British financial meltdown would have limited impact on S. Korea: gov't

SEOUL, June 4 (Yonhap) -- A possible financial meltdown in Britain would have
limited impact on the South Korean economy as the chance of British investors
massively pulling their money out of Asia's fourth largest economy is slim, a
government report showed Thursday.

Concerns over the health of Britain's financial system have mounted after global
credit appraiser Standard & Poor's (S&P) in late May cut its ratings outlook on
the country to "negative" from "stable."
But the Ministry of Strategy and Finance said any financial turmoil in Britain
would have limited impact on the Korean economy and markets due to a low
possibility of massive capital flight.
"An analysis shows that the chance of British investors taking money out of Korea
en masse is slim. Furthermore, the Korean currency and financial markets have
fundamentals strong enough to tackle possible market jitters," a ministry
official said.
According to a report by the Korea Center for International Finance, foreign
financial firms are estimated to have invested a combined US$300.9 billion in
South Korea, including Britain's $74.2 billion.
But the amount that they could withdraw from Korea would probably not exceed $10
billion, it showed.
After the collapse of Lehman Brothers, local banks, saddled with high overseas
short-term borrowing, had been suffering from dollar shortages, sparking concerns
they could face difficulty in meeting financial needs and servicing their debt.
But foreign currency liquidity conditions in South Korea have markedly improved
thanks to rising trade surplus and local banks' efforts to borrow from overseas,
beefing up fundamentals to cope with external shocks.
The country's foreign reserves rose by a record $14.29 billion to $226.77 billion
in May, the world's sixth-largest.
sooyeon@yna.co.kr
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