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South Korea and Malaysia lead Asian stock rally

Asian stock benchmarks rallied this week, with South Korea's Kospi index jumping 6 percent, on optimism a recovery in the US economy will fuel consumer demand for goods from exporters such as Samsung Electronics Co.

The Kospi had its biggest weekly advance in five months after a US job report suggested Asia's biggest overseas market will sustain its growth and retail sales there rose last month.

The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 800 companies in 14 countries, gained 3 percent this week and was set for its highest close in 28 months.

"We may see an earlier-than-expected recovery in the US job market," said Yoo Ji Yeong, who helps manage US$1.3 billion at CJ Investment Trust Management Co in Seoul. "It's one reason to be positive about exporters."

Japanese benchmarks had their second straight week of gains, led by Sony Corp, while Singapore's Straits Times Index and Hong Kong's Hang Seng Index both rallied for a fourth week. Stock markets in Malaysia, Indonesia and Thailand gained after Standard & Poor's on Wednesday raised their debt ratings to their highest since the 1997 Asian financial crisis.

India's Sensitive Index climbed to more than a three-year high after Infosys Technologies Ltd said second-quarter profit rose as orders from overseas clients surged. China's benchmarks rallied in the three days they traded, following a week-long national holiday.

The Kospi climbed 6 percent to 757.89 in the five sessions to Friday, its biggest weekly gain since the period ended April 18. Samsung Electronics, the nation's biggest exporter, jumped 5.7 percent to 445,000 won this week.

"The US economy is rebounding strongly and it looks like consumer spending won't fall off the cliff, so that should help export-related demand," said Hou Wey Fook, who oversees about US$2 billion including Asian stocks as chief investment officer at OCBC Asset Management Ltd in Singapore. "We're very bullish on Asia in the next six months."

US consumer spending is also rising, reflected in last month's sales at retailers such as Wal-Mart Stores Inc and Sears, Roebuck & Co beating forecasts. Stone & McCarthy Research Associates monthly chain store index rose 5.6 percent in September compared with a year ago, the strongest since 1999.

Most earnings "are going to be better than expected," said Lynn Yturri, who helps manage US$140 billion at Banc One Investment Advisors in Scottsdale, Arizona. "The market still looks good for the next two to three quarters."

Japan's Nikkei 225 Stock Average advanced 0.7 percent to 10,786.04 this week, while the Topix index added 0.7 percent to 1073.88. Sony, the world's second-biggest consumer electronics maker, jumped 0.3 percent to ?3,990 this week. The company relies on the US for more than a quarter of its total sales.

Singapore's Straits Times surged 4.5 percent to 1746.04, its biggest weekly rally in more than four months. CapitaLand Ltd, Singapore's biggest developer by sales, jumped 12 percent to S$1.71 this week.

Growth in the city-state's economy may expand more than the government's current forecast of 1 percent this year, Prime Minister Goh Chok Tong said. Deputy Prime Minister Lee Hsien Loong said the economy made up "lost ground" in the third quarter.

Hong Kong's Hang Seng gained 2.8 percent to 11,935.83. China Mobile (HK) Ltd and Sinopec Yizheng Chemical Fiber Co advanced on optimism the country's economic growth will boost earnings.

China Mobile, the nation's largest mobile-phone operator, was the Hang Seng's best performer, jumping 11 percent this week.

Sinopec Yizheng, China's top synthetic fiber maker, rallied 37 percent in the five days just ended. The company said Thursday it expects that profit in the first nine months of this year jumped by more than 50 percent as demand pushed up sales.

"China's domestic consumption is strong and intact," said Aaron Pong, who helps manage about US$200 million in Asian stocks excluding Japan as a director at RBC Investment Management (Asia) Ltd in Hong Kong. Interest in Chinese shares "is still very strong. As long as the liquidity is there, we are happy to sit on our position and trim it as the rally continues."

Malaysia's Kuala Lumpur Composite Index climbed 6.8 percent this week to 790.66, its biggest weekly gain in almost three years. S&P on Wednesday raised Malaysia one level to A-, the fourth-lowest investment grade, on par with South Korea.

Indonesia's Jakarta Composite Index added 3.7 percent this week to 644.818, its fourth straight week of gains. PT Bank Mandiri, Indonesia's biggest lender by assets, rallied 5.7 percent this week. Thailand's SET Index rose 4.3 percent to 582.15. Bangkok Bank Pcl, the nation's biggest lender by assets, jumped 10 percent to 80 baht this week.

Indonesia's long-term foreign-currency rating was raised one level to B, five levels below investment grade and the same as Pakistan. Thailand's rating was raised to BBB, two levels above junk.
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