- Driven by AI data center demand, market value and memory chip prices are rising, leading to market cap milestones for companies in South Korea.
- A structural shift has been observed in global demand for memory chips, impacting market trends.
- Analyst commentary discusses the state of Korean equities and the interest shown by global investors in the memory chip sector.
- Inflationary pressures compel the Bank of Korea to consider rate hikes amidst warnings of structural fragility in the market, including market index weighting.
Bank of Korea tracks rising share of zombie firms in South Korea
What happened
The Bank of Korea reported that the share of zombie companies among nonfinancial firms in Korea has risen to 19.1 percent, up from 17.1 percent a year earlier. This is the highest level since the BOK began compiling the data in 2010. The term refers to companies that have been unable to cover their interest expenses with operating profits for three consecutive years. The BOK noted that while nominal GDP accelerated in the second quarter of this year, surging 26.4 percent from a year earlier, the benefits have not been evenly distributed across the economy.
From koreatimes.co.kr
Why it matters
The rise in zombie firms signals a structural weakness within the overall Korean corporate economy. The BOK stated that the problem is particularly pronounced in industries dependent on domestic demand. The central bank noted that both the proportion of variable-rate borrowing and delinquency rates have seen an increase.
Inflationary pressures compel the Bank of Korea to consider rate hikes amidst warnings of structural fragility in the market, including market index weighting.
From koreatimes.co.kr
Who's involved
- KoreaThe country experiencing the rise in corporate distress and the focus of the BOK's report.
- Bank of KoreaThe central bank that monitors economic trends and issued the report on corporate health.
Keep exploring
Part of
Inflationary pressures compel the Bank of Korea to consider rate hikes amidst warnings of structural fragility in the market, including market index weighting.Also in this story
- Aggressive spending in AI infrastructure and large data centers is putting pressure on the South Korean economy, leading to BoK rate hike considerations.
- Governor Shin signaled the likelihood of a rate hike by the Bank of Korea.
- The Bank of Korea left its benchmark interest rate unchanged at 2.50 percent.
- Goldman highlights that equity outflow is driving the rise of the USD/KRW exchange rate.
The entities involved
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Korea
region in East Asia
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Bank of Korea
central bank of Republic of Korea, established in 1950
Related events
- The Bank of Korea asserts its independence from Federal Reserve policy moves as Korea announces a major annual investment plan in the United States.
- The Bank of Korea monitors corporate performance and market trends as a crisis causes energy cost spikes impacting inflation.
- The Bank of Korea monitors national income and currency trends in Korea.
- BoK rate hikes are reported to be affecting market stability, with officials representing the government finance ministry.
- The Bank of Korea raised its policy rate on August 27, 2026, citing the strong performance of the semiconductor sector as a key factor.