Oddbean

Shadow banking stress in South Korea sends warning to global investors ========== South Korea is experiencing stress in its shadow banking sector, raising concerns among global investors. Delinquency rates at Korean lenders have nearly doubled to 6.55% and 111 trillion won (US$80 billion) of project-finance debt is considered troubled. Korean shadow-bank financing to the real estate sector reached a record 926 trillion won last year. The restructuring announcement by builder Taeyoung Engineering & Construction Co. highlights the threat of flareups. The extent of the concern in Korea is reflected in the rapid policy response, including potential on-site inspections of saving banks. The government plans to speed up restructuring in the property sector. However, overall credit risks have not caused broader economic damage. The worst is yet to come for Korea's property malaise, with Citigroup economists predicting a slowdown in economic growth in the second half. Korean non-bank lenders have made significant investments in overseas commercial real estate, which have suffered in the post-Covid slump. Smaller and non-bank financial institutions are considered more vulnerable to the restructuring efforts. Global investors are closely watching the situation in South Korea's shadow banking sector as a potential warning for other economies. #SouthKorea #ShadowBanking #RealEstate #FinancialStability #DebtRestructuring https://theedgemalaysia.com/node/708923