SEOUL, April 16 (Korea Bizwire) — The overseas businesses of South Korea’s main bourse operator Korea Exchange (KRX) have become “white elephants” amid consecutive annual losses, industry watchers said Sunday.
According to the bourse operator’s annual report, the Lao Securities Exchange (LSX), where the KRX holds a 49-percent stake, posted a net loss of 1.8 billion won (US$1.68 million) last year. The LSX opened in 2011 through cooperation between South Korea and Laos.
The KRX has invested 15.1 billion won in the LSX so far, although the Southeast Asian bourse posted net losses every year since 2011.
The Cambodia Securities Exchange (CSX), which launched in 2012 with the KRX holding a 45 percent stake, also reportedly posted losses through 2013. The South Korean bourse operator has not provided updates since.
“The overseas businesses focus on establishing financial infrastructure in countries with less developed financial markets to take the lead in the areas. We need to approach with a mid-and-long term vision rather than looking to generate short-term profit,” the KRX said.
Market watchers, however, said it will take a significant amount of time to generate profits from the LSX and the CSX, as there are only seven and five companies listed on the bourses, respectively.
The Tashkent Stock Exchange of Uzbekistan, where the KRX gained a 25-percent stake last year, managed to post profits of 30 million won in 2017, but foreign-exchange losses made the business less profitable, market watchers said.
The KRX also came under fire for funding a former lawmaker’s overseas trips while rolling out its overseas businesses.
Prosecutors raided the KRX on Friday for allegedly funding Financial Supervisory Service (FSS) head Kim Ki-sik’s trip to Uzbekistan in 2014, when Kim served as a lawmaker for the now-ruling Democratic Party.