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Marc Stewart: Ride hailing to mobile payments, tech startups see strength in South Korea.
Frances Yoon: It’s reached a point where there’s so much demand for this type of technology that a lot of startups are booming up all over the country.
Marc Stewart: Plus the big gains by smaller companies in the stock market and the latest perk to lure new employees, free French fries. It’s Thursday, July 8th. I’m Marc Stewart with a Wall Street Journal. Here’s the AM edition of What’s News, the top headlines in business stories moving your world today.
Four suspected killers of Haitian President Jovenel Moïse were shot dead last night by national police according to the country’s police chief. Two others were captured. The gun battle happened in the affluent district where the president resided. The police chief said security forces also freed three police officers who had been held hostage by the alleged killers. As we discussed on the show yesterday, President Moïse was assassinated in an attack at his residence. Haiti’s interim prime minister described the attack as highly coordinated by a highly trained and heavily armed group.
The highly transmissible Delta variant of the COVID-19 virus is now the dominant strain in the US, that’s according to federal data. The Journal’s Betsy McKay has more.
Betsy McKay: It’s undergone exponential growth in the past few weeks, like a couple of weeks ago, it accounted for about 20% of COVID-19 infections, now it’s over 50%. It’s about 51, 52%. So it’s growing really fast and that’s not a surprise to public health officials and genomics surveillance experts who track this sort of thing, because this is a highly transmissible variant. It’s 50% or more transmissible than the most common strain that has been circulating in the US since March.
Marc Stewart: Alphabet’s Google is facing an antitrust lawsuit from three dozen states and the District of Columbia over it’s Google Play app store. The bipartisan lawsuit filed Wednesday alleges the company operates an illegal monopoly over the distribution of apps on mobile devices that run the Google owned Android operating system. In a blog post, Google said it provides an open operating system in which customers are free to download apps directly from developers websites.
And in Florida, the 14 day effort to find survivors of the collapsed condo was called off. Crews will now transition to recovery. According to the mayor of Miami-Dade County as of Wednesday, the total number of confirmed deaths rose to 54, with 86 people unaccounted for.
We’ll direct our attention to the Department of Labor today as weekly jobless claims will be released. It’s not just big companies that are getting the attention of Wall Street. Small cap stocks have been on a tear since last fall, and some investors expect them to keep booming. In particular, the Russell 2000 Index of small cap stocks ended June with its ninth consecutive month of gains. That’s its longest monthly winning streak since at least December, 1986. That’s according to Dow Jones market data. So what’s behind the strength? Let’s bring in my WSJ colleague, markets columnist, Rochelle Toplensky. She’s in London. Hello. Good morning.
Rochelle Toplensky: Morning Marc.
Marc Stewart: So Rochelle, these are our companies like clothing retailer, Abercrombie and Fitch, and the restaurant chain, Cheesecake Factory. What’s giving these stocks some fuel?
Rochelle Toplensky: Well, if you think about it Marc, people are out more, they’re eating out, they’re shopping more. And these small caps tend to be more sensitive to that type of economic activity and the economic acceleration. They started picking up speed last October on the news of the promising COVID vaccine trials. And then really took off once the vaccines were announced. Also, part of that earnings growth is that figures are compared to the second quarter of last year, which was obviously very hard hit by the pandemic.
Marc Stewart: All right. So we are seeing some notable gains. What about inherent risks with these stocks? Is there anything unique here?
Rochelle Toplensky: Yeah, it’s important to remember that these are smaller companies, so they have less diversified range of businesses and that means they’ve got smaller buffers.
Marc Stewart: Rochelle Toplensky. Thank you. Have a good day.
Rochelle Toplensky: You too, Marc. Bye.
Marc Stewart: Just ahead. What’s behind the growth of South Korea’s tech sector? We’ll discuss after the break.
We’ve talked a lot about new technology originating in Asia with China and India as established tech hubs. Now South Korea is becoming a hotbed for big tech startups. It’s home to 10 unicorns, young private companies valued at more than a billion dollars, according to CB Insights. That makes it the third largest hub for such companies in the Asia Pacific region. What’s behind this growth? What role does government regulation play and could this part of the South Korean economy flourish even further? Let’s talk about it with the WSJ’s Frances Yoon. She joins me from Hong Kong. Happy to have you here, Frances. Welcome.
Frances Yoon: Thank you for having me.
Marc Stewart: Frances, when you look at South Korea and you think of tech, of course there is Samsung, an iconic brand. There are many large family conglomerates, but most recently we’re talking about startups that aren’t so established. Can you tell us what types of things they’re venturing into and just how quickly this growth is occurring?
Frances Yoon: They’re venturing into all types of companies. We’re talking ride hailing, e-commerce, biotech. These are the types of companies that you see in developed markets like the US and Europe as well. But what’s really astonishing about what’s going on in Korea is how fast they’re able to gain traction, how fast they’re able to get new users and that really helps to drive the growth and valuation in such a fast way. It’s even faster than some of the things that you see sometimes in the US. So for example, we spoke to the CEO of Toss. It’s a FinTech app, and they gave me some astonishing statistics to say that 80% of all Koreans in their 20s use this app. And over 60% of people in Korea in their 30s use this app. So, the ability to scale in such a fast manner is something that is really surprising. Industrial analysts would say that the growth for a lot of these Korean tech companies might be just focused on the domestic market, but some of these companies are all looking to scale outside of Korea. So the growth potential can be pretty interesting.
Marc Stewart: I’m wondering what’s happening now at this point in time that’s allowing these businesses to emerge.
Frances Yoon: I think what’s happening right now is that the country’s reaching a point where with almost everyone owning a smartphone or a mobile phone, they’re using this to buy merchandise and food and things like that on apps. They are using their phones to hail cars or pay for certain things like groceries or payments, getting credit and buying stocks. They’re doing a lot of things with their phones right now and it’s reached a point where there’s so much demand for this type of technology that a lot of startups are booming up all over the country.
Marc Stewart: Frances, I remember visiting Seoul more than a decade ago, and it was apparent even then just how much technology was a part of daily life. It’s a very wired city. So how does this embrace of technology really help propel the tech sector?
Frances Yoon: I think it’s because so many people are using it. It creates a very big marketplace online, and that really helps these tech companies to help people basically improve their lives in such a big way. And it’s really made a big difference. You can see how much easier it’s become to send money or buy stocks or buy goods. And especially during the pandemic when face to face interaction has become more problematic. These types of apps, the convenience of using these apps has really skyrocketed among the Korean population. And we’ve really reached a point where it’s almost unthinkable to live without using these types of apps now.
Marc Stewart: In addition to enthusiasm for technology, one aspect that the tech sector has had to face is government regulation, whether it be in China, the US or in Europe, I’m wondering how the South Korean government views technology, these emerging firms and how that plays in their growth.
Frances Yoon: I think they have a very favorable view on technology. They see it as something that could help drive economic growth for the country. They know that as economic growth becomes more competitive and challenging, that they really see this need to build 10 companies at home as a very important source of future growth and they’re also mindful of how big these US companies and tech companies in developed nations are becoming much more powerful. And I think the Korean government wants to see that happen within their own home ground. I’m told from venture capital firms and from tech companies that the government has shown big interest in helping these types of companies grow. There is a cabinet level body in the government in Korea that helps these types of companies with anything from research to support with taxes and accounting, and a large part of the support comes from funding. So I think that in Korea, if you’re starting up, it’s not that difficult to get some sort of funding from the government to start off.
Marc Stewart: Of course a lot of countries would like to have a high-tech industrial base. What could be learned from the experience in South Korea?
Frances Yoon: What I’m told from investors is that the employees in these types of tech companies in Korea are very hardworking. They’ll go through and push long hours. They will rally around a cause in a big way. And the idea of working for a tech startup is becoming really popular among people who are graduating from college. So I think all of this really helps these companies attract the best talent that’s in Korea right now. And so that really helps to drive the growth and development and the progress in these types of tech startups and tech companies. So I think that could be a very attractive aspect for other companies who are looking to build a tech base somewhere outside of the US.
Marc Stewart: Frances Yoon, thank you for being here.
Frances Yoon: Thanks for having me.
Marc Stewart: And finally, amusement parks were dealt a severe blow last year when the pandemic hit. Now many are reopening. And like other businesses, they’ve been working to staff up by increasing pay and handing out other perks from free French fries to free family passes. Here’s the Journals, Kris Maher.
Kris Maher: So it’s just a great time to get a summer job if you’re a teenager right now. Amusement parks in particular have been raising pay rates pretty dramatically. In some cases, they’ve been ramping up starting pay to $15 an hour, even $20 an hour. And in some cases that’s double what they were offering last year. And on top of that, companies, they’re also throwing out other perks and things like retention bonuses, all of which can add up to a significant amount of money by the end of the summer, especially for teenagers who like to do these jobs in the summer.
Marc Stewart: And that’s What’s News for Thursday. We’re back tonight with a new show. Feel free to leave us a rating and review wherever you get your podcasts. I’m Marc Stewart for the Wall Street Journal. Thanks for listening.