Conglomerates' cash holdings swell amid declining investment

SEOUL, Jan. 31 (Yonhap) -- Cash holdings by South Korea's large conglomerates
almost doubled last year from the previous year, as companies shied away from
investment amid economic uncertainties, data released by individual companies
showed Sunday.
Cash reserves by the nation's 15 large listed companies, including Samsung
Electronics Co. and POSCO, reached 42.82 trillion won (US$37 billion) at the end
of December, growing 46.7 percent from a year earlier, according to the corporate
data based on their balance sheets.
Cash holdings or reserves refer to cash and cashable assets, including bank
deposits, cash equivalents and other financial instruments that come due within
one year.
The rise in cash assets came as companies refrained from capital spending on new
facilities or research and development in a bid to secure cash to ride out a
potential liquidity crisis amid the global economic downturn.
Cash reserves by Samsung Electronics surged 87.9 percent on-year to 12.4 trillion
won. The holding got a boost after the memory-chip giant's operating profit rose
91.2 percent on-year to 10.9 trillion won in 2009.
Hyundai Motor Co. held 7.4 trillion won in cash holdings, up 46.8 percent from
the previous year with POSCO increasing cash holdings 79 percent to 6.8 trillion
won, the data showed.
For this year, however, the companies are expected to tap their cash assets as
they try to aggressively expand business on the back of the economy rebounding
from the worst downturn in a decade, analysts predicted.
"Going through a liquidity crisis stemming from a global financial rout,
companies had no choice other than risk-averse management last year," Hwang
Chang-jung, an analyst at Woori Investment & Securities Co. said.
"But the firms are now deemed to be equipped with a massive amount of ammunition
for aggressive investment with the economy gaining steam", Hwang said.
pbr@yna.co.kr
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