Seoul’s newly elected mayor, Oh Se-hoon delivers a greeting at City Hall on his first day in office Thursday. (Yonhap)
Construction businesses in the South Korean stock market are likely to benefit from an election win by Seoul Mayor Oh Se-hoon over his pledges focusing on housing redevelopment plans.
“Based on plans such as expanding floor area ratio, supplying 360,000 housing units in five years and abolishing the restriction on building apartments with more than 35 floors near the Han River, reconstruction and redevelopment businesses are expected to be revived,” said Kim Dae-jun, an analyst at Korea Investment & Securities, forecasting that private construction firms’ stocks will gain momentum.
SK Securities picked major builders Hyundai Engineering & Construction, GS Engineering & Construction and construction management firms HanmiGlobal and Heerim Architects & Planners as the biggest beneficiaries.
Some analysts have also projected a rosy outlook for the trust industry amid possible easing regulations on housing reconstruction in Seoul. Key local trust companies include Korea Asset Investment Trust and Korea Real Estate Investment and Trust.
Samsung Securities analyst Baek Min-kyung said stagnant trust companies are highly likely to see acceleration in their business from this year, backed by the government’s policy efforts to home supply and the mayor candidates’ reconstruction regulation easing suggestions.
Investors also began purchasing construction stocks followed by the market experts’ positive forecast. Backed by high interest, the construction sector rose 3.8 percent from the previous session’s close.
Shares of Daewoo Engineering & Construction advanced 7.86 percent to 7,000 won ($6.26), while GS E&C and Hyundai E&C also gained 6.45 percent and 3.11 percent to 45,400 won and 46,400 won, respectively. HDC Hyundai Development rose 1.36 percent to 29,800 won.
Korea Asset Investment Trust and Korea Real Estate Investment and Trust traded at 3.71 percent and 1.64 percent higher, respectively, to 4,890 won and 2,485 won per share.
HanmiGlobal’s shares Heerim A&P went up 1.38 percent to 11,050 won and Heerim A&P edged up 0.3 percent to 4,950 won.
As investors predicted that the number of those moving in and out of homes is to rise in line with reconstruction and redevelopment expansion plans, furniture companies’ stocks also moved upward.
Shares of Haatz once climbed 5.63 percent to 12,200 won. Korea Furniture and Enex’s stocks once soared up to 20.28 percent and 16.67 percent to 8,600 won and 2,800 won during intraday trading, but ended the day by retreating 1.4 percent and 1.46 percent, respectively.
By Jie Ye-eun (email@example.com