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Korea Asia Fund Ld (01HG)

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Friday 19 November, 1999

Korea Asia Fund Ld

Interim Results - 6 Months to 30 September 1999

Korea Asia Fund Limited
17 November 1999

The Company

The Korea Asia Fund Limited is a company incorporated in the Cayman Islands but
conducts itself in such a way as to be resident for tax purposes in the United
Kingdom in order to take advantage of exemptions from taxation on capital gains
both in Korea and in the United Kingdom. The Fund invests primarily in listed
securities in Korea in accordance with its licence granted by the Korean
Ministry of Finance and Economy. The Company's shares are listed on the London
Stock Exchange.

Registered Office

The Genesis Building, George Town
Grand Cayman, Cayman Islands
British West Indies

Directors

The Hon. Rupert Francis John Carington (Chairman)
Christopher Michael Bond
Roger David Corley
The Rt. Hon. The Earl of Cromer
Succ-Young Kim
Bryce Dryden McDonnell
Ho Young Park
Hyung Koo Yim
Eun Sang Yoo

Secretary

Christopher Michael Bond
35 Vine Street
London EC3N 2AA
England

Investment Manager

The Korea Asia Fund Management Co.,
Limited
12th Floor. Tower 1, HSBC Centre,
1 Sham Mong Road, Kowloon.
Hong Kong
Telephone: +(852) 2523 1313
Fax: +(852) 2288 8260

Company Secretarial Advisers

KPMG
Aquis Court, 31 Fishpool Street
St Albans
Hertfordshire
AL3 4RF England
Telephone: +44(0) 1727 733000
Fax: +44(0) 1727 733001

Brokers

Merrill Lynch International
20 Farringdon Road
London EC1M 3NH
England
Telephone:+ 44(0)171 867 2000
Fax:      + 44(0)171 772 2919

CHAIRMAN'S REVIEW

Performance

The company's net asset value (NAV) over the 6-month period of this report
outperformed the benchmark index KOSPI by a significant margin. The index
increased by 36.1% in US dollar terms while the company's NAV increased by
44.8%. Despite this good relative performance the discount to NAV increased from
19.68% at the fiscal year end to 21.05% over the period.

Corporate Developments

As reported in the last annual report your Board regularly reviews measures that
might enhance shareholder value and in particular assist in the reduction of the
discount in the share price to NAV and will implement them as appropriate.

On behalf of the shareholders, the Board would like to thank Mr. K. J. Gregory
who has resigned as a director of the company for his contribution over the last
4 years. The directors have invited Mr. B. McDonnell and Mr. S. Y. Kim to join
the board.

Outlook

The Korean economy recorded GDP growth of 7.3% in the first half of 1999 and the
consensus forecast is for GDP of 8.3% for the full year. This strong growth is
attributed to the rapid recovery in private consumption, facility investment and
exports. The current account surplus has grown significantly but despite strong
GDP growth the consumer price index rose only 0.8% year-on-year to September 30
indicating that inflationary pressures are still subdued. The high level of
foreign exchange reserves, the current account surplus and the expected
stability of the currency should assist the government in maintaining a loose
monetary policy whilst the financial markets remain concerned over the effects
of the financial problems of Daewoo.

Investment Policy 

During the first half of the company's financial year the weighting of equities
has been increased to reflect the favourable outlook of the Korean stockmarket.
The Board believes that there may be short term corrections in the market caused
by the financial problems at Daewoo as well as the high level of rights issues.
The longer term outlook remains positive due to the continuing de-leveraging and
cost reductions in the Korean corporate sector as well as the favourable effect
of the strong Japanese Yen for Korean exports. These factors should assist
corporate earnings growth and support the stock market.

Rupert Carington
Chairman

PERFORMANCE COMPARISONS

                        30 September    31 March   % change   30 September
                                1999        1999                      1998
                           Unaudited                             Unaudited
Assets
   Shareholders' funds       262,769     181.442     44.82%        91,005
   (USD'000)

   Number of shares 
    in issue              72,875,000  72,875,000               72,875,000
   Net asset value per share    3.61        2.49     44.98%          1.25
   (USD)

Share price
 Share price (USD)              2.85        2.00     42.50%          1.05
 Discount of share price to   -21.05%     -19.68%                  -16.00%
    net asset value per share

Benchmark
    KOSPI (USD)               687.42      504.92     36.14%        310.32

Total returns for the period:
     Return on net assets     45.98%       30.46%                  -26.89%

BALANCE SHEET
                              As at 30       As at 30        As at 31
                              September,     September,      March,
                                   1999           1998         1999
                                     US$            US$         US$
                              Unaudited      Unaudited    

Fixed assets
     Investments            259,596,838     78,746,689    175,395,394

Current assets
     Debtors                    221,777        233,344      1,333,125
     Cash at bank             5,017,296     12,387,961      6,176,213

                              5,239,073     12,621,305      7,509,338

Creditors: amounts falling due
within one year               2,066,782        362,497      1,462,949

Net current assets            3,172,291     12,258,808      6,046,389

Net assets                  262,769,129     91,005,497    181,441,783

Capital and reserves
     Called-up share capital    728,750        728,750        728,750
     Share premium account  197,547,000    197,547,000    197,547,000
     Other reserves
Capital reserve - realised   (9,029,258)    (8,078,738)   (18,379,885)
Capital reserve - unrealised 77,404,213    (95,377,636)     4,569,351
     Revenue reserve         (3,881,576)    (3,813,879)    (3,023,433)

Total shareholder funds     262,769,129     91,005,497    181,441,783

STATEMENT OF TOTAL RETURN

                                6 months                6 months         
                                ended                   ended           
                                30 Sept 1999            30 Sept 1998
                                                 
                     Revenue   Capital   Total    Revenue   Capital   Total 
              Note        US$       US$    US$        US$       US$     US$     
                               Unaudited                     Unaudited

Gains(losses) 
on investments          0    82,206,895 82,206,895  0 (42,032,542)(42,032,542)  

Exchange gains and 
losses              28,104     (21,406)      6,698 130,624 (159,111)  (28,487) 

Income             880,952           0     880,952 613,799       0    613,799   
 
Investment 
management      (1,370,604)          0 (1,370,604)(557,222)      0   (557,222)
fee   

Other expenses    (266,382)          0   (266,382)(362,814)      0   (362,814) 

Return on 
ordinary
activities 
before tax      (727,930)82,185,489 81,457,559(175,613)(42,191,653)(42,367,266) 
  
Tax on 
ordinary 
activities (1)  (130,213)        0    (130,213) (42,055)        0   (42,055)

Return on 
ordinary 
activities 
after tax 
for the 
financial 
year and 
attributable 
to equity 
shareholders 
transferred 
to/(from) 
reserves      (858,143) 82,185,489 81,327,346 (217,668)(42,191,653)(42,409,321) 
 
Return per
ordinary 
share  (2)    (0.0118)    1.1278     1.1160   (0.0030)  (0.5789)     (0.5819)

Net asset value 
Per ordinary share                   3.6058                            1.2488   

                                Year ended 31 March 1999
                           Revenue      Capital          Total
                              US$          US$             US$          
Gains(losses) 
on investments                  0       47,155,510   47,155,510  

Exchange gains and 
losses                    138,702          233,841      372,543

Income                  2,681,853                0    2,681,853  

Investment management   
   fee                 (4,358,671)               0   (4,358,671)

Other expenses           (567,768)               0     (567,768)

Return on ordinary
activities before tax     894,116       47,389,351   48,283,467   

Tax on 
ordinary 
activities (1)           (321,339)               0     (321,339)

Return on ordinary 
activities after tax 
for the financial 
year and attributable 
to equity shareholders 
transferred to/(from) 
reserves                  572,777       47,389,351   47,962,128
   
Return per ordinary 
share  (2)                 0.0078           0.6503       0.6581

Net asset value 
Per ordinary share                                       2.4898 

   
Notes:

(1) Taxation represents Korean withholding tax on dividends at 15% and at rates
varying between 10% and 15% on interest received.

(2) The calculation of return per ordinary share is based on the net revenue
loss after taxation of US$858,143 and capital gain of US$82,185,489 (1998:
revenue loss of US$217,668 and capital loss of US$42,191,653) and on the
outstanding number of 72,875,000 ordinary shares in issue.   

TEN LARGEST INVESTMENTS
As at 30 September. 1999

Company                                        Percentage of
                             Market Value     Shareholders'  Funds
                                 US$              %
     
Samsung Electronics             34,231,908     13.01
POSCO*                          22,764,660      8.65
SK Telecom*                     22,138,769      8.41
Samsung F & M Insurance         16,303,847      6.20
Korea Telecom*                  15,305,373      5.82
KEPC0                            9,873,068      3.75
Samsung Display Devices          8,025,079      3.05
Kookmin Bank*                    7,727,754      2.94
Daeduck Electronics              7,397,410      2.81
LG Info & Comm                   6,071,097      2.31

* Holdings include new shares and depository receipts.

SECTOR BREAKDOWN OF THE PORTFOLIO

CHART
                                        %
Sector                          Sep 99          Mar 99

Electronics                      27.83           23.23
Ranking & Other Financials       17.25           20.72
Telecommunications               15.57           12.75
Steel                             9.89            6.78
Chemicals                         7.99           10.19
Utility                           5.69            6.40
Food                              4.21            5.65
Transportation                    2.03            1.64
Construction                      0.95            2.38
Others                            8.59           10.26

                                100.00          100.00

                                                                                                                                                 

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