Asian fish processors such as Kyokuyo Co surged this week on speculation consumers will turn to seafood after tests showed a cow in the US contracted mad cow disease and amid outbreaks of bird flu and swine fever in South Korea. McDonald's Holdings Co Japan Ltd slid.
"Consumers probably won't enjoy eating chicken, pork and beef for the time being," said Kim Yung Min, who manages US$125 million at Dongwon Investment Trust Management Co in Seoul.
"For seafood processors, it's a good chance to see shares jump, though they are overshooting a bit."
PHOTO: REUTERS
Japanese steelmakers such as JFE Holdings Inc and Nippon Steel Corp rose after China, the world's largest steel producer, removed import tariffs on five types of steel products. Shipping companies such as Nippon Yusen KK climbed after the Nihon Keizai Shimbun reported Japan's three largest will buy more ships to meet demand from increasing Asian trade.
For the week, Japan's Topix index rose 1 percent to 1018.47 in Tokyo. Fish processors, steelmakers and shipping companies were among the top ten percentage gainers of the index's 33 industry groups. The Nikkei 225 Stock Average gained 1.3 percent to 10,417.41. The benchmarks rose for a second week.
The Morgan Stanley Capital International Asia Pacific Index, which tracks more than 800 stocks across the region, added 1.3 percent to 85.18, its fourth weekly advance in five.
The index is set for its first annual gain in four years.
Shares of Asian fish companies advanced as the US announced its first case of mad cow disease, which is linked to a deadly brain-wasting illness in humans. In Korea, thousands of chickens have been slaughtered after the government said bird flu is spreading, while swine fever was detected in the country.
Kyokuyo, which distributes seafood such as tuna, added 11 percent to ?168 this week. Maruha Corp, which sells seafood products such as raw fish and scallops, climbed 4.4 percent.
Dongwon Industries Co, South Korea's biggest maker of canned fish and processed seafood, surged by 18 percent for the week. Deep-sea fishing company Sajo Industries Co soared 74 percent this week, while rival Oyang Fisheries Co jumped 94 percent.
McDonald's Holdings fell 10 percent in the three days following news of the disease. Even though Japan's biggest fast-food chain gets all of its burger beef from Australia, investors are concerned Japan's ban on US beef imports will raise prices.
The Japanese government said that it will offer financial assistance and advice to small and mid-sized companies affected by the discovery of mad cow disease in the US.
The decision helped boost shares of some beef importers that slumped in previous trading. Yoshinoya D&C Co, a restaurant chain that serves bowls of rice topped with beef slices, yesterday gained 2 percent to ?153,000, snapping a two-day, 12 percent slide.
Nippon Meat Packers Inc, the nation's largest meat processor, yesterday added 4.8 percent to ?1,045, after losing 9.2 percent in the past two days.
The Topix Iron & Steel Index gained 5.4 percent this week making it the second-biggest percentage gainer after shipping companies. It has climbed 81 percent this year, making it the best-performing index among the 33 industry groups.
JFE Holdings, Japan's largest steelmaker by market value, jumped 6.7 percent to ?2,880. Nippon Steel, Japan's biggest steelmaker, advanced 3.7 percent to ?227.
China lifted tariffs of as much as 23 percent that it imposed on some types of hot and cold-rolled steel, stainless steel and other steel products November last year.
"China has greatly contributed to gains this year among some of the raw material stocks and that's going to continue into next year," said Kikuo Osone, who helps manage US$7.1 billion at Fukoku Capital Management Inc in Tokyo.
Increasing demand from Asia has also raised optimism that shippers will benefit from increased trade within the region.
Nippon Yusen, Mitsui OSK Lines Ltd and Kawasaki Kisen Kaisha Ltd, Japan's three biggest shipping lines, are expected to jointly invest more than ?1 trillion in the next four to five years, the Nihon Keizai Shimbun earlier this week.
Nippon Yusen, Japan's largest shipper, jumped 12 percent this week. The company said it will order four container vessels and invest ?770 billion to build 160 ships over five years as it forecasts marine cargo demand will increase worldwide.
Korea's Kospi Index shed 2.8 percent for the week. SK Corp led declines as speculation diminished that the nation's biggest oil refiner would be taken over by Sovereign Asset Management Ltd and its allies. Its shares dropped 13 percent for the week.
Itochu Corp and Taiyo Oil Co bought a combined 0.74 percent stake in SK Corp for US$24.4 million. The purchase by the two Japanese companies, customers of SK Corp, is meant to help fend off a possible hostile takeover bid by Sovereign, the Seoul Economic Daily said.
Earlier this week, a Seoul court backed SK Corp's plan to sell 10.4 percent of its shares to friendly parties. The stake cannot be used to vote as long as it is held by SK Corp.
Monaco-based hedge fund Sovereign, which has 15 percent of SK Corp, is seeking to oust the SK Corp board at a shareholder meeting in March as it tries to gain control of the company. SK Group earlier asked local creditors of its affiliates and other allies to buy SK Corp shares to win a vote in the March meeting.
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