S. Korea's business sentiment stays low on ongoing restructuring

Confidence among South Korean businesses stayed low this month on worries about the ongoing restructuring in shipbuilders and shipping firms, central bank data showed on Wednesday.

The business sentiment index (BSI) for manufacturers stood at 71 in June, unchanged from the previous month, according to the Bank of Korea (BOK). The reading below 100 means pessimists outnumbered optimists.

The figure rose from 63 in February to 71 in April, before staying at the level for two straight months as concerns spread about the government-led corporate restructuring in shipbuilders and shipping firms that have struggled with massive losses and falling orders.

The government urged the country's top three shipbuilders, including Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries and Samsung Heavy Industries, to cut employees and reduce facilities in return for extended loans to the debt-riddled companies.

The figure was based on a BOK survey of 2,842 manufacturers and non-manufacturers conducted between June 15 and 22.

The prospective BSI for July came in at 72, down 2 points from the previous month.

The figure failed to reflect concerns about the British referendum to leave the European Union (EU) as the survey was carried out before the referendum. It indicated further decline in business sentiment next month.

The BSI for shipbuilders and other transport companies tumbled from 49 in May to 29 in June, marking the lowest since the BOK began compiling the data in 2003.

The June BSI for non-manufacturers stood unchanged at 71, but the prospective BSI for July inched down from 73 to 72 on a monthly basis. Endit