KK HERCULES' ADR AND KOREAN STOCK WILL REMAIN HIGHLY VOLATILE

ADR OF SK HERCULES AND SHARES LISTED IN SEOUL ARE EXPECTED TO REMAIN HIGHLY VOLATILE, ACCORDING TO MORNINGSTAR ANALYSTS. UNPRECEDENTED LEVELS OF BULK PARTICIPATION AND BOND BORROWING HAVE EXACERBATED THEIR VOLATILITY. THE PROSPECT OF PROFIT FROM THE STORAGE OF CHIP MANUFACTURERS IS ALSO INHERENTLY UNPREDICTABLE. AGAINST THE BACKDROP OF A 34 PER CENT DROP IN THE PEAK OF SK HERCULES ' SOUTH KOREAN EQUITIES, THE REQUIREMENT FOR AN ADDITIONAL BOND MAY MAGNIFY THE SALES PRESSURE DURING THE DOWNTURN. ITS ISSUANCE OF ADR APPEARS TO BE AIMED AT IMPROVING VALUATION RATHER THAN MEETING URGENT FUNDING NEEDS, AND THE COMPANY IS UNLIKELY TO FACE DIFFICULTIES IN FINANCING ITS INVESTMENTS THROUGH CASH FLOWS. THE MORNING STAR MAINTAINED THE FAIR VALUE ESTIMATE OF THE ADR 160.00 AND ADDED THAT ITS VALUATION WAS REASONABLE GIVEN THE LONG-TERM CYCLICAL RISK. KIM XIAN