Trading room at Hana Bank headquarters in Seoul on July 15 (Courtesy of Yonhap)
Investors in the South Korean stock market rushed to stocks linked to former US President Donald Trump on Monday, such as construction, nuclear power and defense and exchange-traded funds (ETFs) with Tesla Inc. as the odds of his winning back the White House rose after the shooting at him in the election rally last Saturday.
The main Kospi rose 0.14% to finish at 2860.52, and the junior Kosdaq climbed 0.30% to close at 852.88 on July 15, the first trading day after the US presidential candidate’s incident.
The Korean stock market was steady on Monday. Some 53% of the 933 Kospi-listed shares rose, while 41% and 6% fell and remained flat, respectively. On the Kosdaq, some 51% of shares rose and 43% dropped; 6% remained flat.
Foreigners net sold 80.7 billion won ($58.3 million) worth of stocks on the Kospi and net purchased 89.8 billion won worth of the Kosdaq-listed stocks on Monday. Korean institutional investors net bought 122.7 billion won worth of the Kospi-listed stocks and net sold 15.8 billion won worth of the Kosdaq shares on the same day.
“We are unlikely to see a sharp outflow of funds as the public opinion is that Trump’s victory will be favorable to (the Korean) stock market,” said Kim Jee-hyun, an analyst at Seoul-based Kiwoom Securities Co. “If Trump’s win becomes more likely, the stock markets will see fewer uncertainties,” Kim added.
Trump after being shot at election rally on July 13 (Courtesy of Associated Press)
TRUMP-VICTORY TRADES
Korean stocks in nuclear power, construction, infrastructure and defense soared on Monday on the expectation that Trump’s victory will benefit such shares.
The share of Korea Electric Power Industrial Development Co., a nuclear power equipment maintenance company, soared 10.64% to finish at 15,910 won on Monday. KEPCO Engineering & Construction Company Inc., a nuclear energy plant design and engineering firm, jumped 7.65% to close at 80,200 won. Automation equipment maker LS Electric Co.’s share closed at 227,500 won, up 3.64%.
Shares of builders and construction equipment also surged on the expectation of construction of new cities in the US, which Trump has pledged. GS Engineering & Construction Corp. soared 7.54% to close at 17,260 won, and Daewoo Engineering & Construction Co. jumped 6.77% to finish at 4,260 won.
HD Hyundai Construction Equipment Co. surged 9.89% to finish at 57,800 won, and HD Hyundai Infracore Co. jumped 9.93% to finish at 8,080 won.
Korean defense stocks also significantly rose on anticipation that the global demand for weapons will increase following Trump’s win. LIG Nex1 Co. surged 13.35% to close at 233,500 won, and Hyundai Rotem Co. jumped 7.51% to finish at 42,950 won.
Advertisement on Samsung KODEX Tesla Value Chain FactSet ETF (Courtesy of Samsung Asset Management)
TESLA ETFs UP; BATTERY, RENEWABLES DOWN
Korean ETFs with Tesla Inc. rose as co-founder and Chief Executive Elon Musk has expressed his strong support to the Republican candidate.
KIM ACE Tesla Value Chain Active ETF, managed by Korea Investment Management Co., surged 9.23% to 12,355 won on Monday. Samsung KODEX Tesla Value Chain FactSet ETF, operated by Samsung Asset Management Co., rose 4.28% to 14,130 won on the same day.
Electric battery and renewable energy stocks declined on the forecast that Trump may roll back Inflation Reduction Act (IRA) tax credits in EVs and clean energy.
The world’s third-largest battery maker LG Energy Solution Ltd. share plunged 3.89% to finish at 358,500 won. Wind power equipment maker CS Wind Corp. dropped 2.42% to 48,300 won.
“It may be difficult for Trump to change the big frame of the IRA, but he would make giving subsidies more difficult through legislation amendment,” said Han Byung-hwa, an analyst at Seoul-based Eugene Investment & Securities Co. “If Trump wins, the growth rate of EV markets will significantly decline than currently expected,” Han added.
By Han-Shin Park
phs@hankyung.com
Jihyun Kim edited this article.
