Korea Gas Leads Gains in Utility Shares as Investors Seek Haven

By Shinhye Kang

Oct. 27 (Bloomberg) -- Korea Gas Corp., the world's biggest buyer of liquefied natural gas, gained the most in almost a year in Seoul trading as investors sought safety in power and gas companies in a time of market uncertainty.

Korea Gas rose 9.8 percent to close at 40,200 won, the biggest gain since Nov. 6, 2007. It earlier climbed as much as 15 percent to 42,000 won. Korea Electric Power Corp., South Korea's biggest electricity producer, rose 11 percent to close at 23,300 won. The benchmark Kospi Index rose 0.8 percent.

``People are buying safe-haven assets such as state-run utilities,'' said Yun Hee Do, an analyst at Korea Investment & Securities Co. ``Korea Gas is very attractive in terms of valuation as its recent decline has been excessive.''

Korea Gas fell 37 percent last week as the government held off on a price increase amid slower economic growth and high inflation. Utilities were boosted by expectations that falling oil may cut fuel procurement costs. Crude oil has lost 57 percent since touching a record $147.27 a barrel in New York in July.

``Investors should not expect a big rally in Korea Electric, which will keep suffering from a net loss next year,'' Yun said.

Last week, Korea Electric forecast its first loss in its 26- year history because of high oil and coal costs and the falling won. The Seoul-based company expects a loss of 1.25 trillion won ($865.5 million) this year, which is likely to increase in 2009.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net.