NK-related stocks may continue bullish runs

By Lee Kyung-min

Domestic stocks related to the opening of North Korea will continue to enjoy bullish runs in the coming month on growing expectations of inter-Korean cooperation, according to a local brokerage house.

The upbeat outlook came ahead of the third inter-Korean summit, for which President Moon Jae-in was accompanied by top business leaders and heads of key state-run enterprises.

In a research paper released Tuesday, KB Securities said that the primary focus among investors now is whether the thawing relations will lead to tangible inter-Korean business cooperation, which they expect will open up vast opportunities and boost the value of related stocks.

“Expectations are growing because those invited are the South's most powerful, highest-profile business figures with full discretion and authority to launch business projects,” said KB Securities analyst Kim Young-hwan.

“The strong momentum will continue through next month, when a North Korea-U.S. summit is expected to take place.”

The third summit between President Moon and North Korean leader Kim Jong-un started Tuesday and will last through Thursday.

The securities firm expects that if inter-Korean cooperation gains momentum following the summit, its benefits won't be limited to the infrastructure sector.

“If the current mood leads to declaring an end to the Korean War, China-related consumer goods stocks would also benefit,” Kim said.

“China may lift both the travel ban and import ban on Korean products, which was implemented as retaliatory measures against Korea's deployment of a Terminal High Altitude Area Defense battery.”

Top executives who accompanied the President to Pyongyang include Samsung Electronics Vice Chairman Lee Jae-yong, Hyundai Motor Group Vice Chairman Kim Yong-hwan, SK Group Chairman Chey Tae-won, LG Group CEO Koo Kwang-mo and Hyun Jeong-eun, the chairwoman of Hyundai Group, the operator of now-suspended tour projects in the North.

POSCO Chairman Choi Jeong-woo and the heads of the Korea Railroad Corporation, Korea Tourism Organization also visited the North.