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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (54)	12/23/1997 12:57:00 AM
From: Michael Bakunin	Respond to of 9980

[Korea] Monday December 22, 11:53 pm Eastern Time FOCUS-Default talk, downgrade slam Korean markets By Yeom Yoon-jeong SEOUL, Dec 23 (Reuters) - South Korea's financial markets fell further into an abyss on Tuesday, bludgeoned by news that more of its debt had been downgraded to junk bond status and that the government was desperately trying to stave off default. The won, which has lost more than half its value against the dollar this year, plunged to 1,995 to the dollar within minutes of opening, although it recovered to 1,958 at the midday break. Ratings agency Standard & Poor's Corp cut the country's long-term and short-term foreign currency ratings to junk bond status from investment grade -- more severe than the downgrading issued by Moody's Investors Service the day before. ''The S&P news is really poison in the market,'' a foreign bank dealer said. ''It's only a matter of time before the dollar reaches 2,000 (won).'' Stocks on the key composite index plummeted by 6.8 percent, or 27.22 points, as investors worried South Korea would have grave difficulty rolling over short-term foreign debt. The Finance Ministry has estimated short-term debt due in December at between $14 billion and $15 billion, with another $15 billion due in January. But analysts say much mystery still surrounds South Korea's debt picture and the mysteriousness is really spooking the markets. ''I'll be honest with you,'' said one analyst with a foreign brokerage. ''There's too much cloak and dagger stuff. Only they (the government) know how dire it really is. But the exchange rate is saying how the markets feel how dire it is.'' Comments from President-elect Kim Dae-jung also alarmed the markets. ''We don't know whether we could go bankrupt tomorrow or the day after tomorrow,'' Kim told local media on Monday. ''I can't sleep since I was briefed (about the financial situation). I am totally flabbergasted. ''This is the bottom,'' he added. ''It's a matter of one month -- no, even one day.'' The turbulence in the stock and foreign exchange markets brought the debt market to a standstill on Tuesday. No foreign buyers came into the market on the first day on which foreign investment was allowed in bonds issued by state firms and in short-term instruments of three-years or less. Foreign investors have demanded such access for years, but its commencement was a non-event in the current climate. Dealers expected benchmark three-year yields to rise to 31 percent after closing Monday at 30 percent. Call money was quoted at 25 percent but there were no call loans. Foreign banks, meanwhile, were discussing plans on Tuesday to roll over loans to the nation's financial institutions and companies. The country's debt crisis stems from foreign creditors' reluctance to roll over South Korea's estimated $100 billion in short-term debt, which forced Seoul to seek a nearly $60 billion package of bailout loans from the International Monetary Fund earlier this month. An official at a foreign bank told Reuters that branch managers of the 10 foreign banks in Seoul had met on Tuesday ''to discuss the possibility of rolling over loans with strings attached.'' ''The country would face collapse if things go on like this,'' the official said. Bank of Korea Assistant Governor Lee Kang-nam told Reuters the country's foreign currency liquidity would soon show dramatic improvement. Usable foreign exchange reserves were enough to stave off sovereign default and repay short-term debt, he said. The Bank of Tokyo and other Japanese banks had rolled over loans to several Korean banks on Monday, Lee said. But he did not say how long they had rolled them over for. One analyst said he heard it had been for just a week, until the end of the year. Lee also predicted South Korea would show a current account surplus of $1.5 billion in December from a $600 million surplus a month ago.

To: Stitch who wrote (54)	12/23/1997 1:02:00 AM
From: Richard Tsang	Respond to of 9980

Stitch, I enjoy reading your recent postings to this. Please keep them coming. Thanks. RT

To: Stitch who wrote (54)	12/23/1997 10:46:00 AM
From: Sam	Respond to of 9980

Stitch, Wonderful posts, as usual. Thanks so much for sharing some of your thoughts and experiences with us. Have a good holiday. Regards, Sam