Uncertainties surrounding North Korea and the government's blanket sanctions have weighed down stock prices of local firms operating in the communist country, a market researcher here said Sunday.

FnGuide claimed long-running tension between the two Koreas has caused sharp fluctuations in share prices, making stocks of many businesses with production lines in the Kaesong Industrial Complex in the North's border town of the same name worth less now than five years earlier.

Five years ago, Seoul announced sweeping sanctions that limited movements of people and barred all new business investments in retaliation for the sinking of the South Korean Navy vessel Cheonan that left 46 sailors dead.

Companies such as metal molds manufacturer Jaeyoung Solutec, clothing maker In The F, golf club operator Emerson Pacific and electrical equipment maker Ehwa Technologies Information have all reported more-than-usual sharp fluctuations in share prices.

Such developments have even affected companies like Hyundai Merchant Marines (HMM), South Korea's No. 2 shipping line, which is the largest shareholder of Hyundai Asan Corp., a company which runs tours to Mount Kumgang resort in North Korea.

The resort has been closed since 2008, when a North Korean guard shot killed a South Korean tourist at the resort.

HMM shares, which stood at 23,658 won (US$21.7) in May 24, 2010, traded at 9,110 won as of Friday.

"Whenever there is a thaw in relations stock prices rose sharply, but they plunged when the North tested a nuclear device, fired off rockets or engaged in other forms of aggressive behavior," FnGuide said.

The sudden cancellation of UN Secretary General Ban Ki-moon's trip to Kaesong last week hurt stock prices, it said.

While there has been a move to set aside more funds to prepare for eventual unification, most of the money has gone to companies that can benefit from the expected rise in demand for infrastructure building, education and health services in North Korea, FnGuide said. (Yonhap)