South Korean shipbuilding stocks flew high on Friday on news that US President Donald Trump indicated that the world’s No. 1 economy may purchase advanced ships from its friendly nations as part of its efforts to restore the country’s maritime industry.
Shares of Korea’s top three shipbuilders – HD Hyundai Heavy Industries Co., Hanwha Ocean Co., Samsung Heavy Industries Co. – jumped 5.7%, 6.2% and 3.9% to close the day at 342,500 won ($236.58), 77,600 won and 14,500 won, respectively.
HD Korea Shipbuilding & Offshore Engineering Co., the intermediate shipbuilding holding firm of Korean shipbuilding behemoth HD Hyundai Co., also added 3.8%.
Shipbuilding-related stocks also zoomed.
Ship parts manufacturer Hyundai Hyms Co. shot up by a daily limit of 30%; ship engine and part maker HD Hyundai Marine Engine Co. soared 10.8%; and ship engine provider STX Engine Co. rose 5.9%.
The country’s most shipbuilding and related stocks outperformed the broad markets – the main Kospi index closing down 0.5% and the junior Kosdaq index ending up 2%.
The shipbuilding WICS index, a sector index developed by Seoul-based financial market data provider FnGuide, closed up 5.4%.
Their leap comes after US President Trump said on Thursday during a Cabinet meeting that the government may seek approval from Congress to buy “top-of-the-line ships” from other countries that are “close” to the U.S. and known for producing high-quality ships.
MAKE US MARITIME INDUSTRY GREAT AGAIN
Trump hinted at purchasing foreign ships a day after he signed an executive order to restore US maritime dominance.
According to the order, the US government will create a Maritime Action Plan (MAP) to rebuild the country’s shipbuilding capacity.
During the interim, the US may buy advanced ships from close foreign nations, said Trump.
Considering that South Korea, one of the world’s top three shipbuilding nations, is a US ally, shipbuilders in Asia’s fourth-largest economy are expected to benefit from the US government’s shipbuilding revitalization plan.
China and Japan are also global shipbuilding powerhouses, but China-made ships are not considered by the US, given the escalating trade war between Washington and Beijing.
The US government’s move to rebuild the shipbuilding business also comes against the rapid ascent of China’s shipbuilding capacity, overwhelmingly higher than that of the U.S.
The US government blames China’s non-market practices in the shipbuilding industry for the widening gap.
Since Trump was re-elected as the US president, he has been calling for close cooperation from Korean shipbuilders to rebuild the US shipbuilding business.
During a phone call Tuesday, Trump and South Korea’s acting President and Prime Minister Han Duck-soo discussed cooperation in the shipbuilding industry.
By Eunhyeok Ryu and Woo-Sub Kim
ehryu@hankyung.com
Sookyung Seo edited this article.
