volume as of the end of 2013.
There is a growing concern in the market over deterioration of the shipping industry’s competitiveness. In response to such worries, the government will make sure to maintain the shipping sector’s competitiveness by encouraging Hyundai Merchant Marine (HMM) to acquire Hanjin Shipping’s healthy assets such as profit-making ships, overseas sales network, and key work forces.
The shipping and harbor industries are also expected to suffer damage since Hanjin Shipping takes up a signifiicant portion of Korea’s shipping sector. The government will encourage the Korea Development Bank and HMM to arrange additional vessels to ensure cargos are shipped on schedule without delay.
Once again, Hanjin’s filing for court receivership will have only limited impact on financial markets. The government will respond preemptively to any potential risk factors that raise uncertainties. So, we ask all stakeholders to actively share related information and respond to the matter in a swift and systematic manner.