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Asia Business: The Week in Review - 2003-12-29

A Chinese chemical company is taking over South Korea's fourth largest car maker, while retailers in Australia are enjoying a bumper Christmas shopping season.

An international ratings agency warned that the still unresolved dispute over North Korea's nuclear weapons programs could undermine South Korea's sovereign credit rating.

Moody's Investors Service says its outlook for South Korea's long-term foreign and local currency ratings will remain negative as long as geopolitical uncertainties persist.

The impasse started more than a year ago. Efforts by five nations, including South Korea, to organize fresh negotiations with Pyongyang on ending its nuclear program have so far not borne fruit.

In Australia, retailers cashed in on the Christmas holiday as shoppers spent an estimated $20 billion in the six weeks leading to December 25. This is about $2.5 billion more than the previous year.

Stan Moore, executive director of the Australian Retailers Association says a recent interest rate increase did not discourage shoppers. "I think retailers would have been pretty happy with the lead-up to Christmas with the sales," he says. "It wouldn't appear that the interest rate rises have had any significant impact on consumer spending this Christmas period."

China's Blue Star Group has signed an agreement with the creditors of Ssangyong Motors to buy South Korea's fourth largest car maker. The state-run chemical company will buy a controlling 49 percent stake, which reportedly could cost $500,000.

Ssangyong's creditors took it over in 1999 when its parent company collapsed because of the Asian financial crisis. The deal will be finalized in March.

In Hong Kong, China's central bank has selected the local unit of Bank of China as the clearing bank for all Chinese renminbi banking transactions in the territory. Starting January, Hong Kong banks will be able to provide deposit accounts, foreign exchange, remittance and credit card services in the Chinese currency.