Weak yen boosts Japanese automakers

STILL OPTIMISTIC: regional indexes saw another week of gains, boosted by growing confidence in a global economic recovery and greater demand for cars overseas

BLOOMBERG

Sun, Sep 07, 2003 - Page 10

Asian stocks rallied last week with benchmarks in Japan, Hong Kong and South Korea rising for a fourth week as a strengthening US economy boosted optimism about regional growth. Toyota Motor Corp and Johnson Electric Holdings Ltd led gains.

"The US is showing a fast economic rebound and we're catching up with it, with exporters in the lead," said Kim Kyeong Seob, who helps oversee the equivalent of US$850 million at KB Investment Trust Management Co in Seoul. He owns more shares in LG Electronics than the stock's 3 percent Kospi weighting.

Japan's Nikkei 225 Stock Average added 3 percent, touching 14-month highs before paring gains later in the week. The Topix index gained 2.4 percent, its third advance in four weeks.

Indonesia's key index posted a 9.9 percent advance, its biggest weekly gain in more than four years as investors warmed to government efforts to restore political stability.

Thailand's SET Index rose to its highest in five-and-a-half years on optimism a growing Thai economy will boost stocks.

Toyota rose 8.1 percent to 3,480 yen this week, leading gains among automakers. An industry report showed the world's third- largest carmaker outsold DaimlerChrysler AG's Chrysler for the first time in the U.S. last month.

Hong Kong's Johnson Electric, the world's second-largest maker of small electric motors, gained 4.1 percent to HK$12.65.

Johnson gets a third of its revenue in the US from selling small electric motors for use in cars and consumer electronics.

Hong Kong's Hang Seng index rose 2.4 percent for the week, its fourth weekly rally. The index hasn't risen for four weeks straight or more since an eight-week advance ended June 20.

US car sales hit an annual rate of 19 million last month, the highest since 21.3 million in October 2001, when automakers first marketed no-interest loans, Autodata Corp said.

Japanese automakers, including Honda Motor Co and Nissan Motor Co, were also boosted by a decline in the value of the yen against the dollar. A weaker Japanese currency means exporters get more for their dollar-denominated sales while their products become more competitive.

Honda, which gets almost 90 percent of its operating profit in North America, advanced 7 percent this week to ?5,080. The automaker based its forecasts for this business year on 116 yen to the dollar.

Nissan Motor Co, Japan's No. 3 automaker, gained 6.9 percent, to 1,339. Every ?1 drop against the dollar will translate into a ?9 billion increase in Nissan's group pretax profit.

The US Institute for Supply Management's factory index increased to 54.7 last month, the highest reading since December, from 51.8 in July. It was the second straight month the index has been greater than 50, signaling that manufacturing is growing.

"It appears we are now solidly in a global economic upswing," said Hans Kunnen, who helps manage the equivalent of US$52 billion at Colonial First State Investments, the largest holder of Australian-based assets.

South Korea's Hyundai Motor Co added 1.8 percent over the week, helping the Kospi index to advance 0.3 percent, its fourth gain in as many weeks.

Samsung Electronics Co, the world's second-largest semiconductor maker after Intel Corp, climbed 1.8 percent after Intel said Thursday that third-quarter sales will reach the high end of a forecast it gave two weeks ago, boosting optimism about industrywide demand. Revenue will rise to US$7.6 billion to US$7.8 billion, the company said. The company's earlier estimate was US$7.3 billion to US$7.8 billion.

PT Telekomunikasi Indonesia, the nation's largest publicly-traded company, rose 15.9 percent to a 5,300 rupiah last week.

Most of the gains came after an Indonesian court on Tuesday sentenced Muslim cleric Abu Bakar Bashir to four years in prison for taking part in a plot to overthrow the government.

"Despite the terrorism issue and possible rising tension ahead of elections next year, Indonesia's fundamentals remain intact," said Michael Tjoajadi, who helps manage the equivalent of US$95 million of Indonesian equities for Schroders Investment Management in Jakarta.

PT Gudang Garam, the country's largest cigarette maker by sales, surged 14.7 percent to 10,550 rupiah.

Thailand's benchmark SET index closed the week 3.7 percent higher at 557.81, its highest close since Feb. 3, 1998.

Siam Cement, Asia's second-biggest cement maker by capacity after Japan's Taiheiyo Cement Corp, rose 2.4 percent last week.

Thailand's unemployment rate fell to 1.4 percent, its lowest since December during the week. Prime Minister Thaksin Shinawatra said yesterday that low inflation will allow the government to buy rice and other agricultural products at above-market prices to boost rural incomes.