The warm meeting between the leaders of North and South Korea on Friday caused shares in South Korea’s diversified engineering giant Hyundai to soar this week.
Kim Jong-un and Moon Jae-in agreed to "adopt practical steps towards the connection and modernization of the railways and roads", and to begin research on joint economic projects.
The hopeful economic signs were underscored by North Korea’s renewed pledge to abandon its nuclear weapons programme.
Shares in train maker Hyundai Rotem rose 30% and those in contractor Hyundai Engineering & Construction, the country’s largest construction group, jumped 27%. Meanwhile, Hyundai Elevator gained 14%.
Of all the south’s contractors, Hyundai Group has the greatest experience of working in the north.
The Kaesong industrial complex was intended to build confidence between the warring countries (Jack Upland/Creative Commons)
Hyundai Asan, the conglomerate’s development arm, has invested heavily in North Korea.
Its best known project was the Kaesong Industrial Park (pictured), built on the North Korean side of the demilitarised zone. South Korea cut off the park’s electricity and water following a missile launch in 2016.
Sungmee Park, an analyst at Citi, said in the Financial Times: "We expect the construction sector would immediately benefit from an urgent need for power plants and infrastructure in North Korea, if the economy opens. In the longer term we also expect opportunities in the housing, commercial buildings and plants for the 25m population of North Korea."
Other notable winners in rally included Ssangyong Cement and Hanil Cement, which each climbed 9%.
Top image: Hyundai stands to gain from its long association with the Democratic People’s Republic (Hyundai)
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