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Seoul-Tokyo tension affects bilateral investments little

Japanese purchase more Korean stocks since Lee’s visit to Dokdo


The heightened diplomatic tension between Korea and Japan had little negative impact on bilateral investment and trade so far, data showed.

Moreover, Japanese investors were net buyers on Korea’s main bourse for the four trading sessions after President Lee Myung-bak visited Dokdo islets on Aug. 10.

“Japanese investors’ purchase of stocks and bonds surpassed selling over the sessions last week,” said an official of the Financial Supervisory Service.

He downplayed the possibility that the Japanese would actively pull out their investments despite escalating political tension between the two countries.

“Their investment is more dependent upon economic theory rather than political situations.”

FSS data showed that Japanese investors hold only 1.7 percent ― worth 6.7 trillion won ($5.9 billion) based on market capitalization ― of the total stocks on the Korea Exchange. Further, their holding of local bonds stayed at 0.56 percent, or 506 billion won, of the total.

Irrespective of the political dispute, the Ministry of Knowledge Economy is set to provide Japan-based enterprises with various benefits.

As part of its policy to support Japanese technology-oriented investors, the ministry plans to expand the scale of industrial complexes for manufacturing components in major provincial cities, such as Gumi, Pohang, Jinhae and Iksan, over the next three years.

Meanwhile, the Ministry of Foreign Affairs announced that Korean firms are also not suffering any particular difficulty in their business activities in Japan.

Though the ministry said it would closely monitor the situation in Japan in terms of the country’s stance toward Korean enterprises, its officials dismissed the possibility of worsening scenarios including the withdrawal of operations.

Japan’s Chief Cabinet Secretary Fujimura Osamu has said his government would consider various options in regard to the Seoul-Tokyo currency swap deal, not ruling out the chance of a withdrawal from the agreement.

But Seoul officials shrugged off Fujimura’s remarks which came after President Lee demanded an apology from the Japanese emperor for colonial-era wrongdoings prior to any visit to Korea in an annual Liberation Day speech earlier in the day.

Lee had made a surprise visit to Korea’s easternmost islets of Dokdo, which Japan also claims as its own, sparking diplomatic tension between the two countries.

Later the same day, Tokyo requested to delay a meeting between the two countries’ finance ministers which was scheduled for late this month.

An official at the Finance Ministry of Korea said Fujimura’s comments reported by the Japanese media didn’t mean much and that the ministry has not received any official notice from Tokyo on the currency swap deal, which was made out of both countries’ needs.

The two countries expanded the size of their currency swap from around $13 billion to $70 billion through a summit in October last year. The deal on $57 billion expires in October.

By Kim Yon-se (kys@heraldcorp.com)
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