South Korean Stocks Climb to Two-Month High; Samsung Advances

Sept. 27 (Bloomberg) -- South Korean stocks rose to a two- month high after domestic consumers became the most optimistic in five years and on speculation the effects of a U.S. housing slump will be contained. Kookmin Bank and Samsung Electronics Co. paced the advance.

The Dow Jones Industrial Average has added 1 percent since the Federal Reserve cut interest rates on Sept. 18 on speculation lower borrowing costs will buoy the economy and revive takeovers.

``Investors were comforted to see U.S. stocks' gains were stable following the rate cut, and there's definitely optimism about the Korean economy,'' said Kim Woo Sik, who manages the equivalent of $290 million at SH Asset Management Co. in Seoul. ``We think the Fed can cut rates further once or twice.''

The Kospi index gained 24.01, or 1.3 percent, to 1,943.27 as of 11:16 a.m. in Seoul, set for the highest since July 26. The Kosdaq rose 0.7 percent to 793.91. Financial markets in South Korea were shut Sept. 24 to Sept 26 for holidays.

Kookmin, South Korea's biggest bank, gained 1,400 won, or 1.9 percent, to 75,100. Lotte Shopping Co., the largest department store chain, advanced 5,000 won, or 1.3 percent, to 390,000.

South Korea's consumer sentiment index increased to 112 in the third quarter from 108 in the previous three months, the Bank of Korea said in a report. A reading higher than 100 indicates optimists outnumber pessimists.

Subprime Concern Abates

Hyundai Department Store Co., South Korea's second-largest department store operator, climbed 4,000 won, or 3.7 percent, to 111,500. Shinhan Financial Group Ltd., the second-biggest financial-services company, gained 2,300 won, or 4 percent, to 60,000.

Samsung Electronics, which gets about 15 percent of its sales from the Americas, rose 17,000 won, or 3.2 percent, to 551,000. LG.Philips LCD Co., the world's second-biggest maker of liquid-crystal displays, added 1,350 won, or 3.2 percent, to 43,200.

U.S. shares rallied the most in a week yesterday, helped by a New York Times report that Bear Stearns Cos., the second- biggest U.S. underwriter of mortgage bonds, is in ``serious talks with several outside investors'' including Warren Buffett to sell as much as 20 percent of itself to stem losses from the housing slump.

Samsung, Armani

Separately, Samsung Electronics, Asia's biggest mobile- phone maker, and Italian fashion designer Giorgio Armani SpA said on Sept. 23 that they will start selling a jointly developed handset in Europe in November. Financial details weren't provided. The companies also plan to introduce a liquid- crystal display television in January.

Hyundai Motor Co., South Korea's largest automaker, climbed 1,900 won, or 2.7 percent, to 72,500. LG Electronics Inc., South Korea's second-largest exporter, advanced 3,700 won, or 4.6 percent, to 84,400.

Kospi 200 futures expiring in December climbed 1.7 percent to 249.90, while the underlying index advanced 1.3 percent to 246.61.

The following shares also rose or fell. Stock symbols are in brackets after company names.

Hansol Paper Co. (004150 KS), which makes newsprint and art paper, gained 1,050 won, or 5.6 percent, to 19,900. UBS AG recommended investors ``buy'' the shares in new coverage, in a report. The stock may rise to 25,000 won in a year as the company will enter a ``multi-year earnings upcycle'' on falling pulp costs and rising paper prices, wrote Seoul-based analysts including Seung Shin.

Hyundai Engineering & Construction Co. (000720 KS), the fourth-biggest builder in South Korea, added 300 won, or 0.3 percent, to 90,500, compared with a 1.7 percent loss by the Korea Construction Index. The company may be awarded a $1 billion contract jointly with Italy's Snamprogetti SpA to build three fertilizer plants in Qatar, Khalifa Abdulla al-Sowaidi, managing director of Qatar Fertilizer Company, said on Sept. 23.

SK Telecom Co. (017670 KS), the biggest of South Korea's three mobile-phone operators, rose 2,000 won, or 1 percent, to 209,500, trailing gains by its peers in the Korea Communication Services Index. The company said on Sept. 21 that it will spend as much as $200 million to buy new shares of its U.S. unit, which owns 50 percent of a joint venture with Earthlink Inc. SK Telecom also plans to invest as much as $110 million to form an Internet company in the U.S.

Ssangyong Engineering & Construction Co. (012650 KS), a builder, gained 1,050 won, or 4.5 percent, to 24,200. The company said it won a $686 million order to build a hotel in Singapore.

STX Engine Co. (077970 KS), which makes ship engines, advanced 3,300 won, or 5.1 percent, to 68,300. Samsung Securities Co. raised its estimates for the company's annual new orders for 2007 to 2009, in a note, citing high demand for vessels including bulk carriers.