SOME markets in Asia are dominated by a single stock. In Hong Kong it is HSBC, in Singapore it is Singapore Telecommunications. In South Korea it is without doubt Samsung Electronics.
The company is the flagship of the Samsung group, and is the world’s largest memory chip maker, the third-largest mobile phone maker and Asia’s most highly-valued tech stock. Right now it is worth about 24 billion.
Samsung Electronics has been on an upwards trend of late, buoyed by indications that the global economy is picking up speed. Data for chip sales and consumer demand have been pointing in the right direction, and the highly liquid stock is a favourite among fund managers.
Today it rose 4000 won or 1% to 425,000 won, aided by an advance for US tech shares. It is well up from its low for the year of 259,500 won.
Analysts say there is still plenty of upside for Samsung and the sector if events turn out as hoped.
JP Morgan’s team recently received a presentation from company executives and they liked what they heard. ” Samsung Electronics delivered a surprise by indicating that it could achieve Flash bit [ memory chip] growth of 120% to 180% in 2004, following 200% growth in 2003,” its analysts wrote to clients.
“Our recent checks in Asia indicate that demand for high-density [chips], commonly used in cell phones, has been much stronger than expected, with prices stabilising for the first time in roughly three years. Most companies we met with believe there could be a flash shortage” in the final quarter of the year.
This optimism is founded on JP Morgan’s belief – shared by many – that the global economy is coming along nicely. Bill Belchere, the bank’s head of Asian economic research, noted that its in-house measure of industrial production is at a three-year high. Tech production has led a rebound in manufacturing, Belchere said Aided by Samsung’s leap, the Korea Composite Stock Price Index added 1.62 points to 724.75.
Samsung rival Hynix Semiconductor-added 220 won to 7070. LG Electronics, which makes everything from mobile phones to airconditioners, fell 800 won or 1.4% to 57,200 won as profit- takers stepped in.
Japan’s stocks drifted as those seeking to lock in gains after the recent run offset the upwards pressure of those buying in. But a late push lifted the Nikkei 225 by 80.19 points to 10,820.33.
The gainers and losers board seen in recent sessions was turned on its head.
Lender Mizuho Financial, which yesterday doubled its net profit forecast, gave up 1000 yen to 315,000. Dealers said the news had already been priced in.
Carmakers – punished often this month amid fears of a stronger yen – gained ground.
Nissan Motor rose 25 yen or 2% to 1265 yen and Toyota put on 30 yen or 0.9% to 3510 yen.
Hong Kong’s bluechips ran into profit-taking, and the Hang Seng index dipped 89.43 points or 0.9% to 11,645.05.
Henderson Land Development led, falling HK$2.70, or 7.8%, to HK$32.20 on a chunky share placing.
Cheung Kong, the developer led by Li Kashing, Asia’s richest businessman, sank HK$1.12, or 1.7%, to HK$65, while Hang Lung Properties fell 15 cents, or 1.5%, to HK$10.15.
IN BRIEF
IMF calls for action on Japanese bank worries
JAPAN should offload its banking sector’s bad loans and recapitalise banks, the International Monetary Fund has said. IMF director Stefan Ingves warned: “You must ensure there is proper governance. It is not enough to just put in the money and hope that the problem will go away.”
Korea sets sights on a blue-chip index
THE Korean government may set up a blue-chip index to bolster the Seoul stock market, according to Byeon Yang-ho, director general of the Finance Ministry’s Financial Policy Bureau. He said the Kospi 30 could mirror New York’s Dow Jones 30, with a select few high- performing stocks.
Blow for LookSmart as net search war hots up
MICROSOFT’S MSN internet division will shed its biggest client when it ends its licensing agreement with LookSmart in January. The move is the latest in a war for dominance in the highly profitable internet search sector, now led by privately-held Google.
TRADER TALK
MARTIN Hughes, top equity analyst at Credit Lyonnais Laing turned successful private investor, has added to his substantial stake in Amec, the 795 million engineering services company. Hughes bought 3.6 million shares for his hedge fund to take its holding to 18.8 million, or 6.3%. Citywire.co.uk
CURRENCY WATCH
JAPAN’S official reserves totalled a record $604.9 billion (362.4 billion) at the end of September, up $49.8 billion from a month earlier, driven by a 4.46 trillion yen (24 billion) intervention in currency markets to slow the rise of the yen, the Ministry of Finance said today.
SPEAKING OUT
It’s a sobering statistic that the Lloyd’s market spends in excess of 500 million a year on lawyers as part of the claims process. This figure understates the full cost.
Lloyd’s of London chief executive Nick Prettejohn
IN PROSPECT
THE troubled British operations of Sodexho will come under the spotlight tomorrow when the French catering giant reports full-year profits. Its British division was hit by accounting problems and management failures last year, while weak margins dog a business being trounced in the UK by Compass.
Sodexho warned last month of a 14% decline in net profits for the year.
