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To: James Petersen who wrote (13183)	1/13/1998 7:59:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 45548

South Korean ADR premiums seen falling Reuters Story - January 13, 1998 18:50 %TEL %KR %STL %ELG %LDC %EMRG %US %FUND 53040.KS PKX 84300.KS SKM KEP V%REUTER P%RTR By Gilles Castonguay NEW YORK, Jan 13 (Reuters) - South Korea's ADRs are set to lose the highest premiums held by any Asian issue as the country restructures its troubled economy with a series of sweeping reforms, according to institutional investors. "I don't think you're going to see premiums six months from now," said one of them who specializes in the region. "You could (actually) see market discounts, the way these things are trading now," he added, referring to the persisent problems hounding South Korea and other neighboring countries in the worst financial crisis to beset the region in years. The country's three American Depositary Receipts (ADRs) that trade on the New York Stock Exchange have been enjoying premiums as high as 150 percent. Most other ADRs in companies from other Asian countries usually trade on par with overnight prices. On Tuesday afternoon, Pohang Iron & Steel Co Ltd was trading at a 148-percent premium, while Sk Telecom Co Ltd was at 135 percent and Korea Electric Power was at 82 percent, according to John Moon at hedge fund Moon Capital. The premium is the difference between the share price on the local market and the equivalent price in an ADR, which usually represents more than one share. An ADR enables U.S. trade in foreign stock. Anthony Cragg, head of international equities at the Strong Fund, said the prospect of diminishing premiums in a volatile market made investing in South Korean ADRs a risky endeavor. "Premiums are a dangerous thing to play with at the moment," he said. "They can kind of disappear in your hands rather quickly. "You're not going to make money, that's for sure," he added. The Asian country has been imposing legislative measures to open its economy and resolve its huge debt crisis as part of the terms of a rescue package designed by the International Monetary Fund. One of them will eliminate restrictions of aggregate foreign ownership of locally listed stocks by April. Adopted last month, the measure has already risen the ceiling on ownership to 55 percent from 26 percent. As a result, investors and traders expect the ADRs to gradually lose their premiums. "This is a major step forward," said Thomas White, president of the Thomas White World Fund, a three-year-old fund with $50 million in assets. Larry Ioffredo, an assistant portfolio manager at Arnold & Bleichroeder, said his firm preferred to buy local shares than ADRs because the valuations were cheaper. "It makes no sense at all to pay the premiums when there are other ways to get exposure to the market," he said, explaining how his firm was able to buy stock on the local market in Seoul. U.S. institutional investors that are not registered in South Korea can only buy ADRs.