Depressed Stock Prices Chills Depositary Receipt Demand

Korean companies last year issued depositary receipts overseas less often than they did a year earlier, according to data released by the Bank of Korea on Tuesday.

The central bank said that seven local businesses, including KorAm Bank and Pohang Iron & Steel Co., issued $1.55 billion of global depositary receipts in 2000, compared with $6.65 billion during the previous year. There has been no overseas equity offering so far this year, it added. Depositary receipts are securities sold overseas that are actual shares in the issuer.

In addition, local corporations converted their overseas depositary receipts into 156 million domestic shares last year, down 21 percent from 198 million stocks in 1999, as share prices declined on the nation's stock market.

They switched 63.2 million shares listed on the local exchange into overseas depositary receipts in 2000, compared with 20.6 million shares a year earlier.

Thirty-three Korean firms have issued depositary receipts in overseas stock markets and 11 of the issuers allow the securities to be converted into company shares.

by Cheong Chul-gun