“Isn’t the South Korean shipbuilding industry experiencing a supercycle? I’m hopeful for a resurgence similar to what we saw in 2007.”
South Korean investors in shipbuilding-related stocks were all smiles on Apr. 18, seeing stock prices rising. The anticipation that the US-China trade tensions, particularly concerning semiconductors and electric vehicles, would be expanded to the shipbuilding sector served as the catalyst for this rise.
On Apr. 17. (local time), the White House announced the launch of an investigation into alleged unfair trade practices by China in the shipbuilding, maritime, and logistics sectors. This investigation was prompted by a petition submitted by five national labor unions, including the United Steelworkers (USW).
The U.S. announcement caused shares of shipbuilding-related companies to surge in South Korean markets. The U.S. probe into China, which dominates the global shipbuilding industry, will benefit the South Korean shipbuilding industry. Increased foreign and institutional buying drove the stocks to higher levels on Apr. 18.
Samsung Heavy Industries (SHI), one of South Korea’s top three shipbuilders, surged by over 12% intraday, reaching a 52-week high of 9,710 won. The buying spree persisted throughout the day, with trading volume exceeding 38 million shares. Foreign investors made significant purchases, totaling more than 108.4 billion won (approximately $78.38 million) on that single day, positioning the stock as the top-ranked in foreign buyers’ net purchases on the KOSPI. Remarkably, this exceeded the net purchases of Samsung Electronics (81.7 billion won), which ranked second. According to the Korea Exchange, the 108.4 billion won in foreign net purchases of SHI represented the highest ever recorded since the company’s public listing in 1994. The share price stood at 9,540 won at the close of trading, marking a substantial 9.8% increase from the previous day.
Another South Korean shipbuilding tycoon, Hanwha Ocean (formerly Daewoo Shipbuilding & Marine Engineering), saw a remarkable 15% surge in its stock price, closing at 33,300 won. This surge propelled the company’s market capitalization back to the 10 trillion won level, which marked the first time since Hanwha Ocean announced a 2 trillion won capital increase in August last year. Additionally, HD Hyundai Heavy Industries (HD HHI), boasting a market capitalization of over 10 trillion won, experienced an 8% increase, closing at 123,000 won. HD Korea Shipbuilding & Marine Engineering, an intermediate holding of HD HHI, closed at 119,400 won, up 6.3%. HD Hyundai Mipo, a subsidiary of HD HHI closed at 64,900 won, up 9.8% from the previous day.
Small and mid-sized shipbuilders in South Korea also had a good day. SEJINHEAVYIND hit a 52-week high, rising to 7,440 won intraday, while STX Heavy Industries surged to 14,400 won intraday. Other stocks related to shipbuilding equipment, such as Hyundai HYMS (7.5%), SUNG KWANG BEND (6.9%), Hankuk Carbon (6%), and Dongsung Finetec (5.4%), also saw increases.
“The bio and shipbuilding sectors will benefit from the US-China (G2) dispute,” said Ha Keon-hyeong, a researcher at Shinhan Securities. “The US has expanded its regulatory focus beyond Chinese semiconductors to include industries like bio and shipbuilding in which China has been a top global exporter.”
