BUSINESSWEEK ONLINE : SEPTEMBER 25, 2000 ISSUE
INTERNATIONAL -- COVER STORY

Slammed into the Pavement (int'l edition)


For South Korea's cash-starved startups, the Kosdaq market, modeled on the U.S.'s Nasdaq, seemed like just the ticket when it was launched in 1996. Last year, investors couldn't get enough of its stocks. The index shot up 240% in 1999 and boasted a market cap of nearly $100 billion, making it bigger than the bourses in Thailand and the Philippines. At one point last year, Dacom Corp., a maker of telecom gear, sold at a richer multiple than America Online Inc.

This year has been a rude comeuppance. The Kosdaq is off 60% for the year. And some companies, such as Daum Communications, Serome Technology, and Haan Soft, are down 80% from their peaks.

The market's collapse stemmed in part from the global backlash against dot-com valuations that has mauled tech-heavy bourses from Asia to Europe to the U.S. Seoul's Kosdaq is also heavily influenced by individual investors and chain-smoking day traders who buy and sell at the whiff of a rumor.

Even though the insane multiples are gone, it's hard to see the Kosdaq gaining new ground before next year. When it does, investors will be less likely to leap before they look at Kosdaq's newest listings.

By Brian Bremner in Seoul

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