UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/ Filed by a Party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss.240.14a-12

KOREA EQUITY FUND, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:

KOREA EQUITY FUND, INC.
Two World Financial Center, Building B
New York, New York 10281

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NOTICE OF 2006 ANNUAL MEETING OF SHAREHOLDERS
August 17, 2006

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TO THE SHAREHOLDERS OF
KOREA EQUITY FUND, INC.:

Notice is hereby given that the 2006 Annual Meeting of Shareholders (the
"Meeting") of Korea Equity Fund, Inc., a Maryland corporation (the "Fund"),
will be held at the offices of Nomura Securities International, Inc., Two
World Financial Center, Building B, New York, New York, on Thursday, August
17, 2006, at 10:30 A.M. to consider and vote on the following matters:

(1) The election of two Directors to serve as Class II Directors, each to
serve for a term to expire in 2008 and until their successors are duly elected
and qualify;

(2) The election of two Directors to serve as Class III Directors, each
to serve for a term to expire in 2009 and until their successors are duly
elected and qualify; and

(3) The transaction of such other business as may properly come before
the Meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on June 30, 2006
as the Record Date for the determination of shareholders entitled to notice of
and to vote at the Meeting or any adjournment or postponement thereof.

You are cordially invited to attend the Meeting. Shareholders who do not
expect to attend the Meeting in person are requested to complete, date and
sign the enclosed form of proxy and return it promptly in the envelope
provided for that purpose. The enclosed proxy is being solicited on behalf of
the Board of Directors of the Fund.

By Order of the Board of Directors

NEIL A. DANIELE
Secretary

New York, New York
Dated: July 12, 2006

The enclosed proxy card may be executed by holders of record as of the Record
Date. You are urged to complete, sign and date the enclosed proxy card and
return it in the enclosed envelope whether or not you plan to attend the
Meeting.

[This page intentionally left blank]

PROXY STATEMENT

KOREA EQUITY FUND, INC.
Two World Financial Center, Building B
New York, New York 10281

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2006 ANNUAL MEETING OF SHAREHOLDERS
August 17, 2006

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INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Korea Equity Fund, Inc., a
Maryland corporation (the "Fund"), to be voted at the 2006 Annual Meeting of
Shareholders of the Fund (the "Meeting") to be held at the offices of Nomura
Securities International, Inc., Two World Financial Center, Building B, New
York, New York, on Thursday, August 17, 2006, at 10:30 A.M. The approximate
mailing date of this Proxy Statement is July 17, 2006.

All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, proxies
will be voted FOR the election of two Class II Directors (Proposal 1), and FOR
the election of two Class III Directors (Proposal 2).

Any proxy may be revoked at any time prior to the exercise thereof by
giving written notice to the Secretary of the Fund at the Fund's address
indicated above, by submitting a subsequently executed proxy or by voting in
person at the Meeting.

Only shareholders can attend the Meeting and any adjournment or
postponement thereof. To gain admittance, if you are a shareholder of record,
you must bring a form of personal identification to the Meeting, where your
name will be verified against our shareholder list. If a broker or other
nominee holds your shares and you plan to attend the Meeting, you should bring
a recent brokerage statement showing your ownership of the shares, as well as
a form of personal identification.

The Board of Directors has fixed the close of business on June 30, 2006,
as the Record Date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournment or postponement thereof.
Shareholders on the Record Date will be entitled to one vote for each share
held, with no shares having cumulative voting rights. As of June 30, 2006, the
Fund had outstanding 8,409,000 shares of Common Stock, par value $0.10 per
share.

The Board of Directors of the Fund knows of no business other than the
election of two Class II Directors and the election of two Class III Directors
to be considered at the meeting. If any other matter is properly presented, it
is the intention of the persons named in the enclosed proxy to vote in
accordance with their best judgment.

The Fund sends annual and semi-annual reports to shareholders. The Fund
will furnish, without charge, a copy of its most recent annual and semi-annual
report

succeeding such annual report to shareholders upon request to the Fund at Two
World Financial Center, Building B, New York, New York 10281 (or call
1-800-833-0018).

ELECTION OF DIRECTORS

The Fund's Board of Directors is divided into three classes of Directors
serving staggered three-year terms and until their successors are elected and
qualified. Each year the term of office of one class will expire. The term of
office for Directors in Class I expires at the Annual Meeting of Shareholders
to be held in 2007 and for Directors in Class III at the Meeting and when
their successors are duly elected and qualify. The term of office for
Directors in Class II expired at the Annual Meeting of Shareholders held in
2005 and when their successors are duly elected and qualify. Each of the two
Class II Director nominees proposed in this Proxy Statement for election to
the Board of Directors is currently a Director of the Fund. The other current
Directors consists of two Class I Directors and two Class III Directors. The
two Class III Directors are nominees for election at the Meeting and the two
Class I Directors will continue in office after the Meeting.

Should any vacancy occur on the Board of Directors, the remaining
Directors would be able to fill such vacancy by the affirmative vote of a
majority of the remaining Directors in office, even if the remaining Directors
do not constitute a quorum, subject to any applicable requirements of the
Investment Company Act of 1940, as amended (the "Investment Company Act"). Any
Director elected by the Board to fill a vacancy would hold office until the
remainder of the full term of the class of Directors in which the vacancy
occurred and until a successor is elected and qualifies. If the size of the
Board is increased, additional Directors will be apportioned among the three
classes to make all classes as nearly equal as possible.

PROPOSAL 1. NOMINEES PROPOSED FOR ELECTION AS CLASS II DIRECTORS

Messrs. Chor Weng Tan and Hiroshi Terasaki have been nominated to serve
as Class II Directors for a term expiring at the Annual Meeting of
Shareholders to be held in 2008 and until their successors are duly elected
and qualify. The nominees have indicated an intention to serve if elected and
have consented to be named in this Proxy Statement.

Mr. Tan has served as a Director of the Fund since it commenced
operations in 1993. Mr. Terasaki has served as a Director of the Fund since he
was appointed to that position by the Board on June 20, 2005 to fill a
vacancy. Messrs. Tan and Terasaki were nominated for election as directors at
the 2005 Annual Meeting of Shareholders of the Fund, which was held on August
10, 2005. At that meeting, Messrs. Tan and Terasaki received a majority of the
votes cast for the election of directors but did not receive the requisite
votes representing a majority of the outstanding shares of the Fund.
Accordingly, they were not elected to new three-year terms at that meeting
but, in accordance with the Fund's Bylaws and applicable state law, continue
to serve as directors of the Fund until their successors are elected and
qualify.

Unless authority is withheld in the proxy or properly revoked, it is the
intention of the persons named in the accompanying form of proxy to vote each
proxy for the election of the following Class II Director nominees: Chor Weng
Tan and Hiroshi Terasaki.

The Board of Directors knows of no reason why either of the Class II
Director nominees will be unable to serve, but in the event of any such
unavailability, the proxies received will be

voted for such substitute nominee(s) as the Board of Directors may recommend.
Mr. Tan is not an "interested person" of the Fund within the meaning of the
Investment Company Act. It is currently expected that any such substitute
nominee for Mr. Tan will not be an "interested person." Mr. Terasaki is an
"interested person" of the Fund within the meaning of the Investment Company
Act as a result of his service with Nomura Asset Management Co., Ltd. ("NAM")
and its affiliates.

The following tables contain information about the nominees for election
as Class II Directors.

Interested Director

Biographical and other information relating to the Class II Director
nominee who is an "interested person," as defined in the Investment Company
Act, of the Fund is set out below.

Term of Number of Other Public
Position(s) Office and Funds in the Directorships
Held with Length of Principal Occupation(s) Fund Complex Held by the
Name, Address and Age the Fund Time Served* During Past Five Years Overseen*** Director
- -------------------------- ------------- -------------- ---------------------------------------- ------------- -------------
Class II (Nominee for a Term Expiring at the Annual Meeting of Shareholders to be held in 2008)

Hiroshi Terasaki (50)** Class II Director since Managing Director and Chief Executive 2 registered None
c/o Nomura Asset Management Director June 2005 Officer, Nomura Asset Management U.K. investment
U.S.A. Inc. Limited from 2003 to 2005; General companies
Two World Financial Manager, Fixed Income Investment consisting of 2
Center, Building B Department of NAM from 2000 to 2003. portfolios
New York
New York 10281

- -----------------------
* Mr. Terasaki, if elected, will serve as a Class II Director for a term
expiring at the Annual Meeting of Shareholders to be held in 2008 and
until his successor is elected and qualified or until his earlier
resignation or removal.

** Mr. Terasaki is an "interested person," as defined in the Investment
Company Act, of the Fund based on his positions with NAM and its
affiliates. Mr. Terasaki is a director of Japan Smaller Capitalization
Fund, Inc. for which Nomura Asset Management U.S.A. Inc. ("NAM-U.S.A.")
acts as manager and for which NAM acts as investment adviser.

*** In addition to the Fund, the "Fund Complex" includes Japan Smaller
Capitalization Fund, Inc.

Non-Interested Director

Biographical and other information relating to the Class II Director
nominee who is not an "interested person," as defined in the Investment
Company Act, of the Fund is set out below.

Chor Weng Tan (70)** Class II Director since Retired since 2004; Managing Director 2 registered None
142 West End Avenue Director 1993 for Education, The American Society investment
Apartment 19R of Mechanical Engineers from 1991 to companies
New York 10023 2004. consisting of 2
portfolios

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* Mr. Tan, if elected, will serve as a Class II Director for a term
expiring at the Annual Meeting of Shareholders to be held in 2008 and
until his successor is elected and qualified or until his earlier
resignation or removal.

** Mr. Tan is also a director of Japan Smaller Capitalization Fund, Inc.
for which NAM-U.S.A. acts as manager and NAM acts as investment adviser,
and is a member of the Audit and Nominating Committees of Japan Smaller
Capitalization Fund, Inc. and a member of the Audit and Nominating
Committees of the Fund.

*** In addition to the Fund, the "Fund Complex" includes Japan Smaller
Capitalization Fund, Inc.

PROPOSAL 2. NOMINEES PROPOSED FOR ELECTION AS CLASS III DIRECTORS

Messrs. Rodney A. Buck and James E. Hillman have been nominated to serve
as Class III Directors for a three-year term to expire at the Annual Meeting
of Shareholders to be held in 2009 and until their successors are duly elected
and qualify. The nominees have indicated an intention to serve if elected and
have consented to be named in this Proxy Statement.

Messrs. Buck and Hillman have been nominated for election as Directors by
the Nominating Committee of the Board of Directors. As described below, this
Committee nominated Messrs. Buck and Hillman after the two current Class III
Directors, Messrs. William K. Grollman and Arthur R. Taylor, advised the Board
of Directors that they did not wish to stand for re-election.

Unless authority is withheld in the proxy or properly revoked, it is the
intention of the persons named in the accompanying form of proxy to vote each
proxy for the election of the following Class III Director nominees: Rodney A.
Buck and James E. Hillman.

The Board of Directors knows of no reason why either of the Class III
Director nominees will be unable to serve, but in the event of any such
unavailability, the proxies received will be voted for such substitute
nominee(s) as the Board of Directors may recommend. Each of the Class III
Director nominees is not an "interested person" of the Fund within the meaning
of the Investment Company Act. It is currently expected that any such
substitute nominee for each of them will not be an "interested person."

The following table contains information about the nominees for election
as Class III Directors.

Non-Interested Directors

Each of the Class III Director nominees is not an "interested person," as
defined in the Investment Company Act, of the Fund. Biographical and other
information relating to the Class III Director nominees is set out below.

Term of Number of Other Public
Position(s) Office and Funds in the Directorships
Held with Length of Principal Occupation(s) Fund Complex Held by the
Name, Address and Age the Fund Time Served* During Past Five Years Overseen** Director
- -------------------------- ------------- -------------- ---------------------------------------- ------------- -------------
Class II (Nominees for a Term Expiring at the Annual Meeting of Shareholders to be held in 2009)

Rodney A. Buck (58) __ __ Owner, Buck Capital Management None None
1857 West County Road (private investment management
Calais firm) since 2005; Executive
Vermont 05648 Vice President and Chief
Investment Officer, National
Life Group (insurance holding
company) from 2000 to 2005;
Chief Executive Officer;
Sentinel Advisors Company
(investment adviser) from 1996
to 2005.

James E. Hillman (49) __ __ Owner, James E. Hillman CPA None Citigroup
59 Westminster Road (consulting firm) since 2006; Alternative
Lynbrook Director, Citigroup Alternative Investments
New York 11563 Investments Trust Trust
(registered investment company)
since 2006; Managing Director,
The Bank of New York, Inc. from
1999 to 2006; Director, BNY
Hamilton Funds, PLC (offshore
investment company) from 1999 to
2005; Director, BNY Fund Management
(Cayman) Ltd. from 1999 to 2006.

- -----------------------
* If elected by the shareholders and qualify, each Class III Director
nominee will serve for a three-year term expiring at the Annual Meeting
of Shareholders to be held in 2009 and until his successor is elected
and qualified or until his earlier resignation or removal.

** In addition to the Fund, the "Fund Complex" includes Japan Smaller
Capitalization Fund, Inc.

INFORMATION REGARDING OTHER DIRECTORS

The following table contains information about Class I Directors whose terms
will continue after the Meeting.

Class I Directors

Non-Interested Directors

Each of the Class I Directors is not an "interested person," as defined
in the Investment Company Act, of the Fund. Biographical and other information
relating to the Class I Directors is set out below.

Term of Number of Other Public
Position(s) Office and Funds in the Directorships
Held with Length of Principal Occupation(s) Fund Complex Held by the
Name, Address and Age the Fund Time Served* During Past Five Years Overseen*** Director
- -------------------------- ------------- -------------- ---------------------------------------- ------------- -------------
Class I (Term Expiring at the Annual Meeting of Shareholders to be held in 2007)

William G. Barker, Class I Director Retired. 2 registered None
Jr.** (73) Director since 1993 investment
111 Parsonage Road companies
Greenwich consisting of
Connecticut 06830 2 portfolios

John F. Wallace (77)** Class I Director Retired since 2000; Vice President 2 registered None
17 Rhoda Street Director since 1993 of the Fund from 1997 to 2000 and investment
West Hempstead Secretary and Treasurer of the Fund companies
New York 11552 from 1993 to 1997; Senior Vice consisting of
President of NAM-U.S.A. from 1981 2 portfolios
to 2000, Secretary from 1976 to 2000,

Treasurer from 1984 to 2000 and
Director from 1986 to 2000.

- --------------------
* Each Class I Director serves for a three-year term expiring at the
Annual Meeting of Shareholders to be held in 2007 and until his
successor is elected and qualified or until his earlier resignation or
removal.

** Each Class I Director is also a director of Japan Smaller Capitalization
Fund, Inc. for which NAM-U.S.A. acts as manager and NAM acts as
investment adviser, and is a member of the Audit and Nominating
Committees of Japan Smaller Capitalization Fund, Inc. and a member of
the Audit and Nominating Committees of the Fund.

*** In addition to the Fund, the "Fund Complex" includes Japan Smaller
Capitalization Fund, Inc.

ADDITIONAL INFORMATION CONCERNING DIRECTORS

Committees and Directors' Meetings. The Board of Directors has a standing
Audit Committee and a standing Nominating Committee, each of which consists of
the Directors who are not "interested persons" of the Fund within the meaning
of the Investment Company Act and are "independent" as defined in the New York
Stock Exchange listing standards. The principal responsibilities of the Audit
Committee and the Nominating Committee are described below. The Fund has no
standing Compensation Committee. The non-interested Directors have retained
independent legal counsel to assist them in connection with their duties.

During the fiscal year ended October 31, 2005, the Board of Directors
held 15 meetings, the Audit Committee held two meetings and the Nominating
Committee held two meetings. Each incumbent Director attended at least 75% of
the aggregate number of meetings of the Board of Directors held during the
period for which he served and, if a member, of the aggregate number of
meetings of the Audit and Nominating Committees held during the period for
which he served.

Report of the Audit Committee. The following is a report by the Fund's
Audit Committee regarding the responsibilities and functions of the Audit
Committee.

Pursuant to the Audit Committee Charter adopted by the Fund's Board of
Directors on August 6, 2003, the Audit Committee's principal responsibilities
are to: (i) select and oversee the Fund's independent accountants; (ii) review
with the independent accountants the scope, performance and anticipated cost
of their audit; (iii) discuss with the independent accountants certain matters
relating to the Fund's financial statements, including any adjustment to such
financial statements recommended by such independent accountants, or any other
results of any audit; (iv) ensure that the independent accountants submit on a
periodic basis a formal written statement as to their independence, discuss
with the independent accountants any relationships or services disclosed in
the statement that may impact the objectivity and independence of the Fund's
independent accountants and recommend that the Board take appropriate action
in response to this statement to satisfy itself of the independent
accountants' independence; and (v) consider the comments of the independent
accountants and management's responses thereto with respect to the quality and
adequacy of the Fund's accounting and financial reporting policies and
practices and internal controls. A copy of the Audit Committee Charter was
attached as Exhibit I to the Fund's 2004 Proxy Statement.

The Audit Committee has received written disclosures and the letter
required by Independence Standards Board Standard No. 1 from Ernst & Young LLP
("Ernst & Young"), the Fund's independent accountants, and discussed with
Ernst & Young certain matters required to

be discussed by Statement on Auditing Standards No. 61. The Audit Committee
has considered whether the provision of non-audit services by Ernst & Young is
compatible with maintaining the independence of those accountants. At its
meeting held December 14, 2005, the Audit Committee reviewed and discussed the
audit of the Fund's financial statements with Fund management and Ernst &
Young. The Audit Committee discussed with Ernst & Young their independence and
considered whether the provision of services by Ernst & Young to the Fund and
to NAM-U.S.A. and its affiliates was compatible with maintaining Ernst &
Young's independence. Based upon these reviews and discussions, the Audit
Committee recommended to the Board of Directors that the Fund's audited
financial statements be included in the Fund's Annual Report to shareholders
for the fiscal year ended October 31, 2005.

The Audit Committee's Charter for the Fund requires the Audit Committee
(a) to pre-approve all auditing services to be provided to the Fund by the
Fund's independent accountants; (b) to pre-approve all non-audit services,
including tax services, to be provided to the Fund by the Fund's independent
accountants in accordance with the Securities Exchange Act of 1934, as amended
(the "1934 Act"); provided, however, that the pre-approval requirement with
respect to the provision of non-audit services to the Fund by the Fund's
independent accountants may be waived by the Audit Committee under the
circumstances described in the 1934 Act and (c) to pre-approve non-audit
services to be provided to the Fund's investment adviser (and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the Fund) if the engagement relates directly
to the operations and financial reporting of the Fund.

Submitted by the Audit Committee of the
Board of Directors of the Fund

William G. Barker, Jr.
William K. Grollman
Chor Weng Tan
Arthur R. Taylor
John F. Wallace

Nominating Committee; Consideration of Potential Director Nominees. The
principal purpose of the Nominating Committee is to select and nominate the
independent (i.e., non-interested) Directors of the Fund. It evaluates
candidates' qualifications for Board membership and, with respect to nominees
for positions as independent directors, their independence from the Fund's
manager and its affiliates and other principal service providers. The
Committee periodically reviews director compensation and will recommend any
appropriate changes to the Board as a group. This Committee also reviews and
may make recommendations to the Board relating to those issues that pertain to
the effectiveness of the Board in carrying out its responsibilities in
governing the Fund and overseeing the management of the Fund.

The Nominating Committee will consider potential director candidates
recommended by Fund shareholders provided that the proposed candidates satisfy
the director qualification requirements provided in the Nominating Committee's
Charter; are not "interested persons" of the Fund or the Fund's investment
adviser within the meaning of the Investment Company Act; and are
"independent" as defined in the New York Stock Exchange listing standards. The
Committee has determined that potential director candidates recommended by
Fund shareholders must satisfy the Securities and Exchange Commission's
("SEC") nominee requirements found in

Regulation 14A of the 1934 Act. A copy of the Nominating Committee Charter was
attached as Exhibit II to the Fund's 2004 Proxy Statement.

Shareholders recommending potential director candidates must substantiate
compliance with these requirements at the time of submitting their proposed
director candidate to the attention of the Fund's Secretary. Notice to the
Fund's Secretary should be provided in accordance with the deadline specified
in the Fund's Bylaws and include the information required by the Fund's
Bylaws.

The Nominating Committee identifies prospective candidates from any
reasonable source and has the ability to engage third-party services for the
identification and evaluation of potential nominees. Generally, the Committee
meets annually to identify and evaluate nominees for Director and make its
recommendations to the Board. The Committee may meet more frequently if
vacancies on the Board occur during a given year. In identifying and
evaluating a potential nominee to serve as an independent Director of the
Fund, the Nominating Committee will consider, among other factors: (i) whether
the individual has any material relationships that could create any appearance
of impropriety with respect to or a lack of independence from NAM-U.S.A. or
any of its affiliates; (ii) whether the individual has the integrity,
independence of mind and personal qualities to fulfill the fiduciary duties of
an independent Director of the Fund and to protect the interests of Fund
shareholders; (iii) the individual's corporate or other business experience in
significant positions which demonstrate sound business judgment; (iv) whether
the individual has financial and accounting experience; (v) the individual's
ability to attend at least four regular meetings a year and (vi) whether the
individual can add to the balance of experience of the present independent
Directors. The standard of the Nominating Committee is to treat all equally
qualified nominees in the same manner.

As indicated above, Messrs. William K. Grollman and Arthur R. Taylor, the
current Class III Directors, advised the Board of Directors that they did not
wish to stand for re-election as Directors. In accordance with its Charter,
the Nominating Committee met and considered recommendations for candidates.
The Nominating Committee has nominated Messrs. Rodney A. Buck and James E.
Hillman for election as Class III Directors. Mr. Buck was initially
recommended to the Nominating Committee by the Fund's counsel and Mr. Hillman
was initially recommended to the Nominating Committee by an independent
Director. No nominee recommendation was received from shareholders. The
Nominating Committee may modify its policies and procedures for director
nominees and recommendations from time to time in response to changes in the
Fund's needs and circumstances, and as applicable legal or listing standards
change.

Communications with the Board of Directors. Shareholders may send written
communications to the Fund's Board of Directors or to an individual Director
by mailing such correspondence to the Secretary of the Fund (addressed to Two
World Financial Center, Building B, New York, New York 10281). Such
communications must be signed by the shareholder and identify the class and
number of shares held by the shareholder. Properly submitted shareholder
communications will, as appropriate, be forwarded to the entire Board or to
the individual Director. Any shareholder proposal submitted pursuant to Rule
14a-8 under the 1934 Act, must continue to meet all the requirements of Rule
14a-8. See "Additional Information -- Proposals of Shareholders" below.

Director Attendance at Shareholder Meetings. The Fund has no formal
policy regarding director attendance at shareholder meetings. Each member of
the Board of Directors then in office was present at the Fund's 2005 annual
meeting of shareholders.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the 1934 Act requires the officers and directors of the Fund
and persons who own more than 10% of a registered class of the Fund's equity
securities to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the SEC, the New York Stock Exchange and the Boston Stock Exchange.
Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish the Fund with copies of all Forms 3, 4 and 5 that they
file.

Based solely on the Fund's review of the copies of such forms, and
amendments thereto, furnished to it during or with respect to its most recent
fiscal year, and written representations from certain reporting persons that
they were not required to file Form 5 with respect to the most recent fiscal
year, the Fund believes that all of its officers, directors, greater than 10%
beneficial owners and other persons subject to Section 16 of the 1934 Act due
to the requirements of Section 30 of the Investment Company Act (i.e., any
advisory board member, investment adviser or affiliated person of the Fund's
investment adviser), have complied with all filing requirements applicable to
them with respect to transactions during the Fund's most recent fiscal year.
However, Hiroshi Terasaki, the President and Director of the Fund, Keiko Tani,
the Vice President of the Fund, and Eric Poh, the portfolio manager of the
Fund, filed Forms 3 subsequent to their due dates.

Interested Persons. The Fund currently treats one Class II Director
nominee, Mr. Terasaki, as an "interested person" of the Fund within the
meaning of Section 2(a)(19) of the Investment Company Act based on his
positions with NAM and its affiliates.

Compensation of Directors. NAM-U.S.A. pays all compensation of all
Directors of the Fund who are affiliated with NAM-U.S.A. or any of its
affiliates. The Fund pays to each Director not affiliated with NAM-U.S.A. or
any of its affiliates an annual fee of $10,000 plus $1,000 per Board or
committee meeting attended, together with such Director's actual out-of-pocket
expenses relating to attendance at meetings. Mr. Barker, who has been
designated by the Directors not affiliated with the Fund to serve as Lead
Director, is paid an additional $5,000, effective June 2005. Such fees and
expenses aggregated $73,400 for the fiscal year ended October 31, 2005.

The following table sets forth for the periods indicated compensation
paid by the Fund to its Directors and the aggregate compensation paid to the
Directors by all U.S. registered investment companies managed by NAM-U.S.A. or
advised by NAM:

Pension or Retirement Aggregate Compensation
Aggregate Compensation Benefit Accrued as Part of from Fund Complex Paid to
from Fund For Fund Expenses for its Directors During the
its Fiscal Year Ended Fiscal Year Ended Calendar Year Ended
Name of Director October 31, 2005 October 31, 2005 December 31, 2005*
---------------- ---------------- ---------------- ------------------

William G. Barker, Jr........ $16,539 None $45,000
William K. Grollman.......... 13,500 None 34,500
Chor Weng Tan................ 13,500 None 34,500

Arthur R. Taylor............. 13,500 None 34,500
Hiroshi Terasaki**........... -- None --
John F. Wallace.............. 13,500 None 33,500

- -----------------------

* In addition to the Fund, the "Fund Complex" includes Japan Smaller
Capitalization Fund, Inc. Because the funds in the Fund Complex do
not share a common fiscal year, the information relating to
compensation from the Fund Complex paid to the Directors is provided
as of December 31, 2005.

** Mr. Terasaki was appointed a Director of the Fund effective June 20, 2005.

Officers of the Fund. Officers of the Fund are elected and appointed by
the Directors and hold office until they resign, are removed or are otherwise
disqualified to serve. Certain biographical and other information relating to
the officers of the Fund is set out below:

Name, Address* and Position(s) Held Term of Office** and Principal Occupation(s)
Age of Officers with the Fund Length of Time Served During Past Five Years
--------------- ------------- --------------------- ----------------------

Hiroshi Terasaki (50) President President since 2005 President of NAM-U.S.A. since 2005;
Managing Director and Chief Executive
Officer, Nomura Asset Management U.K.
Limited from 2003 to 2005; General
Manager, Fixed Income Investment
Department of NAM from 2000 to 2003.

Kenneth L. Munt (59) Vice President Vice President since Senior Vice President and Secretary of
2001 NAM-U.S.A. since 1999.

Keiko Tani (43) Vice President Vice President since Senior Vice President and General Counsel
2005 of NAM-U.S.A. since 2005; Leader, Legal
Team, Product Documentation & Legal
Department of NAM from 2003 to 2005,
General Manager of Legal Department
from 1999 to 2003.

Rita Chopra-Brathwaite Treasurer Treasurer since 2002 Vice President of NAM-U.S.A. since 2001;
(37) Assistant Vice President of NAM-U.S.A.;
from 1999 to 2000.

Neil Daniele (45) Secretary Secretary since 2002 Senior Vice President of NAM-U.S.A. Inc.
since 2002; Vice President and Compliance
Officer of Munich Re Capital Management
Corp. (asset management firm) from 2001
to 2002; Vice President of AIG Global
Investment Group, Inc. (asset management
firm) from 2000 to 2001; Compliance
Officer of AIG Global Investment Corp.
from 1996 to 2000.

- -----------------------
* The address of each officer listed above is Two World Financial Center,
Building B, New York, New York 10281.

** Elected by and serves at the pleasure of the Board of Directors.

Stock Ownership. Information relating to the share ownership by each
Director nominee and each current Director who will continue to serve as a
Director after the Meeting, at June 15, 2006, is set out below:

Aggregate Dollar Range of
Name of Continuing Shares of Common Aggregate Dollar Range of Securities in All Registered
Directors Stock of the Fund Equity Securities Funds in the Fund Complex
and Nominees Beneficially Owned in the Fund Overseen by Director Nominee
------------ ------------------ ----------- ----------------------------

Current Directors
William G. Barker, Jr. -0- None None

John F. Wallace 2,000 $10,001-$50,000 $10,001-$50,000

Nominees
Rodney A. Buck -0- None $10,001-$50,000
James E. Hillman -0- None None
Chor Weng Tan 3,500 $10,001-$50,000 $50,001-$100,000
Hiroshi Terasaki -0- None None

As of June 15, 2006, the current Directors and officers of the Fund as a
group (10 persons) owned an aggregate of less than 1% of the outstanding
shares of the Fund. At such date, all of the officers of the Fund as a group
(5 persons) owned an aggregate of less than 1% of the outstanding shares of
Nomura Holdings, Inc., the parent company of each of NAM-U.S.A., NAM, Nomura
Asset Management Hong Kong Limited ("NAM-Hong Kong") and Nomura Asset
Management Singapore Limited ("NAM-Singapore").

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

City of London Investment Group PLC ("CLIG") and City of London
Investment Management Company Limited (together with CLIG, the "City of
London") have reported beneficial ownership of approximately 7.86% as of June
9, 2006. City of London is located at 10 Eastcheap, London, EC3M, 1LX, Great
Britain. To the knowledge of the management of the Fund, City of London is the
only beneficial owner of more than 5% of the Fund's outstanding shares.

Shares of Common Stock Percentage of the Fund's
the Fund Beneficially Common Stock Owned at
Name of Beneficial Owner Owned at June 9, 2006 June 9, 2006
- ------------------------ --------------------- ------------

City of London Investment Group 660,767 7.86%
PLC and City of London Investment
Management Company Limited

ADDITIONAL INFORMATION

Expenses and Methods of Proxy Solicitation

The expense of preparation, printing and mailing of the enclosed form of
proxy, this Proxy Statement and the accompanying Notice of Meeting will be
borne by the Fund. The Fund will reimburse banks, brokers and others for their
reasonable expenses in forwarding proxy solicitation material to the
beneficial owners of the shares of the Fund. In addition to the solicitation
of proxies by mail, proxies may be solicited in person or by telephone. The
Fund has retained The Altman Group ("Altman"), a firm that specializes in
proxy solicitation services, to assist in the solicitation of proxies for the
Meeting for a fee of approximately $4,000, together with reimbursement of such
firm's expenses. Altman is obligated to provide proxy solicitation services
including, but not limited to, distribution of proxies to broker-dealers,
telephonic communication with shareholders and broker-dealers, and monitoring
of voting results.

Independent Accountants' Fees

The SEC's auditor independence rules require the Fund's Audit Committee
to pre-approve: (a) all audit and permissible non-audit services provided by
the Fund's independent

accountants directly to the Fund and (b) those permissible non-audit services
provided by the Fund's independent accountants to NAM-U.S.A. and entities
controlling, controlled by or under common control with NAM-U.S.A., if the
services relate directly to the operations and financial reporting of the
Fund.

The following table sets forth the aggregate fees paid to Ernst & Young,
independent accountants for the Fund, for the Fund's fiscal year ended October
31, 2005 for professional services rendered for: (i) the audit of the Fund's
annual financial statements and the review of financial statements included in
the Fund's reports to shareholders; (ii) financial information systems design
and implementation services provided to the Fund, NAM-U.S.A. and entities
controlling, controlled by or under common control with NAM-U.S.A. that
provide services to the Fund; and (iii) all other non-audit services provided
to the Fund, NAM-U.S.A. and entities controlling, controlled by or under
common control with NAM-U.S.A. that provide services to the Fund. For the
Fund's fiscal year ended October 31, 2005, the independent accountants did not
render any other audit-related services to the Fund, except as described under
clauses (i) above. The Fund's Audit Committee has determined that the
provision of non-audit services under clause (iii) is compatible with
maintaining the independence of the independent accountants from the Fund.

Financial
Information
Audit Fees Audit Systems Design and
Charged to Related Tax Implementation All Other
Fund the Fund Fees Fees Fees Fees* Fiscal Year End
- ------------------------- ------------- ---------- ------------ ------------------ ------------- -----------------

Korea Equity Fund, Inc.. $55,000 $9,000 $9,000 None $9,500 October 31, 2005

- --------------
* These fees relate to tax advisory services for NAM, NAM-U.S.A., NAM-Hong
Kong and NAM-Singapore; audit and audit-related services for NAM-Hong
Kong; and non-audit services for the Fund.

Voting Requirements

The holders of a majority of the shares of stock of the Fund entitled to
vote at the Meeting, present in person or by proxy, shall constitute a quorum
for the transaction of business at the Meeting. If, by the time scheduled for
the Meeting, a quorum of the Fund's shareholders is not present, or if a
quorum is present but sufficient votes to act upon the proposals are not
received from the shareholders, the chairman of the meeting may propose one or
more adjournments of the Meeting to permit further solicitation of proxies
from shareholders. No additional notice will be provided to shareholders in
the event the Meeting is adjourned unless otherwise required by Maryland law.

All shares represented by properly executed proxies, unless such proxies
have previously been revoked, will be voted at the Meeting in accordance with
the directions on the proxies; if no direction is indicated, the shares will
be voted FOR the election of two Class II Director nominees (Proposal 1) and
FOR the election of two Class III Director nominees (Proposal 2). Provided
that a quorum has been established at the Meeting, approval of the election of
two Class II Directors to the Board of Directors (Proposal 1) and approval of
the election of two Class III Directors to the Board of Directors (Proposal 2)
require the affirmative vote of a majority of the shares outstanding and
entitled to vote thereon, in person or by proxy. Approval of any other routine
matter which may properly come before the Meeting for consideration requires
the affirmative vote of a majority of the votes cast.

Broker Non-Votes and Abstentions

The Fund expects that broker-dealer firms holding shares of the Fund in
"street name" for the benefit of their customers and clients, as well as the
Japan Securities Depositary Center Inc. ("JASDEC") holding shares of the Fund
on behalf of its beneficial shareholders, will request the instructions of
such customers, clients and beneficial shareholders, on how to vote their
shares on each proposal before the Meeting. The Fund understands that under
the rules of the New York Stock Exchange, the Boston Stock Exchange and the
Osaka Securities Exchange, broker-dealers and the JASDEC may, without
instructions from such customers, clients and beneficial shareholders, grant
authority to the proxies designated by the Fund to vote on certain matters to
be considered if no instructions have been received prior to the date
specified in the broker-dealer firm's or the JASDEC's request for voting
instructions. Certain broker-dealer firms or the JASDEC may exercise
discretion over shares held in their name for which no instructions are
received by voting such shares in the same proportion as they have voted
shares for which they have received instructions.

The shares as to which the proxies so designated are granted authority by
broker-dealer firms and the JASDEC to vote on the proposals to be considered
at the Meeting, the shares as to which broker-dealer firms have declined to
vote ("broker non-votes"), as well as the shares as to which proxies are
returned by record shareholders but which are marked "abstain" on any proposal
will be included in the Fund's tabulation of the total number of votes present
for purposes of determining whether the necessary quorum of shareholders
exists. However, abstentions and broker non-votes will not be counted as votes
cast. Therefore, abstentions and broker non-votes will have the same effect as
a vote against the election of Director nominees and the shareholder
proposals.

Other Matters

With regard to any other business matters that may properly come before
the Meeting for consideration, it is the intention of the persons named in the
enclosed proxy to use their discretionary voting authority and to vote in
accordance with their best judgment.

Address of Manager, Investment Adviser and Investment Sub-Advisers

The address of NAM-U.S.A. is Two World Financial Center, Building B, New
York, New York 10281. The address of NAM is 1-12-1, Nihombashi, Chuo-ku, Tokyo
103-8260, Japan. The address of Nomura Asset Management Hong Kong Limited is
30th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong
Kong. The address of Nomura Asset Management Singapore Limited is 6 Battery
Road, #40-02 Singapore 049909.

Proposals of Shareholders

Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders of the Fund, which is expected to be held in August
2007, must be received by the Fund for inclusion in its Proxy Statement and
form of proxy relating to that meeting by March 14, 2007. The persons named as
proxies in future proxy materials of the Fund may exercise discretionary
authority with respect to any shareholder proposal presented at any subsequent
shareholder meeting if written notice of such proposal has not been received
by the Fund by April 18, 2007. Written proposals with regard to the Fund
should be sent to the Secretary of the Fund, Two World Financial Center,
Building B, New York, New York 10281.

Shareholders wishing to present proposals at the next annual meeting of
shareholders of the Fund that they do not wish to be included in the Fund's
proxy statement and form of proxy, must send written notice of such proposals
to the Secretary of the Fund, Two World Financial Center, Building B, New
York, New York 10281, and such notice must be received by the Secretary no
sooner than March 20, 2007 and no later than April 18, 2007 in the form
prescribed from time to time in the Fund's Bylaws.

By Order of the Board of Directors

Neil A. Daniele
Secretary

New York, New York
Dated: July 12, 2006

KOREA EQUITY FUND, INC.
Two World Financial Center, Building B
New York, New York 10281

PROXY

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned shareholder of Korea Equity Fund, a Maryland corporation
(the "Company"), hereby appoints Kenneth Munt and Neil A. Daniele as proxies
for the undersigned, with full power of substitution in each of them, to
attend the Annual Meeting of the Stockholders (the "Annual Meeting") to be
held at the offices of Nomura Securities International, Inc., Two World
Financial Center, Building B, New York , New York, on August 17, 2006, at
10:30 a.m., local time, and any adjournment or postponement thereof, to cast
on behalf of the undersigned all votes that the undersigned is entitled to
cast at the Annual Meeting and otherwise to represent the undersigned at the
Annual Meeting with all powers possessed by the undersigned if personally
present at the Annual Meeting. The undersigned hereby acknowledges receipt of
the Notice of the Annual Meeting of Stockholders and of the accompanying Proxy
Statement and revokes any proxy heretofore given with respect to the Annual
Meeting.

-----------------

The votes entitled to be cast by the undersigned will be cast as
instructed on the reverse side hereof. If this Proxy is executed but no
instruction is given, the votes entitled to be cast by the undersigned will be
cast "for" each of the nominees for director and, in any event, in the
discretion of the Proxy holder on any other matter that may properly come
before the Annual Meeting or any adjournment or postponement thereof.

-----------------

PLEASE COMPLETE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
USING
THE ENCLOSED ENVELOPE

------------------

Please sign exactly as name(s) appear(s) hereon. When shares are held by
joint owners, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized persons.

- -------------------------------------- ---------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- -------------------------------------- ---------------------------------------
---------------------------------- -----------------------------------
- -------------------------------------- ---------------------------------------
---------------------------------- -----------------------------------
- -------------------------------------- ---------------------------------------
---------------------------------- -----------------------------------
- -------------------------------------- ---------------------------------------

/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
-----------------

KOREA EQUITY FUND, INC.

------------------

Mark box at right if an address change or comment has been noted on the
reverse side of this card. / /

CONTROL NUMBER:

Please be sure to sign and date this Proxy

- -------------------------------------------------------- -------------------- ----------------- -----------------

THE BOARD OF DIRECTORS For For All
RECOMMENDS A VOTE All Nominees
"FOR" ALL CLASS II DIRECTOR Nominees Withhold Except
NOMINEES / / / / / /

1. Election of two Class II Directors for a two-year term and until their
successors are duly elected and qualify:

Chor Weng Tan
Hiroshi Terasaki

NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Nominees Except" box and strike a line through the nominee's
name. Your shares will be voted for the remaining nominee.

- -----------------------------------------------------------------------------------------------------------------

THE BOARD OF DIRECTORS For For All
RECOMMENDS A VOTE All Nominees
"FOR" ALL CLASS III DIRECTOR Nominees Withhold Except
NOMINEES / / / / / /

2. Election of two Class III Directors for a three-year term and until their
successors are duly elected and qualify:

Rodney A. Buck
James E. Hillman

3. In the discretion of such proxies, upon such other business as may properly
come before the meeting or any adjournments thereof.

Date ________________

_____________ Shareholder sign here ______________ Co-owner sign here ________