Korean companies get gloomier for fifth month in a row

Containers stacked at a dock in the Port of Busan on Oct. 21. [YONHAP]

Korean companies' optimism declined in October for the fifth month in a row.

The Business Survey Index (BIS) on business conditions, which measures how companies view the business environment, declined two points to 76 in October.

For the manufacturing industry, the BIS fell 2 points to 72, while optimism in non-manufacturing industries also fell 2 points in the same period to 79.

A BSI above 100 indicates that pessimists outnumber optimists. A total of 15 categories, including business conditions, sales and profitably, are surveyed from more than 3,000 corporations.

The BIS fell as a result of “continued high inflation and concerns over an economic slowdown from a rise in interest rates in key countries,” said the Bank of Korea in a statement Wednesday.

In the manufacturing sector, a fall in makers of chemical products and plastics was particularly evident, while a decline in information and communications and real estate industries were notable in the non-manufacturing sector.

The Economic Sentiment Index (ESI), a composite of the BSI and Consumer Survey Index, for October was 95.5, down 2.5 points from September.

The Bank of Korea said it expects Korea’s exports to “rapidly slow” in the future, citing a "withering of economic growth” in key regions, including the United States, China and the EU. It said a rapid decline in the global IT industry was another factor hurting Korea’s exports.

The business environment has suffered from interest rate increases by the central bank and a liquidity crunch in the bond market.

Fueled by a default in project financing for Legoland Korea amusement park in Gangwon Province, bonds issued by corporations with high credit rating are being shunned by the market.

The total amount of A-rated bonds sold in the over-the-counter bond market from Oct. 14 through 20 was 70.5 billion won ($49 million), down 57.5 percent from a week earlier, according to Yonhap citing KIS Pricing, a provider of pricing services and analytics for local securities.

Compared to Sept. 16 through 22, the amount was down 80.7 percent.

AAA-rated Kepco, the state-owned power supplier, tried to sell 400 billion won worth of bonds on Oct. 17 at a 5.9 percent interest rate, but was only able to sell 280 billion won worth.

BY JIN MIN-JI [jin.minji@joongang.co.kr]