HOUSE_OVERSIGHT_012088.jpg
1.46 MB
Extraction Summary
3
People
7
Organizations
1
Locations
2
Events
1
Relationships
2
Quotes
Document Information
Type:
Investment research report / newsletter page
File Size:
1.46 MB
Summary
This document is page 10 of a 'Global Foresight' report from the Third Quarter of 2017, authored by Michael D. Seo (likely of Rockefeller Capital Management given the email domain). It analyzes the South Korean economy, specifically the dominance and governance issues of 'chaebols' (family-controlled conglomerates) like Samsung and SK. While the document bears a 'HOUSE_OVERSIGHT' Bates stamp, indicating it was produced during a congressional investigation (likely regarding Epstein's financial handlers), the content of this specific page is purely economic research and contains no direct mention of Jeffrey Epstein or his associates.
People (3)
| Name | Role | Context |
|---|---|---|
| Michael D. Seo | Director of Equity Research, CFA |
Author of the report; contact information provided.
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| Chey Tae-Won | Chairman of the SK chaebol |
Cited as an example of governance issues; served prison time for embezzlement but was pardoned.
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| Park Geun-Hye | Former President of South Korea |
Pardoned Chey Tae-Won in 2015 despite previous campaign promises to limit pardons.
|
Organizations (7)
| Name | Type | Context |
|---|---|---|
| Rockefeller Capital Management |
Implied by email domain 'rockco.com' associated with the author.
|
|
| Samsung |
Listed as one of the five most recognizable chaebols.
|
|
| Hyundai |
Listed as one of the five most recognizable chaebols.
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|
| SK |
Listed as one of the five most recognizable chaebols; involved in embezzlement scandal.
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| LG |
Listed as one of the five most recognizable chaebols.
|
|
| Lotte |
Listed as one of the five most recognizable chaebols.
|
|
| Bloomberg |
Source for the data in Chart 1.
|
Timeline (2 events)
Summer 2015
Locations (1)
| Location | Context |
|---|---|
|
Subject of the economic analysis.
|
Relationships (1)
Park Geun-Hye pardoned Chey Tae-Won in the summer of 2015.
Key Quotes (2)
"The cultural and regulatory disregard of misconduct is at the root of Korea’s corporate governance, especially among the chaebols."Source
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Quote #1
"Samsung Electronics alone represents a 21% share of the KOSPI market capitalization and 21% share of employees which is emblematic of the chaebols’ influence in Korean society."Source
HOUSE_OVERSIGHT_012088.jpg
Quote #2
Full Extracted Text
Complete text extracted from the document (2,523 characters)
MICHAEL D. SEO, CFA
Director of Equity Research
212.549.5232
mseo@rockco.com
Director of Equity Research
212.549.5232
mseo@rockco.com
Leveling the Playing Field
Investment opportunities in the changing South Korean landscape
Investment opportunities in the changing South Korean landscape
South Korea has grown over the last 50 years from a poor mostly agricultural economy to a powerful exporter with the 11th highest GDP in the world. Its growth has been built on the back of its chaebol system – conglomerates of companies that are family-controlled, often spread across multiple industries. While this structure has served Korea well in terms of rapidly developing its industrial base, it has also been associated with ongoing governance issues. The risks associated with investing in Korea have historically resulted from its stock market having a much lower valuation than those of comparable economies.
As an example of recent governance issues, consider that Chey Tae-Won, chairman of the SK chaebol, had been serving a four-year prison sentence for embezzling $40 million from the SK companies. He was pardoned by former President Park Geun-Hye in the summer of 2015 and soon found himself back in the familiar leadership role of his family conglomerate. Political actions such as this pardon or nepotism within large publicly traded corporations are common, if not expected, in Korea. Throughout its history, the nation’s gyrating politics and powerful businesses maintained a symbiotic relationship that propelled tremendous GDP growth while tarnishing the political reputation of a nation. The cultural and regulatory disregard of misconduct is at the root of Korea’s corporate governance, especially among the chaebols.
The five most recognizable chaebols as shown in CHART 1 (Samsung, Hyundai, SK, LG, and Lotte) collectively represent over 50% of the market capitalization of the Korea Composite Stock Price Index (KOSPI) and 47% of its revenues. Samsung Electronics alone represents a 21% share of the KOSPI market capitalization and 21% share of employees which is emblematic of the chaebols’ influence in Korean society.
During Park Geun-Hye’s 2012 presidential election campaign and political career, Ms. Park had been critical of past presidents who had abused the power to pardon individuals and sought to limit the government’s role in granting pardons. Her decision
CHART 1: CHAEBOL % SHARE OF THE KOSPI INDEX
[Bar Chart Data Visualized]
60%
50%
40%
30%
20%
10%
0%
60%
50%
40%
30%
20%
10%
0%
Market Cap
Revenue
Employees
Revenue
Employees
[Legend]
Samsung
Hyundai
SK
LG
Lotte
Samsung
Hyundai
SK
LG
Lotte
Source: Bloomberg
10 GLOBAL FORESIGHT THIRD QUARTER 2017
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HOUSE_OVERSIGHT_012088
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