South Korea’s Minister for Oceans and Fisheries Cho Seung-hwan said on 6 October that stock market conditions and the shipping cycles would determine when the state should dispose of its interest in the country’s flagship carrier HMM.
The last two years brought record profits for HMM as container freight rates rocketed to all-time highs, resulting in calls for the company to come off government support, which had been in place since 2016 after the company found itself on the brink.
The state controls 52% of HMM’s shares, through Korea Development Bank (KDB), Korea Ocean Business Corporation (KOBC), Korea Credit Guarantee Fund (KODIT) and National Pension Service. That said, convertible bonds could raise the government’s stake to 74%.
During a parliamentary audit into his ministry, Cho said, “The privatisation of HMM would be difficult with a 74% stake, so we will review shipping industry circumstances with long-term perspectives to carry out the stake sale.”
The minister added that the government will continue consultations with related parties, including the Financial Services Commission.
Cho’s words contrasted with KDB chairman Kang Seok-hoon, who said last month that the bank should divest its stakes in HMM and Daewoo Shipbuilding & Marine Engineering at the earliest. On 26 September, South Korean chaebol Hanwha Corporation was named the preferred bidder to buy half of KDB’s stake in DSME.
While HMM had a windfall the last two years, the container shipping market has been experiencing a correction as port congestion and volumes ease, and analysts are forecasting weaker earnings for the company in the second half of 2022.
HMM’s stock price closed at KRW 18,200 (US$12.90) today (7 October), lower than yesterday’s closing price of KRW 18,350 (US$13.01).
Martina Li
Asia Correspondent
