Emerging markets update

Emerging markets made strong gains last week, after a better-than-expected US employment report eased recessionary fears. The MSCI Emerging Markets Index rose by 3.41% in US dollar terms, led by gains in the Latin American component.

Turkey's inflation eased in September, falling to 7.1% year-on-year, amid a slowdown in domestic demand and the stronger lire. In the Philippines, easing price pressures prompted the central bank to cut overnight rates by 0.25% to 5.75%. In contrast, Indonesia and Thailand saw inflation rising in September, fuelled by higher food and oil prices.

Brazil's industrial output exceeded forecasts in August, signalling stronger domestic demand and adding to expectations that the central bank may end its cycle of rate cuts.

Thailand's finance ministry raised the low end of its 2007 growth forecast to 4.5% from 4%, citing rising exports and a recovery in domestic consumption. Separately, the Cabinet approved the spending of 32bn baht to build new mass transit lines in Bangkok.

Ecuador's president Rafael Correa won a third straight electoral victory, providing him a wide mandate to rewrite the country's constitution. Pakistan entered political limbo, after the Supreme Court delayed the announcement of the official result of Saturday's election until it has heard legal challenges to the candidacy of General Pervez Musharraf.

Brazil: CVRD won a bid to operate part of the North-South railway for 30 years at a cost of 1.48bn reals, part of its latest push into the logistics business. Bradesco announced a cross-border alliance with Banco de Chile to provide investment products to each other's customers.

Czech Republic: Erste Bank is planning to invest ?400m over the next three years to expand its Ukraine branch network.

India: Corporates took advantage of strong liquidity to tap the capital markets for funding. The government-owned electricity transmission utility closed its first week with a 92% premium to its IPO price of Rs52. Reliance Power, another power utility is considering a 5% pre-placement to its IPO, while construction firm Maytas' IPO was oversubscribed by over 68 times. In other news, HDFC cut its lending rates on new loans by 0.5%.

Indonesia: Astra's motor unit, Toyota-Astra, reported a 2.4% year-on-year increase in September vehicle sales as lower interest rates spurred demand.

Korea: Lotte Confectionery purchased a 30% stake in Vietnamese snack manufacturer, Bibica, giving Lotte a crucial gateway for its expansion plans in Vietnam. Hyundai Motor reported lower car sales in September.

Malaysia: Bumiputra-Commerce Holdings is interested in buying a 30.6% stake in ACL Bank held by Thailand's Ministry of Finance; Walt Disney Co held preliminary talks with Khazanah Nasional about developing a theme park in southern Johor. Synergy Drive is expected to suspend shares of the eight companies involved in its merger exercise.

Mexico: Consorcio ARA downgraded its earnings forecast for financial year 2008, due to its failure to get land permits. Russia: Lukoil is planning to invest US$1.5bn to upgrade its refinery in the Nizhny Nogorod region.

Sri Lanka: Keells Hotels Ltd (KHL), a subsidiary of John Keells Holdings, announced the takeover of three Confifi Group hotels through a share swap in which KHL would issue its own shares.

We hold the above highlighted companies.

Aberdeen Asset Management Asia Limited