North-linked firms soar on Seoul market after summit

SEOUL: Shares in South Korean builders, railway component makers and other firms with links to the North rocketed as Friday’s interKorea summit fuelled optimism for new cross-border projects.

The historic meeting saw the North’s leader Kim Jong Un and South Korean President Moon Jae-in vowing to “encourage more active cooperation, exchanges” and promote “co-prosperity”.

The declaration sent shares of many firms which were once involved in now moribund interKorean projects shooting up on the Seoul stock market.

Shares of Hyundai Engineering & Construction – which built buildings at the now-shuttered Kaesong jointly-run industrial complex in the North – surged 26 per cent.

The zone – where 53,000 North Korean workers once churned out products ranging from watches to clothes for some 120 South Korean companies – was shuttered in 2016 under Moon’s conservative predecessor Park Geun-hye.

Kim and Moon agreed on Friday to open a joint liaison office in the Kaesong area – a move seen by some as a first step toward reopening the compound, although UN Security Council sanctions imposed on the North over its missile programmes could yet stymie such hopes.

Nam Kwang Engineering & Construction, which once ran a construction materials factory in the complex, jumped 15 per cent.

Apparel maker Good People rose 6.3 per cent, although North Korea is banned from both importing and exporting textiles under the UN measures.

Hyundai Elevator jumped 11 per cent. It has a controlling stake in Hyundai Asan, which holds rights from Pyongyang and Seoul for several cross-border projects including the Kaesong development.

Other units of the Hyundai group, whose late founder – a refugee from the North – pioneered cross-border economic projects, saw their shares soar in anticipation of a business boom.

Hyundai Information Technology climbed 20.4 per cent and railway equipment maker Hyundai Rotem soared by the daily limit of 30 per cent after Kim and Moon vowed steps towards the “connection and modernisation of the railways and roads” between the two halves of the peninsula.

Daea IT – which produces rail signalling systems – also hit the daily limit, while infrastructure firm Woowon Development jumped 26 per cent. — AFP

In this file photo taken on April 27, a picture of North Korea’s leader Kim Jong Un and South Korea’s President Moon Jae-in is beamed onto the Peace House during a closing ceremony at the end of their historic summit at the truce village of Panmunjom. — AFP photo