S. Korea's Lee, Japan's Ishiba Vow to Boost Ties in First Call
South Korea's President Lee Jae-myung and Japanese Prime Minister Shigeru Ishiba held their first phone conversation and vowed to seek ways to deepen bilateral ties so both nations can respond together to future challenges.
'The two leaders agreed to build a more solid and mature South Korea-Japan relationship based on mutual respect, trust, and a responsible attitude,' Lee's office said in a readout Monday. The conversation lasted 25 minutes and marked their first direct contact since Lee's victory in a snap election last week.
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BYD Unleashes an EV Industry Reckoning That Alarms Beijing
(Bloomberg) -- The price war engulfing China's electric vehicle industry has already sent share prices tumbling and prompted an unusual level of intervention from Beijing. The shakeout may just be getting started. Next Stop: Rancho Cucamonga! Where Public Transit Systems Are Bouncing Back Around the World Trump Said He Fired the National Portrait Gallery Director. She's Still There. ICE Moves to DNA-Test Families Targeted for Deportation with New Contract US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn For all the Chinese government's efforts to prevent price cuts by market leader BYD Co. from turning into a vicious spiral, analysts say a combination of weaker demand and extreme overcapacity will slice into profits at the strongest brands and force feebler competitors to fold. Even after the number of EV makers started shrinking for the first time last year, the industry is still using less than half its production capacity. Chinese authorities are trying to minimize the fallout, chiding the sector for 'rat race competition' and summoning heads of major brands to Beijing last week. Yet previous attempts to intervene have had little success. For the short term at least, investors are betting few automakers will escape unscathed: BYD, arguably the biggest winner from industry consolidation, has lost $21.5 billion in market value since its shares peaked in late May. 'What you're seeing in China is disturbing, because there's a lack of demand and extreme price cutting,' said John Murphy, a senior automotive analyst at Bank of America Corp. Eventually there will be 'massive consolidation' to soak up the excess capacity, Murphy said. For automakers, relentless discounting erodes profit margins, undermines brand value and forces even well-capitalized companies into unsustainable financial positions. Low-priced and low-quality products can seriously damage the international reputation of 'Made-in-China' cars, noted the People's Daily, an outlet controlled by the Communist Party. And that knock would come just as models from BYD to Geely, Zeekr and Xpeng start to collect accolades on the world stage. For consumers, price drops may seem beneficial but they mask deeper risks. Unpredictable pricing discourages long-term trust — already people are complaining on China's social media, wondering why they should buy a car now when it may be cheaper next week — while there's a chance automakers, as they cut costs to stay afloat, may reduce investment in quality, safety and after-sales service. Auto CEOs were told last week they must 'self-regulate' and shouldn't sell cars below cost or offer unreasonable price cuts, according to people familiar with the matter. The issue of zero-mileage cars also came up — where vehicles with no distance on their odometers are sold by dealers into the second-hand market, seen widely as a way for automakers to artificially inflate sales and clear inventory. Chinese automakers have been discounting a lot more aggressively than their foreign counterparts. BofA's Murphy said US automakers should just get out. 'Tesla probably needs to be there to compete with those companies and understand what's going on, but there's a lot of risk there for them.' Others leave no room for doubt that BYD, China's No. 1 selling car brand, is leading the way on price cuts. 'It's obvious to everyone that the biggest player is doing this,' Jochen Siebert, managing director at auto consultancy JSC Automotive, said. 'They want a monopoly where everybody else gives up.' BYD's aggressive tactics are raising concerns over the potential dumping of cars, dealership management issues and 'squeezing out suppliers,' he said. The pricing turmoil is also unfolding against a backdrop of significant overcapacity. The average production utilization rate in China's automotive industry was mere 49.5% in 2024, data compiled by Shanghai-based Gasgoo Automotive Research Institute show. An April report by AlixPartners meanwhile highlights the intense competition that's starting to emerge among new energy vehicle makers, or companies that produce pure battery cars and plug-in hybrids. In 2024, the market saw its first ever consolidation among NEV-dedicated brands, with 16 exiting and 13 launching. 'The Chinese automotive market, despite its substantial scale, is growing at a slower speed. Automakers have to put top priority now on grabbing more market share,' said Ron Zheng, a partner at global consultancy Roland Berger GmbH. Jiyue Auto shows how quickly things can change. A little over a year after launching its first car, the automaker jointly backed by big names Zhejiang Geely Holding Group Co. and technology giant Baidu Inc., began to scale down production and seek fresh funds. It's a dilemma for all carmakers, but especially smaller ones. 'If you don't follow suit once a leading company makes a price move, you might lose the chance to stay at the table,' AlixPartners consultant Zhang Yichao said. He added that China's low capacity utilization rate, which is 'fundamentally fueling' the competition, is now even under more pressure from export uncertainties. While the push to find an outlet for excess production is thrusting more Chinese brands to export, international markets can only offer some relief. 'The US market is completely closed and Japan and Korea may close very soon if they see an invasion of Chinese carmakers,' Siebert said. 'Russia, which was the biggest export market last year, is now becoming very difficult. I also don't see Southeast Asia as an opportunity anymore.' The pressure of cost cutting has also led analysts to express concern over supply chain finance risks. A price cut demand by BYD to one of its suppliers late last year attracted scrutiny around how the car giant may be using supply chain financing to mask its ballooning debt. A report by accounting consultancy GMT Research put BYD's true net debt at closer to 323 billion yuan ($45 billion), compared with the 27.7 billion yuan officially on its books as of the end of June 2024. The pain is also bleeding into China's dealership network. Dealership groups in two provinces have gone out of business since April, both of them ones that were selling BYD cars. Beijing's meeting with automakers last week wasn't the first attempt at a ceasefire. Two years ago, in mid 2023, 16 major automakers, including Tesla Inc., BYD and Geely signed a pact, witnessed by the China Association of Automobile Manufacturers, to avoid 'abnormal pricing.' Within days though, CAAM deleted one of the four commitments, saying that a reference to pricing in the pledge was inappropriate and in breach of a principle enshrined in the nation's antitrust laws. The discounting continued unabated. --With assistance from Yasufumi Saito and Chester Dawson. The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again Is Elon Musk's Political Capital Spent? What Does Musk-Trump Split Mean for a 'Big, Beautiful Bill'? Cuts to US Aid Imperil the World's Largest HIV Treatment Program ©2025 Bloomberg L.P.
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Activist Retail Investors Take On Korea's Corporate Laggards
(Bloomberg) -- South Korea's small investors are trying to shake up the country's creaky corporate landscape. Next Stop: Rancho Cucamonga! Where Public Transit Systems Are Bouncing Back Around the World Trump Said He Fired the National Portrait Gallery Director. She's Still There. ICE Moves to DNA-Test Families Targeted for Deportation with New Contract US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn Amateur stock-pickers across the country are gathering on social media platform KakaoTalk and dedicated shareholder apps such as Act, which has racked up more than 110,000 users in the two years since it launched. Their aim: to give a jolt to Korea's $1.9 trillion stock market, which has for years traded at cheaper multiples than regional rivals like Japan and Taiwan. 'Korea's financial system lags global standards and companies need to be held accountable,' said Younghee Won, a 66-year-old art instructor and amateur investor. 'Online platforms allow our anger to translate into action.' This wave of grass-roots activism means Korea's listed companies are now being pressured from all sides, as politicians, regulators and foreign investment funds push for better governance. That may finally force local companies to address the long-standing 'Korea discount' — adding fuel to a stock market that is already one of the world's best performers so far this year. It has also turned small investors into a surprising political force. Lee Jae-myung, the left-leaning politician who won the country's presidential election last week, tried to position himself as a champion for shareholders, promising to lift corporate governance standards, curb stock manipulation and set the Kospi index on the path to 5,000 — almost 80% higher than its current level. The Kospi entered a bull market after Lee's election win and was around 1.7% higher in early Asian trading on Monday. The market is getting a boost from foreign funds loading up on stocks, and rising optimism from Wall Street. Goldman Sachs Group Inc. strategists said in a weekend note they were upgrading Korean stocks to overweight from neutral, pointing to the increased likelihood of capital market reforms. Read: Goldman Upgrades Korean Stocks to Overweight on Domestic Boost Growing Clout Retail investors in Korea now represent almost 30% of the overall population, according to Goldman Sachs. A boom in stock trading during the Covid-19 pandemic led to millions of new account openings, fueling the rise of online communities where they could learn about stock picking — and hatch plans. Shareholders of Korean companies filed 168 proposals in the most recent round of annual general meetings, a jump of more than 80% from 2021, according to figures from the AJU Research Institute of Corporate Management. That included 78 proposals directly targeting management, calling for the appointment or removal of executives. 'Minority shareholders are seeking a more active role in corporate governance,' said Nameun Kim, deputy director at the AJU. 'If previously the focus was solely on returns, now they want their preferred directors on the board so they can participate in management decisions.' So far, small investors' successes have come at small companies, those with a market value of $1 billion or less. During the recent round of annual general meetings in March, medical company Oscotec Inc. scrapped plans to reappoint its chief executive after pushback from investors, while biotechnology firm Amicogen Inc and textile company DI Dong Il Corp. appointed new auditors after small investors pushed for it. Oscotec, Amicogen and DI Dong Il Corp. didn't respond to requests for comment. Unsurprisingly, many companies do their best to resist — or simply ignore — these mini activists. Kim, a schoolteacher who asked to be identified only by his surname, became so frustrated with one Korean company whose stock he holds that he sent 400 letters to fellow investors he found in the company's shareholder registry, asking them to join him in a KakaoTalk group to discuss possible action. More than 120 of them signed up. 'I had to print and mail each one by hand,' he said. 'I did it all on my own, outside of work hours, while maintaining a full-time job. Shareholder activism is exhausting, frustrating and frankly overwhelming.' The company didn't respond to Kim's numerous requests for clarity on their business performance, and he ended up selling most of his stake. He held on to a few shares out of a sense of obligation to his fellow activists. The rise of small investors in Korea differs from the meme-stock mania in the US, where anonymous users on Reddit's WallStreetBets forum banded together to drive up the price of GameStop Corp. and other shares. Korean platforms such as Act and Hey Holder require users to confirm they actually hold shares before they can join any dedicated group, meaning those weighing into discussions already have skin in the game. Act's CEO Sangmok Lee said that users on his platform often act more like 'fans' of the companies they hold. 'Fans engage in shareholder activism out of love for the company, much like how parents use discipline out of love,' Lee said. Powerful Allies Korea's stock market has for years been cheaper than close rivals Japan and Taiwan when it comes to metrics such as the price-to-book ratio, a popular measure of how much a stock is worth compared to the value of a company's assets. The 'Korea discount' doesn't have a single cause but analysts point to worries about how companies invest, a convoluted series of cross shareholdings and a sense that the interests of company executives aren't always in line with their shareholders. Read: What's the 'Korea Discount' and Why Is It a Problem?: QuickTake Small investors won't be enough on their own to turn things around, but they have some powerful allies. Local activist funds like Align Partners Capital Management Inc. are on the rise, adding professional savvy to the efforts of amateur investors. Foreign funds are also getting in on the act, expanding their operations in Korea in the hopes that the market is finally ready to turn a corner. 'We're optimistic that the presidential elections will bring even more substantial changes in South Korea,' said Seth Fischer, founder and chief investment officer of activist fund Oasis Management in a recent Bloomberg Television interview. He added a note of caution, saying there was still a 'long, long way to go' in reforming Korea's corporate sector. But small investors' greatest source of support may come from the very top. In a Facebook post before his election win, Lee Jae-myung promised to protect investors' interests, promote transparency and push companies to appoint directors representing minority shareholders. His goal? Turning the 'Korea discount' into a 'Korea premium.' (Upgrades prices, adds details on Goldman Sachs upgrade in paragraph seven.) The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again Is Elon Musk's Political Capital Spent? What Does Musk-Trump Split Mean for a 'Big, Beautiful Bill'? Cuts to US Aid Imperil the World's Largest HIV Treatment Program ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
2 hours ago
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Japan Should Use Asia Trade Bloc in US Talks, Party Chief Says
Japan should take a bigger role in a regional free trade agreement and use its expansion as a bargaining tool in tariff negotiations with the US, the leader of the country's largest opposition party said on Monday. Yoshihiko Noda, president of the Constitutional Democratic Party of Japan, was speaking to reporters in Tokyo after the country's chief negotiator returned from a fifth round of talks in Washington with little sign of a reprieve from US tariffs.
