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An employee is organizing gold products at a jewelry store located in Jongno-gu, Seoul. Photo = News 1 Ahead of the US presidential election on November 5, investors are increasing related investments, such as direct betting or purchasing safe assets to avoid risk.
On October 20 (local time), the Wall Street Journal reported that investors were increasing investments related to the U.S. presidential election, despite warnings that the post-election financial market situation was different from expectations based on past cases. Investors are betting directly on the election results on betting platforms such as ‘Khalsi’.
In the stock market, Trump Media (DJT), the parent company of Truth Social, is attracting the attention of day traders as it fluctuates greatly due to changes in the outlook for the election results. As expectations for the victory of Republican presidential candidate former President Donald Trump rise, Trump Media’s trading volume has surged and its stock price has doubled since mid-September.
As former President Trump made a pledge to support the virtual currency industry, the virtual currency market was also tied to the Trump theme. Cryptocurrency exchange stock prices rose 25% in October. Bitcoin, the leading virtual currency that had been staying at the $68,000 level, exceeded $69,000 per piece for the first time in four months. This was influenced by expectations that regulations related to virtual currency would change favorably after the presidential election.
Meanwhile, in order to reduce election-related volatility, some investors are looking for investments that will deliver good results no matter which candidate is elected. Financial stocks are expected to maintain the status quo if Democratic candidate Vice President Kamala Harris is elected and benefit from deregulation under former President Trump’s administration.
The international gold price rose to $2,725 per ounce on the morning of October 21, breaking an all-time high. The media interpreted this year’s surge in the price of precious metals such as gold, a traditional safe asset, as a sign that financial asset risks are being hedged ahead of the election.
7 out of 10 civil servants with low seniority are worried about leaving the company
It was found that 7 out of 10 public servants with less than 5 years of experience were considering leaving the company.
According to the ‘Public Service Organizational Culture Awareness Survey on Civil Servants with Low Seniority’ received from the Ministry of Public Administration and Security by the office of Rep. Wi Gon Wi of the Democratic Party of Korea, a member of the National Assembly Public Administration and Security Committee, 32,905 (68.2%) of the 48,248 respondents to national and local public servants said that they ‘do not hold public office.’ He answered that there was a time when he thought, ‘I want to quit.’
The most common reason for wanting to quit was ‘low financial compensation’ (35.5%). This was followed by ‘social unfair treatment such as malicious complaints’ (18.9%) and ‘excessive workload’ (13.9%). 48.6% responded that they were ‘dissatisfied’ with the burden of work (workload, difficulty, etc.) as public servants.
In addition, 45.6% of respondents said they were ‘dissatisfied’ with the way public officials work, which was much more than the 14.4% who said they were ‘satisfied’. The most common reason for dissatisfaction was ‘reporting method, including production of unnecessary reporting documents’ (39.9%).
Regarding the work-life balance in public service, 37.2% responded that they were ‘dissatisfied’. The most common reason for dissatisfaction was ‘mobilization for various events with little work relevance, being called for emergency work, etc.’ (38.7%).
KIC yield 1.4%… “The lowest compared to sovereign wealth funds in developed countries.”
The Korea Investment Corporation (KIC)’s three-year conversion rate of return was 1.4%, which was lower than that of major foreign sovereign wealth funds and other pension funds.
On October 21, Rep. Lee Jong-wook (People Power Party) of the Planning and Finance Committee of the National Assembly pointed out, “KIC’s three-year rate of return is around 1%, the lowest compared to sovereign wealth funds in developed countries,” and “the 10-year rate of return, which is an important long-term rate of return, is also at the lowest level.”
KIC’s three-year conversion rate of return is 1.4%. It was significantly lower than major overseas sovereign wealth funds such as Norway’s NBIM (4.5%), Singapore’s Temasek (7.7%), the US’s Alaska Permanente (10.4%), and Australia’s Future Fund (8.6%). KIC’s 10-year conversion rate of return was 4.9%, which was lower than that of overseas sovereign wealth funds, which ranged from 5.7 to 8.8%.
KIC President Park Il-young said, “We are taking (the criticism of the rate of return) seriously and will review and report from various angles to improve the rate of return.”
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Korea Zinc headquarters in Jongno-gu, Seoul. Photo = News 1 Differential voting rights, poison pills, golden stocks
In the wake of the management rights dispute between Youngpoong’s advisor Jang Hyung-jin’s family, which has maintained a joint management system for 75 years, and Korea Zinc’s Chairman Choi Yun-beom’s family, attention is being paid to ways to defend management rights.
When Advisor Jang joined hands with the private equity fund MBK Partners to make a tender offer for shares of Korea Zinc and Youngpoong Precision, Chairman Choi launched a counterattack with a tender offer of treasury stocks.
The business community has been arguing for the introduction of differential voting rights, poison pills (new share purchase options), and golden stocks to defend management rights. Differential voting rights are a system that grants a particularly large number of voting rights to some common stocks.
Poison pill refers to granting new stock preemption rights at a low price only to existing shareholders, excluding takeover attempts, in the event of a hostile merger or acquisition (M&A) or infringement of management rights. The poison pill is one of the most powerful defenses against hostile takeovers that has been adopted by almost all public company boards in the United States since the Moran v. Household decision in 1985.
Golden stocks refer to stocks that have the right to exercise an absolute veto on resolutions at a general shareholders’ meeting with just one share. In Korea, such means of defending management rights are not permitted, so the acquisition and cancellation of treasury stock is considered the only means of defending management rights that a company facing a hostile M&A attempt can take.
The business community is calling for legislation to protect management rights in order to improve the imbalance in which there are fewer means of defense compared to means of attack in hostile M&As. If there is no means to defend management rights, indirect defenses of management rights, such as buybacks of shares, are inevitable, which ultimately leads to unnecessary expenditure of funds or expenses.
If management rights defense measures are legislated, corporate funds that would otherwise be used to indirectly defend management rights can be used for investment in facilities and R&D, compensation for executives and employees, and promotion of stakeholder interests.
Reporter Ahn Ok-hee ahnoh05@hankyung.com
