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Geopolitical risks persist on Korean Peninsula: Moody‘s

Global credit rating agency Moody‘s Investors Service said Wednesday that uncertainty related to the geopolitical risks on the Korean Peninsula persists even after the recent series of summits and peace mood concerning North Korea.

“The key constraining factor restriction to South Korea’s credit rating is its geopolitical risk,” Christian de Guzman, vice president and senior credit officer at Moody’s, said in a press conference held in Seoul.

“The fact that the first-ever US-North Korea summit was held in Singapore last week does not restore the possibility of armed conflict on the peninsular prior to August last year.”
Christian de Guzman, vice president and senior credit officer at Moody’s Investors Service. (Yonhap)
Christian de Guzman, vice president and senior credit officer at Moody’s Investors Service. (Yonhap)

The global agency suggested in early September last year that Seoul’s credit rating could be downgraded, in case armed conflicts take place on the peninsula and consequently damage the functions of the Korean government and economy.

Though the hard-reached summit and the recent set of peninsular dialogues, according to the Moody’s officer, could act as an alleviating factor to conventional risks, uncertainties persist ahead in North Korea’s denuclearization’s road map.

“More practical and irreversible measures will be required in order to review the (current) credit rating status of South Korea,” Guzman said, adding that the incumbent US government under the rule of President Donald Trump is subject to uncertainty.

Meanwhile, the credit rating agency upgraded its rating for the country‘s top market player for Samsung Electronics from the conventional A1 to Aa3, citing stronger leadership and stable cash flow.

“The change reflected (the company’s) improved business stability, robust cash flow, and outstanding response capacity to capital investment demands and market volatility,” said an official of the company.

Moody‘s claimed that the Korean tech giant is likely to keep up its current initiative in the market for the next two or three years at least, citing its brand recognition, technological upper hand and profitability.

“Considering the large gap with the top cap semiconductor companies and runner-up Chinese companies, as well as the high entry barrier, China’s investment will not be sufficient a factor to pose significant challenge on Samsung or to reorganize the market order for the next three to five years,“ the official said.

By Bae Hyun-jung (