Bloomberg News

South Korea Stocks Gain Most Among Asia Markets on Earnings

October 21, 2011

(Closes shares throughout.)

Oct. 21 (Bloomberg) -- South Korean stocks gained, with the benchmark index rising the most in Asia, on speculation the nation’s earnings will withstand a global economic slowdown.

The Kospi Index added 1.8 percent to 1,838.38 at the close on the Korea Exchange, rebounding from a 2.7 percent drop yesterday. The gauge rose 0.2 percent this week, its second straight weekly advance.

Samsung Electronics Co., the world’s second-biggest handset maker, rose to the highest level since May on a Wall Street Journal report that its smartphone shipments beat Apple Inc.’s in the last quarter. Hynix Semiconductor Inc., the world’s second-largest maker of computer memory chips, jumped 10 percent after research company IHS iSuppli said Apple used the company’s NAND-flash chips in the iPhone for the first time. Daewoo Engineering & Construction Co. led builders higher on speculation they will benefit from a potential increase in reconstruction work in Libya.

“Bets that the worst for the technology industry may have passed are driving Korean stocks up today,” said Han Sang Soo, a fund manager at Samsung Asset Management Co. in Seoul, which oversees about $28 billion.

Standard & Poor’s said in a report today France is among euro-region sovereigns likely to be downgraded in a stressed economic scenario. The sovereign ratings of Spain, Italy, Ireland and Portugal would also be reduced by another one or two levels in either of New York-based S&P’s two stress scenarios, the ratings firm said.

Samsung Shipments

The Kospi sank 16 percent in the third quarter, the most since the last three months of 2008, as signs of slowing U.S. economic growth and a worsening European debt crisis fueled speculation that demand for South Korea’s exports will fall. Stocks in the gauge trade at 9.5 times estimated profit, compared with 9.7 times for the MSCI Emerging Markets Index.

Samsung Electronics gained 1.1 percent to 917,000 won, the highest level since May 3. The company’s smartphone shipments are said to have topped Apple’s in the last quarter, the Wall Street Journal reported, citing a person familiar with the situation.

Samsung SDI Co., which supplies rechargeable batteries to Samsung Electronics, added 6.3 percent to 136,000 won.

Libyan Reconstruction

Daewoo Engineering climbed 7.8 percent to 9,860 won, while Hyundai Engineering & Construction Co. rallied 6.6 percent to 68,300 won. The 36-member Korea Construction Index was the best performer among the Kospi’s 19 industry groups.

“Investors appear to be betting that reconstruction projects will increase in Libya following Muammar Qaddafi’s death,” Alex Cho, an analyst with Daishin Securities Co., said by phone today.

LG Display, the world’s second-largest liquid-crystal display maker, advanced 7.8 percent to 24,250 won. The company’s net loss in the three months ended in September was 687.5 billion won ($600 million), according to a regulatory filing yesterday.

“Quarterly earnings should improve starting from the current quarter,” Jeff Kim, an analyst with Hyundai Securities Co., said in a report today.

STX Pan Ocean Co., South Korea’s largest bulk-shipping line, fell as much as the daily limit of 15 percent, while affiliates tumbled on speculation group companies may sell stock to help pay debt.

“There were rumors about the group planning to sell shares and bonds because they may be short of funds,” said Um Kyung A, an analyst at Shinyoung Securities Co. in Seoul.

STX Group has no financial troubles and business is “normal,” the company said in an e-mailed reply to Bloomberg News queries.

--Editor: Matthew Oakley

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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