Government reforms cheer South Korean markets

South Korea's stock market and currency continued their cautious recovery yesterday, as confidence grew in the government's resolve to carry out the economic reforms agreed as part of the rescue package from the International Monetary Fund (IMF).

Share prices plummeted last week, after the leading candidate in tomorrow's presidential election, Kim Dae Jung, said that he would renegotiate stringent conditions attached by the IMF to its $57bn bail-out. He reversed his position over the weekend, and since then the Korean government has taken a series of market opening and liberalisation measures.

The Seoul stock exchange's composite index rose 4.78 per cent to 404.26 yesterday, despite news that a large pharmaceutical company, Shin Poong, had been suspended from trading after it defaulted on repayments.

The Korean won closed at 1,425 to the dollar compared with 1,564 on Monday, when the government lifted the trading band and allowed the currency to float freely.

The most immediate causes of market optimism were a series of financial reform measures announced by the government in compliance with the IMF agreement.