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Corporate cash reserves mark record high in June

By 김영원

Published : Aug. 15, 2016 - 10:55

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[THE INVESTOR] Cash reserves held by South Korean companies posted a record high in June as rising economic uncertainties led businesses to increase their cash piles, central bank data showed Monday.

Out of 2,337.38 trillion won (US$2.11 trillion) of South Korea's M2 money supply, 614.39 trillion won was held by the local corporate sector as of end-June, according to the data by the Bank of Korea (BOK).

The M2 refers to currency in circulation, including bank debentures and deposits with a maturity of less than two years, along with stock investments.

It does not cover government and corporate bonds.

The corporate M2 surpassed 600 trillion won for the first time in March and fell slightly off the mark in April and May.

It added 18.68 trillion won in June to touch the record high, marking the largest growth since the data was compiled in 2011.

"The government expanded fiscal spending in the first half, and it seems to have injected capital into the corporate sector," a BOK official said.

The corporate cash reserves added 24.65 trillion won, or 4.1 percent on-year, in the first half.

Market watchers say the higher cash reserves reflect lackluster corporate investment amid lingering economic uncertainties at home and abroad, while the record-low interest rates also reinforced the latest trend.

(theinvestor@heraldcorp.com)