S. Korea's top 20 conglomerates sit on cash hoard of $180.6 billion

Big Korean conglomerates have piled up cash hoard during the pandemic period, leading them to pledge more than 1,000 trillion won ($800.1 billion) investments over the next five years.

According to an analysis published by local business tracker CEO Score on Thursday, cash and cashable assets held by the top 20 companies, excluding financial companies and public institutions, reached 226 trillion ($180.6 billion) won as of the end of March this year, up 33.4 percent from the end of 2019 as companies began hoarding cash amid uncertainties from the pandemic.

During the same period, all of the top 20 companies except four - GS Caltex, Samsung C&T, CJ CheilJedang, and E-Mart – upped their cash reserves.

By company, Samsung Electronics, the No. 1 company in the nation in terms of sales, had the largest amount of cashable assets with 124 trillion won at the end of the first quarter this year, surging 20.3 percent compared to the end of 2019.

Cashable assets of Hyundai Motors, the No. 2 conglomerate, jumped 33.2 percent to 21.3 trillion won during the same period. Kia, the No. 5 company in the country, more than doubled from 7.3 trillion won to 16.1 trillion won while Hyundai Mobis, the No. 10 company, rose 42.0 percent to 4.7 trillion won. The three companies’ total cash reserves amounted to 42.1 trillion won.

POSCO Holdings had cash holdings of 15.8 trillion won, LG Chem 9 trillion won, LG Electronics 5.6 trillion won, Hanhwa 4 trillion won, SK hynix 5.4 trillion won, and LG Display 3.4 trillion won.

The top five rank - Samsung, SK, Hyundai Motor, LG, and Lotte – and 13 other conglomerates including POSCO, Hanwha, GS, Hyundai Heavy Industries, CJ, and Kolon, announced large-scale investment plans totaling 1,084.6 trillion won.

Samsung announced that it will invest 450 trillion won in semiconductor, bio, and IT fields over the next five years. The nation’s No. 1 conglomerate is also conducting large-scale mergers and acquisitions with cashable assets worth 124 trillion won.

Three companies under Hyundai Motor Group have plans to invest 63 trillion won in Korea by 2025.

“Large companies can afford to make active investments because of their large cash hoards,” said Seo Ji-yong, an economics professor at Sangmyung University.

Promises of incentives and business-friendly environment by the new government and elevated relationship with the U.S. to encompass economic and technology alliance after recent visit by U.S. President Joe Biden have excited their investment, he said.

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