KOREA EUROPE FUND SEEN LIKELY TO BE SUCCESS
The 30 mln dlr closed-end Korea Europe
Fund to be listed in London early next month will likely prove
as successful as the New York-based 100 mln dlr Korea Fund,
according to most securities analysts polled by Reuters here.
    The paid-in capital of the Korea Fund was 60 mln dlrs when
it was listed on the New York Stock Exchange in September 1984
and increased to 100 mln dlrs in June last year.
    The fund's net assets totalled 154 mln dlrs at the end of
last year.
    "Its (Korea Fund) runaway success was mainly due to steep
price gains on the Korea Stock Exchange ...," said Park Sin-bom,
a director of Lucky Securities Co. "The Europe Fund is certain
to benefit from this booming but closed market."
    The South Korean stock market soared last year with the
composite index, a weighted average of 355 listed shares,
rising 68.9 pct. This week the index passed the 360 level for
the first time after starting the New Year on 264.82.
    Dealers have said prices would continue to gain this year
in view of good prospects for the economy and an expected
partial opening of the market to direct foreign investment.
    However, some analysts are concerned about potential risks
such as South Korea's unstable domestic politics and the lack
of market sophistication.
    Despite the doubts, the new fund is attracting offers in
London and shares are trading at a premium of 40 to 60 pct over
their 10 dlr issue price, said officials of Ssangyong
Investment Company, one co-lead managers.
    The offer is co-lead managed by Baring Brothers and Co Ltd
of Britain and underwritten by 44 international banks and
institutional investors, including eight South Korean
securities firms.
    A foreign securities analyst told Reuters the South Korean
securities firms underwiting the issue were "greedily asking for
high premiums" in reponse to big demand.
    The portfolio will be managed on the London Stock Exchange
by Korea Schroder Fund Management Ltd, a joint venture between
<Schroders Plc> of Britain and four South Korean securities
houses.
    At the moment, foreigners can only invest in the local
market indirectly through five locally-run trusts worth a total
of 140 mln dlrs, and the Korea Fund in New York.
    But the government is expected to announce guidelines for
direct outside investment on the market by October, when
foreigners holding convertible bonds issued by <Samsung
Electronics Co Ltd> will have the option to trade them for
shares.
    Samsung issued 20 mln dlrs worth of convertible bonds in
December 1985, the first of three South Korean firms so far to
take the step.
 REUTER
