By Lee Hyo-sik
Staff Reporter
Shares of companies engaging in an array of inter-Korean economic cooperation projects have shot up this week, following the news on Sunday that North Korea agreed to dismantle its nuclear weapons development program by the end of the year.
Most firms, which will take part in sending electricity to the Stalinist country in return for the dismantlement of its nuclear reactors, saw their stocks rise to their daily limit up over the past two trading sessions.
Also, shares of those companies operating in the Gaesong Industrial Complex have rallied on expectations that easing of geo-political tensions associated with North Korea will further boost economic cooperation between the two Koreas.
But analysts cautioned that investors should refrain from purchasing inter-Korean project related stocks at the moment as share prices will likely fall once the North Korean hype subsides.
After two days of negotiations with his Pyongyang counterpart Kim Kye-gwan in Geneva, U.S. Assistant Secretary of State Christopher Hill told reporters Sunday that North Korea had agreed to declare its nuclear stockpile and disable its atomic weapons programs by the end of this year.
Also, North Korea's Foreign Ministry said Monday that the U.S. had decided to remove Pyongyang from its list of states sponsoring terrorism.
Shares of Ewha Technologies Information, a power equipment maker, hit its daily limit up on Monday, rising nearly 15 percent to 1,965 won from last Friday's close of 1,710 won. Ewha shares rose 1.78 percent to close at 2,000 won in Tuesday's trading session.
Romanson, a wrist watch manufacturer, which operates plants in the Gaesong Industrial Complex, saw its share price increase 14.9 percent to 3,400 won on Monday from 2,960 won last Friday.
``North Korea related stocks went up sharply early last month after the announcement of the second inter-Korean summit. And now, the latest development surrounding the reclusive state is providing a further boost to those shares,'' said Lee sun-yup, an analyst at Goodmorning Shinhan Securities.
He said a large number of investors are snatching up shares of companies involved in North Korean economic projects when the local stock market has lost its directions amid volatile investor sentiment in the wake of U.S. subprime loan default risks.
He said investors should be picky, as it will take time before these companies' profits will benefit from the easing of tension between the North and South.
``It's risky to jump on the bandwagon at the moment as such shares will likely come down soon as in the past when the North Korean hype dies down and the market regains solid upward momentum,'' Kim said.
He advised investors to choose North Korea related shares based on their corporate earnings and long-term prospects.
leehs@koreatimes.co.kr
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