Market Monitor ICT South Korea 2017

Payment behaviour in the South Korean ICT sector has been good over the past two years, and the number of payment delays and insolvencies is low.

Like the overall economy South Korea's ICT sector, is very export driven. After a subdued performance in 2016, South Korean ICT exports increased the fifth month in a row in March 2017, thanks to higher global demand for semiconductors and displays. That said, domestic demand for ICT products has remained flat so far.
The sector is dominated by a number of large business groups like Samsung, Hyundai and CJ Group. Despite the concentration of bigger players, the sector is very mature and still considered highly competitive. Despite some downward pressure profitability of the sector is expected to remain generally stable in 2017.
While gearing and dependence on bank loans are high in this sector, financial institutions are in general supportive of most businesses. Corporate borrowing rates are rather low, and companies have diversified borrowing funding sources (e.g. banks, bond market etc.).
On average, payments in the ICT industry take between 60 and 120 days. Payment behaviour has been good over the past two years, and the number of payment delays and insolvencies is low.
Our underwriting stance continues to be open for ICT businesses supported by the availability of financial and business information and a good track record. The outlook for sector performance in 2017 is positive due to recovering exports, higher spending by the public sector and rebounding consumer confidence. However,any protectionist measures imposed by US government on Korean imports can be a downside risk.

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