Newsletter. Special Features. KSFC News. Financial Market & Statistics PUBLISHED BY KOREA SECURITIES FINANCE CORPORATION ISSUE #019

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1 Newsletter PUBLISHED BY KOREA SECURITIES FINANCE CORPORATION ISSUE #19 Special Features - KSFC celebrates its 63 rd anniversary KSFC News - Business News - CSR Activities Financial Market & Statistics - Trends in the Korean Financial Markets - KSFC Statistics

2 2 KSFC Newsletter I. SPECIAL FEATURES KSFC celebrates its 63 rd anniversary On October 1, 218, a ceremony was held at the KSFC headquarters to celebrate its 63 rd anniversary. Ever since the establishment in 1955, the KSFC has underpinned the development of Korea s capital market, contributing to the overall growth of the economy. CEO Wan kyu Chung delivered a speech to express his gratitude to all the executives and employees for their dedication, as well as to customers and shareholders for showing steadfast support. The KSFC has achieved stable growth even in the face of market fluctuations triggered by uncertainties across the globe, and the size of proprietary assets and client assets managed by the company reached KRW 87tn and KRW 247tn, respectively, as of September 218. Mr. Chung highlighted the importance of pursuing qualitative growth, honing competitiveness of employees and driving bold innovation as we enter the 4 th industrial revolution, and encouraged everyone to dedicate their efforts for the company to take another leap forward.

3 Issue # 19 3 II. KSFC NEWS Business News CEO Wan kyu Chung visits the U.S. with a Korean delegation of securities companies KSFC CEO Wan kyu Chung participated in the New Portfolio Korea (NPK) project, where a delegation consisting of heads of various Korean financial institutions visited the United States on a 8 day program starting from November 3, 218. Organized by the Korea Financial Investment Association (KOFIA), the NPK project each year sends a delegation abroad to improve understanding about overseas capital markets and strengthen collaboration with foreign institutions. The goal of the 218 NPK program was to learn about the investment environment and capital market trends in the U.S., explore business opportunities related to the 4 th industrial revolution and promote networking with American financial institutions. The delegation visited Silicon Valley to search for new investment opportunities with brokerage firms and innovative companies, before stopping by global tech giants in Seattle to discuss the future direction of digital transformation. The KSFC will continue to make the best of its effort as a front runner to drive innovation across the Korean capital market.

4 4 KSFC Newsletter II. KSFC NEWS CSR Activities Participation in the 8 th KOFIA Kimchi Fair On November 2, 218, the KSFC took part in the 8 th KOFIA Kimchi Fair alongside various financial institutions including securities companies, asset management companies and real estate trust companies. A total of 4 CEOs and 73 employees from KOFIA and 64 financial investment institutions gathered to prepare 34,5kg of Kimchi, which was donated to ChildFund Korea and about 1 welfare facilities sponsored by the Kimchi Fair participants. Fourteen people including CEO Chung from the KSFC joined the event to share the warmth of love to our neighbors against the cold weather. Launched in 211 as a charity event to support the marginalized endure the winter season, the Kimchi Fair has seen an increasing number of participants and amount of donated Kimchi for the past eight years. As one of the Fair s early contributors, the KSFC will continue to support the Kimchi Fair, which is fast becoming a representative volunteer activity for the Korean financial investment industry.

5 Issue # 19 5 Sponsor of the 218 Welfare Contest for the Disabled The KSFC Foundation signed a KRW 2mn sponsorship agreement for projects selected through a contest to improve welfare for the disabled, which is one of the Foundation s main focus. The contest was held for the first time since the Foundation was established, aiming to unearth fresh ideas that can enhance the quality of life for the disabled by providing them with opportunities to participate in the community. Among a total of 17 institutions that applied for the contest, five judges including outside experts selected four final recipients for the grant. The selected ideas include pilot project for personal budgeting, dental treatment for the disabled and distribution of educational material for dental care, matching funds to support the independence of the disabled and cultural activities and renovation of child care facilities for the disabled. The KSFC Foundation hopes to build a society where people with disabilities can lead better lives and fulfill their dreams.

6 6 KSFC Newsletter III. KOREAN FINANCIAL MARKET TRENDS Stock Market Trends The KOSPI fell month over month in October amid negative factors to stock prices such as the prolonged U.S. China trade war and increasing global risk due to deteriorating fiscal conditions in Italy. Meanwhile, the KOSPI inched upwards in November with the partial resolution of political uncertainty following the U.S. midterm elections on November 6 th, despite the ongoing trade conflict between the U.S. and China. Rising expectations for the U.S. China Summit planned for December 1 st also seem to have exerted a positive influence on the stock market. However, the short rally ended due to weak economic indicators at home along with increasing uncertainty over the Chinese economy, leading the KOSPI to close lower month over month in December. The KOSPI Index (Unit: points) 2,4 2,35 2,3 2,25 2,2 2,15 2,1 2,5 2, 1,95 1,9 Oct Oct Oct Nov Nov Dec Trading Value (Unit: KRW billion) 9,5 8,5 7,5 6,5 5,5 4,5 3,5 2,5 Oct Oct Oct Nov Nov Dec

7 Issue # 19 7 Bond Market Trends A combination of internal and external factors pushed the Korean T bond yields downwards in October. At home, the Bank of Korea (BOK) lowered the economic outlook from 2.9% to 2.7%. Meanwhile, the global economy was struck with concerns over the Chinese economy slowing down due to the prolonged U.S. China trade war. The downward trend stretched into November, especially for those of longer maturities, with prospect for the BOK to freeze the rates after a quarter percent increase to 1.75% on November 3 th and spreading scepticism for a trade consensus to be reached between the U.S. and China. The yield continued to fall in December, as rising uncertainty over a U.S. China trade deal and Brexit accelerated the downward push. Major Bond Yields (Unit: %) 1-year treasury bond 3-year treasury bond 5-year treasury bond 1-year treasury bond Oct Oct Oct Nov Nov Dec OTC Trading Value (Unit: KRW billion) 3, 25, 2, 15, 1, 5, Oct Oct Oct Nov Nov Dec

8 8 KSFC Newsletter IV. KSFC STATISTICS Investors Deposits (Based on average balance, Unit: KRW billion) Deposit Account Trust Account 4, 35, 3, 25, 2, 15, 1, 5, 218. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Lending (Based on average balance, Unit: KRW billion) Loans to Financial Institutions Loans to Retail & Corporate Customers 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 218. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. SBL Intermediation - Stock Borrowing and Lending Intermediation (Based on average balance, Unit: million shares) 6, 4, 2, 218. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. - Bond Borrowing and Lending Intermediation (Based on average balance, Unit: KRW billion) 52,5 45, 37,5 3, 218. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.

9 Issue # 19 9 Inter-Dealer Repo Intermediation (Based on average balance, Unit: KRW billion) 16,5 15, 13,5 12, 1,5 9, 7,5 6, 4,5 3, 1, Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. ESOP (Based on month-end balance, Units: number of ESOA, million shares) Depositing ESOAs Deposited Shares 1,26 1,24 1, ,2 1,18 3 1,16 1, , Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Custody (Based on average balance, Unit: KRW billion) 12, 15, 9, 75, 6, 45, 3, 15, 218. Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.

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