Stock prices of HD Hyundai, Hanwha Ocean soar on US president-elect hinting at outsourcing military ships
The stocks of Korean shipbuilders on Tuesday gained steam after US President-elect Donald Trump hinted at possibly outsourcing US Navy ships to Washington’s allies in an effort to rebuild American maritime military forces.
“We’re going to do to something with ships,” Trump said in an interview on "The Hugh Hewitt Show," a conservative radio program, Monday.
“We need ships. And we may have to go a different route than you would normally go. …We don’t build ships anymore. We want to get that started. And maybe we’ll use allies, also, in terms of building ships. We might have to. We need ships. China’s building, from what I’m hearing, every four days, they’re knocking out a ship.”
According to UK-based global shipping solutions provider Clarksons, Korea claimed 18 percent of shipbuilding orders worldwide between January and November last year, whereas China accounted for 69 percent of the market.
“We may have to go to others, bid out, and it’s OK to do that,” said Trump. “We’ll bid them out until we get ourselves ready. We’re not prepared for ships. We don’t have docks.”
The stock prices of Hanwha Ocean and HJ Shipbuilding & Construction showed strong gains on the day while the shares of HD Hyundai’s shipbuilding subsidiaries and Samsung Heavy Industries increased a little.
As of Tuesday's market closing, the shares of Hanwha Ocean and HJ Shipbuilding & Construction were trading at 42,900 won ($29.60) and 7,190 won, respectively, up 12.6 percent and 15.97 percent from Monday. HD Hyundai Mipo and Samsung Heavy Industries were trading at 131,900 won and 11,830 won, respectively, up 2.17 percent and 3.59 percent from the previous day.
“As the US tries to keep China in check, (Trump) has to turn to his allies who are good at shipbuilding,” said a shipbuilding industry official.
“Among the allies of the US, only Korea and Japan are capable, and Korea has better shipbuilding capabilities than Japan right now, so (Trump) is eyeing Korean shipbuilders. Because right now, the US cannot overcome its shortcomings in the short term.”
Trump’s latest comments on potentially exploring shipbuilding cooperation with Korean companies followed his previous call for expanding ties in the shipbuilding sector between the two countries.
In November last year, Korea’s presidential office announced that President Yoon Suk Yeol and Trump had a brief phone call following Trump’s presidential victory. According to Seoul, Trump underlined the need for the US shipbuilding sector to work with Korea and said it is necessary to cooperate with Korea in the field of maintenance, repair and overhaul.
To back up Korean shipbuilders, Yoon Hee-Sung, CEO of the Export-Import Bank of Korea, vowed to provide all-out efforts to support the country’s shipbuilding industry as he visited the naming ceremony of an ammonia-powered ship at HD Hyundai Mipo Dockyard in Ulsan on Monday.
“The Eximbank increased its shipbuilding support budget to 12 trillion won this year, up 1 trillion won from the previous year, to actively support the revival of the shipbuilding industry,” he said.
“The Eximbank will continue to promote the excellence of our shipbuilding industry to overseas shipowners and offer strategic financial support for overseas clients that contribute to our shipbuilders securing competitiveness through ordering eco-friendly and high-value-added ships.”
