| On August 3 the share price of Daesung Resources, a company in the normally underperforming mining sector on the Korean Stock Exchange (kse), stood at w171,000 ($209.82) about nine times its low for 1995. Daesung shares had been climbing furiously between July 23 and August 2, hitting the daily permissible upper limit every single trading day. And just three weeks later, they had slid 35% from their peak. The rush on the shares was prompted by rumours that the government would permit the coal company to turn its mine sites into casinos. By mid-August, though, it became clear that the rumours had been just that. Moreover, analysts began to refer to Daesung as a chakcheonju, literally a "strategy stock" strategy in this case being an imaginative tale spread in order to drive up share prices and hoodwink gullible investors. In other words, Daesung had been the object of an old-fashioned ramp. The Daesung caper is only the most recent indication that transparency is not one of the Korean stock market's strong points, in spite of highly publicized official promises to rid the market of unsavoury practices. In fact, on the eve of South Korea's hoped-for entry into the oecd, the Korean equity market still appears to maintain a high degree of tolerance for questionable standards of investor protection, unusual reporting practices by listed corporations, and capricious interference by bureaucrats. |