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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Jyoti sharma who wrote (11360)	12/13/1997 12:39:00 PM
From: Rational	Read Replies (1) \| Respond to of 18056

Jyoti: Thanks for telling that the premium is coming from the ADR conversion ratio; that is, we get only half of the company's share in Korea. Why is the premium so high? Is it liquidity? It seems, buying Korean stock here does not generate the value of currency devaluation. It is like we are buying the ADRs at January value of the won (900 to one US$). When won appreciates, the share value may go down because the P/E will look very high since earnings are converted to less US$. The high price of these ADRs when they were floated here may have been due to hype. The recent Korean crisis may have brought down the price of (say) PKX because of a newly founded fear of bankruptcy and has no relationship to devaluation, IMHO. I was initially tempted about these companies because I forgot about the possibility that the ADR conversion ratio could be greater than 1. In any case, thanks for sharing your thoughts. I will have to think more about these companies. Sankar