Sun, Jan 05, 2003 - Page 11 News List

Hyundai may lead gains in South Korean markets

Asian equities:While analysts are upbeat about selected sectors in the region, such as South Korean automakers, they still seem to be perceiving danger and uncertainty

BLOOMBERG , SEOUL

South Korea's KOSPI index, which had its best two-day start to a year since 1999, may rise further in the coming week amid evidence that exporters such as Hyundai Motor Co are increasing overseas sales.

South Korea's biggest automaker expects sales to rise 13 percent this year and will expand production to meet increasing demand in China, India and Turkey.

"Things seem to be getting better," said Lee Yong-beom, who helps manage about US$585 million at Chohung Investment Trust Management Co. Lee said he is "looking positively" at Hyundai Motor and other exporters and expects the Kospi to climb above 680 next week. The benchmark index jumped 5.4 percent Thursday and Friday to 661.10.

Elsewhere in Asia, Japanese stocks will trade for the first time this year on Monday after ending last year near two-decade lows. Any rebound may hinge on the prospects for growth in the US economy, some investors said.

Taiwan stocks may decline, led by chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台灣積體電路公司), which sold more than three-quarters of its chips to US customers in the third quarter. US industry and government reports may show the pace of a recovery isn't strong enough to lift demand for chips and computers from the region.

In Hong Kong, developers and retailers may slide. Chief Executive Tung Chee-hwa probably won't announce any moves in an annual speech to accelerate growth in the city's economy, which is barely recovering from its second recession in five years, some analysts said.

The KOSPI index had its biggest rally in 12 weeks on Friday.

Samsung Electronics Co, the world's largest maker of computer-memory chips and the index's biggest company, jumped 7 percent for its largest gain since Nov. 4.

During the final week of last year, the benchmark declined 7.4 percent and was the world's second-worst performer. Only the KOSDAQ index, another measure of South Korean companies, dropped more.

Korea imports almost all its oil, and the indexes fell as oil prices surged amid growing tension between the US and Iraq.

"I still think we're in a bear market," said John Burbank, who manages US$20 million of international stocks at Passport Capital LLC in San Francisco. His Passport I fund gained 3.9 percent in December, compared with the Standard & Poor's 500 Index's 6 percent drop.

Japanese companies that rely on overseas sales, such as Nissan Motor Co, Casio Computer Co and Bridgestone Corp, were among the Nikkei 225 Stock Average's 10 best-performing stocks during 2002.

"The bottom line is US economic growth is still stronger than in Japan," said Marc Desmidt, who helps manage US$8.3 billion at Merrill Lynch Investment Managers Co. "As an investor, you want to be exposed to the areas that are growing," he said, adding that exporters are "a favorite area."

The Nikkei 225 dropped 19 percent for the year, and the TOPIX index slipped 18 percent. Both benchmarks had their sixth annual losses in seven years. Japanese markets have been closed since Dec. 31 and will trade for a half day on Jan. 6.

Stocks elsewhere in Asia rose as a US manufacturing survey showed the biggest rise in 11 1/2 years for a factory index. Some reports in the coming week may signal the world's largest economy isn't recovering as fast as that result suggested.

The Institute for Supply Management, which compiled the index, will publish a measure for businesses including banking, health care and construction. That index may decline to 55.5 in December from 57.4 in November while the Commerce Department may report factory orders dropped in November for the third time in four months, according to Bloomberg News surveys of economists.

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