FOREIGN sentiment on the South Korean market is not overly negative despite recent price falls, according to Thornton Management Asia in a report to clients. The report said the announcement of the real name financial system two weeks ago came as a shock to the South Korean stock market but noted that volume selling in quality securities has not yet occured. On August 13, the Composite Index dipped 32.37 points to 693.57, down 4.5 per cent, during a two-hour trading period which saw extremely low volume. Saying the implementation was crucial to the anti-corruption campaign, the report said it would have a very good impact on South Korean companies in the long-term, as a result of improved transparency. However, the report agreed that the stock market would have to suffer in the short-term. US BOND prices have jumped in the last week, so Hong Kong investors holding both short and long-term US bonds should take note. According to Investors Chronicle, the rise was triggered by the Senate approval of President Clinton's budget deficit reduction package. Bonds may have discounted budget cuts long ago, but prices still edged higher, and yiel30-year bond fell to 6.45 per cent - the lowest since it was launched 16 years ago. The magazine said that lopping $496 billion off the budget deficit over the next five years should reduce the supply of bonds issued, making those around now more valuable. Shorter term, the package could shave half per cent off economic growth next year. If this happens, interest rates increases by the Federal Reserve may be delayed. But the mazagine said it would need more good news to send bond prices higher. Long bonds (25-30 years) are vulnerable after their extensive rally - particularly to any hint of inflation.