Alliance Capital Management is betting on South Korea, despite the volatility that has plagued that nation's financial markets and the economies of other Asian countries.

Last week, New York-based Alliance bought a 20% equity stake in Hanwha Investment Trust Management Co., a money management boutique in Seoul.

Because of the market turbulence, Alliance paid 50% less for its position in the South Korean firm than it had planned when the deal was struck last August, said Young Yoon, an Alliance senior vice president.

Alliance's investment is a small one, representing a mere $4 million, Mr. Yoon said. But it's a step in the right direction in a nation that Alliance executives believe will recover from the current economic downdraft.

"I would rather look at the longer-term horizons, not day-to-day fluctuations," said Mr. Yoon. Alliance did examine the fundamentals affecting the nation's economy before finalizing the deal, he said.

The agreement initially will see Hanwha distributing five of Alliance's offshore funds to its clients in South Korea, but both firms eventually will create investment products that will be available to U.S. investors, he said. "Any kind of investment product which invests in South Korea, we will try to market in the U.S," Mr. Yoon said.

That includes eventually making those products available through banks, Mr. Yoon said. Alliance has selling agreements with "several hundred" banks, but focuses activities on the "25 largest leading national and regional institutions," an Alliance spokesman said. The firm's only South Korean portfolio, the $100 million Korean Investment Fund, is a closed-end fund and therefore is exchange listed, he said.

Hanwha Investment Management is a subsidiary of Hanwha Securities Co., the largest bond trading house in South Korea, which has an annual trading volume of $45 billion. Alliance has more than $217 billion in assets under management.

The partnership with Hanwha is not Alliance's first foray into Asia. Last September the firm bought a 50% stake in SunHung Kai Properties Ltd. in Hong Kong, in a venture called New-Alliance Asset Management. It focuses on investing in Chinese, Taiwanese, and Hong Kong securities, the spokesman said.

Through the SunHung partnership, Alliance has a portfolio called the Alliance Greater China 1997 Fund, which has less than $50 million under management and is available through banks, he said.

"There hasn't been a tremendous amount of demand for China investments yet because of the troubles in Asia," the spokesman said. Nevertheless, during the last quarter of 1997, Alliance's China fund fared better than most others that posted average returns of negative 30%, compared with Alliance's return of negative 27%.

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