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Foreign observers warn of Korea's crisis

Posted September. 19, 2000 16:08,   


The Korean stock market and its economy have attracted the spotlight of global investors.

There is a positive report by The Financial Times that the Gyeongui Line between Seoul and North Korea's Sinuiju, which was disconnected after the Korean War, is to be reconnected.

On the down side, more foreign press reports focused on the possible spread of Seoul's economic crisis, coming only three years since the outbreak of the foreign exchange crisis, to the rest of the world.

The Bloomberg News reported that the Korea Composite Stock Price Index crashed, the exchange rate soared to 1,131 won per U.S. dollar, and the three-year corporate bond yield rose to the 9% level. Bloomberg also quoted a Bank of America report saying that foreign companies were worried that Korea's restructuring of conglomerates and the financial sector wouldn't progress properly with Ford Motor's withdrawal from buying Daewoo Motor.

Also, Moody¡¯s Investors Service, which has dispatched a team to Korea to evaluate the nation¡¯s credit rating, rated the exchange bonds that the Korea Deposit Insurance Corp. will issue at Baa2. It is equivalent to Korea's sovereign rating, and it is the lowest level among investment grades. CBS Market Watch said that Moody's might not lift Korea's rating during its visit to Korea.

The Wall Street Journal reported that Ford didn't negotiate a price for its final offer to buy Daewoo Motor, adding that it was because of Daewoo's internal trouble. The paper quoted UBS Warberg analyst Saul Rubin as saying that most people think the winner in the takeover bid of Daewoo Motor would have been a loser and that it is unnecessary to acquire the large Korean automotive corporation, which has low brand awareness and among the worst financial structures.

Meanwhile, CBS Market Watch reported that Koreans got angry about Ford's abandoning of its bid to buy Daewoo Motor, noting that there could be an anti-Ford campaign in Korea.