Inter-Korean shares rally on possible US-North Korean talks
gettyimagesbank
By Jhoo Dong-chan
Share prices of firms related to inter-Korean economic cooperation enjoyed a rally in June over a possible third U.S.-North Korea summit ahead of U.S. President Donald Trump's visit to Seoul late this month.
According to online market researcher Market Point, share prices of Shinwon and GoodPeople gained 18 percent and 14.1 percent, respectively, this month as of Tuesday. Both fashion firms had operated manufacturing plants in Gaeseong Industrial Complex before they were shut down in February 2016.
Other Korean firms such as In The F and Jestina, which had also operated a factory in the complex, enjoyed a rally in their share prices in the period.
Share prices of Ecomaister and Hyundai Rotem jumped around 30 percent and 12 percent, respectively, this month alone. Both firms will participate in inter-Korean railroad projects if they go ahead.
Of the nation's inter-Korean economic cooperation stocks, market observers said Hyundai Elevator is expected to benefit the most from the peaceful atmosphere.
Owning a 73.9 percent stake in the elevator-producing firm, Hyundai Asan has been the nation's most active player in the past inter-Korean economic cooperation projects.
“Hyundai Asan has been at the forefront of the inter-Korean economic cooperation projects. It's natural Hyundai Elevator could enjoy a rally in its share price thanks to the recent peaceful mood,” said Shinhan Investment researcher Kim Yoon-seo.
“If Hyundai Asan launches a joint project with Pyongyang, share prices of Hyundai Elevator will skyrocket.”
Daishin Securities analyst Lee Dong-heon agreed.
“Expectations are very high now,” Lee said. “We could see another post-Hanoi summit situation this time as well, but expectations are now leading the rally.”
Kim claimed the current rally could continue throughout the year.
“The situation is different from the Hanoi summit. It's also crucial for Trump to raise his approval rating before the presidential election next year,” he said.
“North Korea is an important card for Trump. He will come up with visible results by the end of this year.”
North Korean leader Kim Jong-un sent a wreath of flowers for the funeral of late former South Korean first lady Lee Hee-ho last week.
Along with the wreath, Kim also sent a condolence message via his sister Yo-jong at the border village of Panmunjeom.
In February, the summit between Trump and Kim ended without a deal in Vietnam due to differences over the scope of North Korea's denuclearization and sanctions relief from the U.S.
Talks between Washington and Pyongyang have since halted, but U.S. National Security Adviser John Bolton said in a media conference last week that a third summit between Trump and Kim is “entirely possible.”