By Yoon Ja-young
Staff Reporter
Shares connected with presidential frontrunner Lee Myung-bak rose to the daily ceiling Tuesday, one day ahead of the presidential election.
Analysts said investors seem to be betting on the former Seoul mayor winning the election, but advised that they should make sound investment based on performance and fundamentals.
Sammok Precision, Tuksu Engineering & Construction, Dongshin Construction, and Ee-Hwa Construction, all deemed to benefit from Lee's campaign pledge to build a canal across the country, rose to their daily ceiling.
The shares of Hankook Tire, owned by the family of Lee's son-in-law Cho Hyun-bum, also rose 7.14 percent to 19,500 won.
Shares of construction companies had a steep rise as Lee, who had a successful career in Hyundai Construction and accumulated huge assets through real estate investment, is expected to ease regulations on real estate. Construction companies had a conflict with the President Roh Moo-hyun administration that tried to suppress the real estate bubble, but Lee has pledged to ease taxes on real estate.
Hyundai Engineering & Construction rose 6.27 percent, and Samsung Corp. and Hyundai Development Company also saw around 5 percent rise.
Shares connected to other main candidates Chung Dong-young and Lee Hoi-chang, meanwhile, saw a steep fall.
``Investors seem to be thinking Lee Myung-bak will win the election,'' said Kim Young-jun, an analyst at SK Securities. Kim said the presidential election theme could last for over a week.
However, he said buying these stocks because of the election would be speculation, not investment. ``There isn't the slightest fundamental in the move. The surge is meaningless.''
Kim said the election theme doesn't work as the country gets more transparent. ``Businesses needed money, and the Ministry of the Finance and Economy, under the President, used to determine who's going to get the loan in the past. The personal relationship with the President did matter in the past, but it doesn't seem to be so now.''