I'm 99% sure that Mathews and the other mutual funds can't
buy the Korean-only shares. So they buy the foreign tranche
shares. (Just like the closed-ends.) If they were to sell these
shares, they'd sell to the highest bidder, and so they
correctly use the latest market prices prevailing for the foreign
tranche shares when they calculate (or estimate) NAV.
Since they are an open-end mutual fund, you always buy and sell at NAV. There are never discounts or premiums.
Thanks. I used to receive Morningstar's CEF publication until it was discontinued so I'll look up what you're referring to.
But could not MAKOX' NAV also be interpreted two ways, depending on whether they own shares that are available to foreigners or those that are available only to Koreans?
I'm sure they would calculate NAV based on latest price of the particular type of shares, but their may be an inherent premium in MAKOX if they own lots of foreigner-type shares.
Is this thinking correct, do you think?
Morningstar used to publish reports on closed-end
mutual funds. The particular one I found on KF was
from a library and was about a year old. It said that
in computing NAV, KF used the foreign tranche
prices for some shares, and the Korean prices for others.
This is of course very confusing. I'd like them to calculate
NAV using the prices they could get if they sold a marginal
number of shares that day. I do know that the reported
premiums/discounts for these Korean closed-end mutual funds have varied alot over time. My very amateur guess is that
as the market opens more fully to foreigners, and there are more
investment options, the premiums will disappear and Korean
funds will trade at discounts, much as closed-ends for most
countries do. This could happen in a month or in a year.
Of course, MAKOX (Mathews Korea) is an traditional open-end
fund, and therefore doesn't suffer from these complications.
You mention that Morningstar describes the calculation of premiums on the Korea Closed End Funds. I have searched their website but have found nothing.
Would very much appreciate additional reference in this regard.
thank you very much.
Is this a good thing?
SEOUL, Feb 11 (Reuters) - South Korea's presidential transitional team said on Wednesday it had proposed Pohang Iron & Steel Co (05490.KS) and Korea Telecom be privatised to improve the country's international competitiveness.
The team also proposed overseas share sales for three other state firms.
The team said in a statement overseas share sales of three other state-run companies, including Korea Tobacco & Ginseng Corp, Korea Gas Corp, Korea Heavy Industries & Construction Co Ltd, were also proposed.
``A brief proposal on privatisation was reported to president-elect Kim Dae-jung on Tuesday,'' said a transitional team spokesman. ``Kim has not yet made any comment on the proposal,'' he said, adding the proposal was sketchy and more details would be announced later.
The statement said POSCO and Korea Telecom were already market-oriented and that a third-party takeover and a stake sale to foreigners was possible.
Foreign investors already are allowed to hold up to 25 percent of POSCO, but Korea Telecom is unlisted and no foreign ownership is allowed.
The statement said the overseas sale of state firms' shares was necessary to secure foreign currency funds and help overcome the country's economic crisis.
-- POSSIBLE LOST DATA --
\000 The statement said South Korea had been trying to privatise
68 state-run companies since 1993, but added only 16 of the total had actually landed in the private sector, while five had been merged with other state firms.
It said privatisation was slow because of the depressed stock market, objections from vested interest groups and government ambivalence.
OK Robert you win I'm outta there! I bought at 7 3/4 and just sold at 9 5/16. That is about 20% in three weeks. I'm no pig so I'm out. The point here is with this much short selling the ADR can't go down. If the short come back and the ADR drops back into the 7 range I'll be back for some more.
If you could buy a share of SK Tech. in Korea and issue 90 ADRs in N.Y. You could retire on this one deal but the stock is not the ADR. That is the rub.
I don't think you are evil because you short sell a stock. I do it myself from time to time. That's what makes a market; Differences of opinion.
By the way I don't use E-Trade, but I understand it's really not a bad deal.
SKM is an ADR that represents 1/90 of a common share. Fact.
The common stock closed at 575,000 won. Fact.
The exchange is 1575 won to the dollar. Fact.
The premium is over $5 a share. Fact.
The Korean market is open to foreign investors. Fact.
If you buy this stock in New York instead of Korea, you have a strong desire to pay more for things and secretly would like to lose money. Emotion.
You think that people who shorts stocks are evil and would like to see them lose money, even if you lose money too. Emotion.
You wouldn't buy this stock in the Korean market because it is too logical and you can't use E-trade. Emotion.
That was exactly my point in Msg. 238. I bought the ADR 2 1/2 weeks ago at 7 3/4. There are a lot of people out there that
sold these ADR's short. They got caught up in the asian flu. The Won fell like a stone and the ones that got short early made a
lot of money. But too many held on too long and tried to squeeze out that last buck. Well I don'T Think Korea is going to
default. And SK Tech. is basicly sound. The shorts missed the bottom and every day some of that short money slips away. They want out
of there shorts more than we want out of our longs so the price goes up. Robert has some interesting thing to say about SK rel.
to value in the Korean market. But, I think we are dealing more with emotion here than fact.They need to get out and we got the
I own some of this stock
would like some comments about the short
interest in this stock
as reported on www.bigcharts.com--short interest
there is lot ot short interest (options) if this stock
continues up above 10 - might we see a large
surge in the price as the shorts get caught?