Korea Inc. hoarding trillions in unused cash

Korea’s biggest companies are sitting on mountains of cash, a lawmaker from the ruling party said Thursday, citing data that showed the top 100 companies on the Kospi index had a combined 127.78 trillion won ($112.4 billion) in cash reserves as of the end of last year.

Rep. Park Kwang-on of the Democratic Party released the data as part of a routine legislative audit. Regulatory filings from the stock exchange showed that companies’ cash reserves, which are typically saved to cover short-term needs or a rainy day, had more than tripled in the past eight years after the global financial crisis. Park recommended that companies actively invest the money rather than hoard it.

“Conglomerates piling up cash won’t do them any good in the long term,” he said. “They are supposed to more proactively allocate the capital to job creation, which will in turn raise domestic demand and lay the groundwork for all economic participants to achieve growth.”

Samsung Electronics, the largest company on the Kospi by market capitalization, saw its cash reserves expand 13 times since 2008 to 32.11 trillion won, spurring rumors that the company might be ready to pursue another big overseas acquisition like the deal with Harman International earlier this year.

But that amount is still paltry compared to Apple’s cash reserves, which totaled $246.1 billion, or about 280 trillion won, at the end of last year. About 94 percent of its reserves are in foreign accounts, and the company faces mounting pressure from the Trump administration to use its cash to hire more American workers.

Hyundai Motor, fourth-largest on the Kospi, saw its cash reserves grow fivefold from 2008 to 7.89 trillion won. The bigger the market cap, the larger the growth was in cash reserves. The top 10 companies saw their reserves balloon an average sixfold to 54.72 trillion won, while the top 20 experienced fourfold growth to 79.23 trillion won. The top 30 saw their cash reserves more than triple to 90.62 trillion won.

In terms of total assets, including cash reserves and other investments, the top 100 companies saw their holdings more than double in the past eight years to 2,084.41 trillion won.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]