Could you please help me with these questions and answer the sex questions from
ID: 371495 • Letter: C
Question
Could you please help me with these questions and answer the sex questions from the two articles.
Study case:
Article number one::-
((South Korea takes aim at Hyundai cross-shareholdings))
DECEMBER 29, 2015 by: Song Jung-a in Seoul South Korea’s antitrust watchdog has ordered Hyundai Motor and sister company Kia Motors to sell part of their stakes in affiliate Hyundai Steel by Thursday to comply with the country’s law against newly formed or expanded cross-shareholdings. The Fair Trade Commission said on Wednesday the duo should sell down their stake in one another to weaken “circular shareholdings” that were built up by the July merger of Hyundai Steel with fellow steel company Hyundai Hysco. As an option, the regulator recommended Hyundai and Kia sell their combined 6.6 per cent stake, worth Won461bn ($393m), in the merged entity that trades under the Hyundai Steel name. South Korean regulators, facing growing public complaints over chaebols’ opaque ownership structures, have pledged to crack down on newly formed cross-shareholdings, through which chaebol founding families control their vast business empires despite having only direct minority stakes in key units. Analysts expect regulators to step up checks on chaebols for any violations of the law that took effect in July last year banning the creation or strengthening of circular shareholdings. “Chaebol companies will pay more attention to the issue as more mergers and acquisitions are expected as part of their business realignment in the succession process,” said Park Ju-geun, head of corporate information provider CEO Score. The FTC’s move against Hyundai comes after the regulator told Samsung Group this week to reduce cross-shareholdings that were expanded by a controversial merger of Samsung C&T and Cheil Industries in September. To comply, battery-maker Samsung SDI said it would sell its 2.6 per cent stake worth about Won727.5bn in the merged Samsung C&T entity by the end of March, one of the options advised by the FTC. Hyundai and Kia hold 11 per cent and 20 per cent, respectively, of Hyundai Steel. Hyundai said it had asked the regulator to extend the deadline, given the difficulty of selling the stakes at short notice. News of the FTC order sent shares of Hyundai Steel down 4.7 per cent on Wednesday, heading for their biggest decline in almost five months. Kia Motors fell 1.5 per cent, versus a 0.3 per cent decline in the benchmark Kospi Composite index. Hyundai Motor was flat. Mr Park said the FTC order against Hyundai would not have a big impact on Hyundai’s founding family’s control over key units as Hyundai Steel was not at the center of the group’s circular shareholdings. Hyundai Mobis, which makes automotive parts, is a key node in the group’s complex ownership structure because it holds 20.8 per cent of Hyundai Motor
Article number two::-
((Japan Japanese banks to accelerate unwind of cross-shareholdings))
NOVEMBER 15, 2015 by: Leo Lewis in Tokyo Nearly six months since Japan established its first corporate governance code, the country’s three largest banks have set accelerated targets for selling down their estimated Y10tn “strategic” stakes in corporate clients. The move, which has seen Mizuho, Sumitomo Mitsui and Mitsubishi UFJ all pledging to speed up the sale of so-called cross-shareholdings, is a timely fillip for Prime Minister Shinzo Abe and a growth program that some have accused of running out of steam. The corporate governance code, which came into force in June and requires companies to disclose and justify their policies regarding cross-shareholdings, is part of Mr Abe’s broader effort to entice Japanese to move their cash from deposits into riskier assets. The cozy, opaque relationships locked into the cross-shareholdings, say analysts, are among many turn-offs for would-be investors. The banks are among the worst offenders. Mizuho, which had just under Y2tn of domestic equity holdings in March, said that it would reduce its cross-shareholdings by 40 per cent over the next few years. The bank’s president, Yasuhiro Sato, vowed on Friday to “constantly reduce” the crossshareholdings by gaining understanding from the companies involved. Mitsubishi UFJ, which holds over Y5tn in domestic equities, said over the summer that it had tested those holdings against undisclosed new criteria and found that about a fifth did not make the grade. The bank has since said it will cut the total value of its cross-shareholdings to 10 per cent of tier one capital from about 19 per cent now. Sumitomo Mitsui’s new target is to reduce its current ratio of crossshareholdings to tier one capital by half over the next five years. Its cross-shareholdings stand at around Y1.8tn. The move by the banks replies to a demand in the Japan Revitalization Strategy drafted earlier this year. Both foreign and domestic investors have long condemned the maintenance of extensive crossshareholdings by Japanese banks and other companies as a heavy drag on corporate governance. The cross-shareholdings, which were originally intended to strengthen business ties between bankers and clients, or suppliers and customers, are seen as a key Reason why Japanese company managements are so rarely held to account for failure to deliver higher return on equity (ROE). Japan’s most recent round of annual general meetings saw the median support rate for the managements of the country’s 500 largest companies standing at 97 per cent despite nearly a third of those firms delivering an average ROE below 5 per cent. Analysts at Nomura calculate that while the cross-shareholding ratio across corporate Japan, excluding insurers, was at its lowest ever level of 10.8 in the most recent financial year, the pace of reduction is slow. The brokerage estimates that the ratio will drop to around 9.9 per cent by the end of the 2017 financial year. In a recent research report on the subject, Nomura’s Kengo Nishiyama, warned that the huge crossshareholdings of Japan’s megabanks were a potential problem beyond the corporate governance issues and that the banks “need to reduce risk stemming from share price fluctuations to enable them to fulfil their role as financial mediators at times of market stress”.
Questions:-
1-What is a conglomerate and how does it relate to a Keiretsu and to a Chaebol?
2-What are good examples of cross-shareholdings from both articles?
3-What is the main goal of minimizing cross-shareholdings according to the article?
4-What is Hyundai doing according to the article when it comes to cross-shareholding?
5-How much per cent of the shares does Hyundai Mobis owns of the Hyundai Motor Company?
6-What are the differences between a Keiretsu and a Chaebol? Hint: You are not going to find this answer in the articles so you have to search the web for the answer.
Explanation / Answer
1-What is a conglomerate and how does it relate to a Keiretsu and to a Chaebol?
Conglomerate is a business house which owns many small subsidiaries or independent companies which have businesses in different areas. Eg – Hyundai is into shipping, Automobile, Electronics, Steel etc.
Keiretsu is the Japanese version of a conglomerate with the difference that it is an informal business group. The group member companies hold some holdings in each other so that share price fluctuation can be controlled and also any hostile take-overs.
Chaebol is the Koran version of Conglomerate but it is a formal group of small companies together or a mammoth single business group with the key difference that it is primarily controlled by a family dynasty.
2-What are good examples of cross-shareholdings from both articles?
Hyundai Motors and Kia motors holding big chunk in Hyndai steel
Samsung SDI holdings in Samsung C&T
Hyundai mobis holding almost 21% in Hyundai motors
Mizuho, Sumitomo Mitsui and Mitsubishi UFJ groups hold huge chunks in their group companies
3-What is the main goal of minimizing cross-shareholdings according to the article?
The primary goal of minimizing cross-holdings is to remove the opaqueness in the cross-holdings which acts as a huge deterrent in good corporate governance processes. This in turn makes the equity market unfavorable to investors due to its opaqueness (in addition to the market regulator’s despise). Also due to such high cross-holdings the RoE is restricted and thus investors do not see it as a favored investment asset class.
4-What is Hyundai doing according to the article when it comes to cross-shareholding?
Hyundai and sister company Kia motors have agreed to sell down their current 11 and 20% stakes in Hyundai steel but have asked for more time from the regulator to complete the process due to the huge chunk of sale that needs to be performed.
5-How much per cent of the shares does Hyundai Mobis owns of the Hyundai Motor Company?
20.8
6-What are the differences between a Keiretsu and a Chaebol? Hint: You are not going to find this answer in the articles so you have to search the web for the answer.
Chaebols are generally controlled by their founding families, while keiretsu are run by professional managers. Chaebol ownership is also centralized, while keiretsu are decentralized.
https://www.investopedia.com/terms/c/chaebol-structure.asp