Foreign buyers lift Seoul hi-techs

TECH stocks took centre stage in Asian trade today in the wake of Intel's broadly positive second-quarter figures, even though the US chip-making giant said the outlook for information technology spending remained cloudy.

The fallout was especially noticeable in Seoul where an intriguing tug of war has developed between foreign funds that are betting on a continued hi-tech, export-led recovery and locals who are less optimistic as domestic demand falters.

Samsung Electronics, which today turned in second-quarter figures in line with expectations, was up 6500 won, or 1.6%, at 414,500 while Hynix Semiconductor advanced 480 won, or 5.2%, to 9630.

The market consensus was that Intel's numbers were a pointer to better times ahead.

Smith Barney has noted that over the past two-and-a-half months foreigners have bought a net 4.6 trillion won (£2.4 billion) of Seoul-listed equities while Korean retail punters and institutions have clipped their positions by a net 5.27 trillion won.

'With the divergence of view between foreigners and locals, who is going to win this tug of war?' Smith Barney asks. It then supplies its own answer, suggesting that the lead benchmark will climb a further 17% over the next half year.

The bank's analysts noted that exports account for more than half of the local economy, with hi-tech products making up 40% of the total. Related to the market, electronics represent 38% of the overall capitalisation.

The argument runs that, should tech spending pick up, Korean exports will boom and sluggish domestic demand should in turn get a handy lift. 'In the event of a global IT recovery, we believe the Korean equity market will continue its performance,' Smith Barney said.

The Korea Composite index edged ahead by 1.16 points to 714.61, assisted in part by the positive comment overnight from US Federal Reserve chairman Alan Greenspan on the prospects for the world's largest economy.

The Intel effect was also evident in Japan. Chip equipment maker Tokyo Electron gained 120 yen, or 1.6%, to 7650 while Advantest was ahead 30 yen at 6620.

Among other gainers, Shimano - famous for its manufacture of high-end bike parts - rose 100 yen, or 5.3%, to 2005 on a report that its first-half numbers are set to surpass consensus expectations.

The Nikkei 225 Average fell 63.08 points to 9687.92 in afternoon trade before recovering to close at

9735.97, down 15.03. Brokers noted that there may be rising concern the market has advanced too far, too fast in recent months and could be set for a period of consolidation.

Hong Kong trade was lacklustre despite the upbeat tone from Greenspan. The Hang Seng index added 71.6 points to 10,207.2. International bank HSBC was level at HK$95 as was computer manufacturer Legend at HK$3.02.

In Jakarta, traders' eyes were fixed on telecoms giant Telekomunikasi Indonesia, down 50 rupiah at 4650. It missed a deadline yesterday to refile its results for last year with US regulators, who had rejected the initial set. Its US shares may now be de-listed or it could be heavily fined. The Jakarta Composite index was down 3.98 points at 529.85.

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