Demand for cars and ships lifts Seoul stocks

Seoul’s recent strong run continued on Monday as foreign and institutional buyers kept up demand for its heavyweight auto and shipmaking stocks.

The Kospi Composite jumped 3.3 per cent to 1,898.32. It was one of the few indices to make gains last week, and since hitting a 14-month low exactly four weeks ago the Kospi has rallied nearly 15 per cent.

Shipyards were among the best performing stocks as investors bet on a resurgence of new orders. Samsung Heavy Industries climbed 8.4 per cent to Won30,200, and Daewoo Shipbuilding added 5.3 per cent to Won25,650.

Hyundai Motors gained 5.3 per cent to Won228,000 after the local press reported the company had crossed the 2m vehicle sales landmark in Latin America. Kia Motors added 2.9 per cent at Won74,500.

HSBC was upbeat on the prospects for Korean and Chinese carmakers. “This sector has underperformed and offers excellent value,” HSBC said. “Risk to earnings is low; it is currently a sector under-owned by Asia-focused funds and offers reasonable value. In the long term, this sector should offer excellent exposure to the emerging Asian middle class.”

In China, SAIC Motor rose 2.5 per cent to Rmb15.37, while BYD in Hong Kong jumped 7 per cent to HK$14.90.

The Hang Seng was the only regional index to eclipse the Kospi, climbing 4.1 per cent to 18,771.82, while the Shanghai Composite gained 2.3 per cent to 2,370.3 after data showed China’s manufacturing sector returned to expansion after three months of contraction.

Heavyweight industrial stocks flourished, with China Coal Energy up 7.6 per cent to HK$8.75, oil producer Cnooc added 6.5 per cent to HK$13.68 and aluminium group Chalco gained 6.4 per cent to HK$3.83.

The FTSE Asia Pacific index climbed 2.7 per cent to 229.91, helped also by a 1.9 per cent gain to 8,843.98 by Tokyo’s Nikkei 225 Average.

Stronger-than-expected export data helped buoy Japanese stocks. TDK , the maker of magnetic heads for disk drives, surged 8.3 per cent to Y2,967 after Seagate Technology in the US reported on Friday surprisingly robust quarterly earnings.

Tokyo Electric Power rose 8 per cent to Y284 after the company was reported to be planning to sell a 20 per cent stake in wind farm joint venture Eurus Energy Holdings to its partner Toyota Tsusho for about Y20bn. Toyota Tsusho shares added 2.9 per cent to Y1,313.