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More questions than answers in Seoul

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MOVES by South Korea to open its economy to increased foreign investment are not all they seem.

What the authorities described as 'significant' was, in fact, a symbol. What they referred to as 'momentous' was a mere token. Why are they being so two-faced? Over the past two weeks, two measures ostensibly designed to open the Korean market to more foreign money have been unveiled.

First came the announcement overseas fund managers are to be allowed to operate 100 per cent owned operations in Korea for the first time. Then came the notice that foreign companies are to be permitted to seek a listing on the Korean exchange.

The market liked the moves. Yesterday, South Korean share prices hit a record high for the year.

But brokers were confused by the market's performance. They agree the fundamentals are in place to justify solid share price appreciation over time, but chose to describe yesterday's mood as 'hyper'.

It was a prescient choice of word. Senior economists and Seoul-based representatives of international broking houses welcomed the recent liberalising moves, but warned their significance was muted.

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