The South Korean market plunged 2 per cent yesterday as one former president was sentenced to death, another received a 22-year prison sentence and some of the nation's most important businessmen were handed out jail terms. The Korea Composite Index tumbling 15.24 points, or 1.95 per cent, to 766.89, with some of the nation's most respected blue-chip companies - the chaebol - leading the way. Senior executives at five of the country's leading corporate giants received prison terms, while four more had their sentences suspended after being found guilty of bribing former presidents Chun Doo-hwan and Roh Tae-woo. Dong Ah group chairman Choi Won-suk was sentenced to 21/2 years. Daewoo group chairman Kim Woo-choong, Jinro group chairman Chang Jin-ho and Hanbo group honorary chairman Chung Tae-soo each received two-year sentences. Analysts and traders greeted the news with resignation. The market has suffered political fallout from the corruption scandal, student riots in Seoul and a doubling of the current account deficit in the past few months, all of which undermined market confidence. Keun Mo Lee, head of research at ING Barings, said: 'No one knows where the bottom is. They thought it was 870 points, and then they though it was 820, and now they think it is 780.' Henry Morris, head of research at Seoul-based Coryo Securities, said: 'There will be some fallout. This issue has not been on the front burner for a while, and now it will be taken up once more as a political football, which will not do any good.' Despite the apathy surrounding the latest batch of bad news, the severity of the businessmen's sentences rocked market watchers, who had expected the government to show leniency. 'This will create a highly adverse business climate. Companies are very dependent upon their senior leaders as most chaebol do not have a core management cadre overseeing business decisions,' Mr Morris said. Analysts expect the legacy of the political scandal to last until at least the end of the year, but are anticipating positive economic news in the first quarter of 1997, restoring faith in the market. 'The chaebol will find out that no one is indispensable,' Mr Morris said. He noted that good news could be expected on the current account deficit as imports slowed and exports were rendered more competitive by a falling won.
