[금통위poll]③Experts Say "Taeyoung Construction Incident Has Limited Impact on Financial Sector"

Financial experts have expressed the opinion that the impact of the real estate project financing (PF) crisis triggered by Taeyoung Construction's workout application on the domestic financial market is limited under the current circumstances.

Taeyoung Construction, which applied for a workout due to liquidity issues in real estate project financing (PF), has completed a creditors' briefing session. On the 4th, the traffic light in front of Taeyoung Construction's headquarters in Yeouido, Seoul, turned red. Yoon Se-young, the founding chairman of Taeyoung Group, acknowledged management's mistakes during the briefing and requested consent for the workout, but the main creditor bank, the Korea Development Bank, asked for an additional self-rescue plan. Photo by Kang Jin-hyung aymsdream@

According to a survey conducted by Asia Economy from the 3rd to the 5th among 21 respondents including domestic and foreign securities analysts, bank and economic research institute economists, more than half of the respondents answered that the impact of the Taeyoung Construction issue on the domestic financial market is minimal or not significant.

Experts noted that the real estate PF crisis has not yet escalated into a financial system crisis, and with the government's proactive response efforts, the possibility of it spreading into a crisis across the entire financial sector is considered low.

Heo Ji-soo, a senior researcher at Woori Financial Management Research Institute, said, "The Taeyoung Construction issue may act as a burden factor on investment sentiment," but added, "Thanks to the authorities' policy responses such as the 85 trillion won liquidity supply program, the possibility of it spreading into a chain management crisis among construction companies is low."

Lee Jae-hyung, a research fellow at Yuanta Securities, said, "The risk related to real estate PF is ongoing, and the variable is to what extent the credibility of the financial market will be damaged by this incident," adding, "Considering that the risk has not yet spread to other industries and that there is ample capacity for bond investment, the impact on the financial market is at a normal level."

There were also many opinions that the risk exposure of the domestic financial market related to real estate PF is limited to some institutions, so the impact will not be significant.

Jung Sung-tae, a researcher at Samsung Securities, explained, "The exposure related to real estate PF is mainly concentrated in Saemaeul Geumgo and others, so the possibility of transmission to the entire financial sector is low."

Jo Yong-gu, a research fellow at Shin Young Securities, also said, "The exposure of the real estate PF crisis to domestic financial institutions is expected to be less than feared or limited (at a manageable level)," adding, "Since the credit market had mostly anticipated this, it is judged as a weakness factor limited to the secondary market."

On December 28, when Taeyoung Construction, experiencing a liquidity crisis due to real estate project financing (PF), applied for a workout (corporate restructuring), the Taeyoung Construction flag fluttered in the wind at the Taeyoung Building in Yeongdeungpo-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

However, there were some opinions that this real estate PF incident could spread from Taeyoung Construction to major domestic construction companies and have a significant impact on the financial market.

Baek Yoon-min, a research fellow at Kyobo Securities, said, "Although the outcome cannot be predicted yet, even excluding the Taeyoung Construction incident, the risk related to domestic real estate PF is not small," adding, "Basically, noise related to real estate PF is inevitable, and especially if the problem spreads to other construction companies, the impact on the financial market will inevitably expand."

Oh Chang-seop, a researcher at Hyundai Motor Securities, said, "If the illiquid PF problem spreads not only to Taeyoung Construction but also to domestic construction companies in general, financial market instability is a concern," and predicted, "This incident will have a significant impact on the financial market."

Moon Hong-chul, a researcher at DB Financial Investment, said, "The government will be able to actively manage credit risk and credit crunch issues," but evaluated, "Negative effects on real estate prices and the economy itself are inevitable."

This content was produced with the assistance of AI translation services.