By Kim Yoo-chul
Staff Reporter
The successful conclusion of a free trade pact between South Korea and the European Union is expected to boost the shares in carmakers, shipbuilders and electronics firms as the import tariff for the products is gradually scrapped.
If the agreement comes into effect ― next year at the earliest ― the import tariff for South Korean products, which is currently set at 14 percent for TVs and 10 percent for automobiles, will be eliminated in three to five years.
But machinery makers, chemical companies, pharmaceutical firms and agriculture-related enterprises are forecast to suffer due to widening technology gaps with their bigger European rivals.
``On the back of technology and price competitiveness, telecommunication- and semiconductor-related shares will benefit from the free trade pact,'' Kang Hyun-cheol, chief analyst at Woori Investment & Securities, said Monday.
``Shipbuilders and electronics firms are also set to see a boost in their shares, while those of machinery- and chemical-related stocks may be hurt as the import tariffs are still higher than their European competitors,'' Kim added.
``Korea's car exports to the EU is expected to rise by 40 percent. Meanwhile, truck makers are expected to secure new markets as the 22-percent import tariff, which is now weighed on Korean manufacturers, will be scrapped,'' Samsung Economic Research Institute (SERI) said in a report.
Park So-yeon, an analyst at Korea Investment, said the market share of Korean carmakers in Western Europe will rise, capitalizing on demand for compact-sized automobiles.
According to an analysis released by the Korea International Trade Association (KITA), Korea exported $9.8 billion worth of shipbuilding- and telecommunication-related products last year, as well as $7.8 billion worth of memory chips and electronic components.
Korea is home to the world's three biggest shipyards ― Hyundai Heavy, Samsung Heavy and Daewoo Shipbuilding & Marine Engineering.
Samsung Electronics is also the world's top vendor of memory chips and flat-screens, while Hyundai-Kia Automotive Group is one of the leading car manufacturers in the global market.
But analysts say agricultural shares focusing on dairy products will experience difficulties as price-competitive products from the EU are set to come into Korea.
Korea exported just $190 million worth of agricultural products to the EU while importing $2.04 billion in 2008, according to data from the Korea Agro-Fisheries Trade Corp.