[THE INVESTOR] US President Donald Trump’s sudden cancellation of a planned summit with Kim Jong-un drove down stock prices of South Korean companies related to businesses in the North on May 25.

Hyundai E&C, the only South Korean construction company that has participated in construction projects in North Korea from 1998 to 2008, saw its stock drop to a low of 57,200 won, or 15.26 percent, in morning trading. It closed at 60,900, down 9.78 percent. 

US President Donald Trump

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The company was catapulted into the spotlight as it was expected to become one of the South Korean companies that would benefit from the thawing tensions between the neighbors after President Moon Jae-in met his North Korean counterpart on April 27. As of last week, its share price had jumped more than 50 percent compared to a month earlier.

The share price of Hyundai Elevator, the largest shareholder of Hyundai Asan, which owns business rights in the North, including tourism programs for Mount Geungang, and train company Hyundai Rotem, tanked 18.66 percent and 23.52 percent, respectively, in the morning following Trump’s announcement. They closed at 86,900 won, down 16.84 percent, and 28,000, down 19.19 percent, respectively.

“North Korea-related shares may remain in limbo for a while, but this could also be a chance to buy stocks at a discount since there is still hope for an eventual resumption of the summit,” said Kim Yoon-seo, an analyst from Shinhan Financial Investment.

Companies in construction and electricity business sectors were also affected by Trump’s sudden about-face. The stock price of Namkwang Engineering & Construction, which runs its branch, Namkwang NK, at the Kaesong industrial park, in North Korea, plummeted 29.45 percent to 17,250 won in the morning to end at 19,950 won, down 18.4 percent.

US President Donald Trump(left) and South Korean President Moon Jae-in.

DongYang Steel Pipe, Hi Steel, and Kwangmyung Electric also saw their respective stocks drop more than 15 percent in intraday trading.

Market analysts had expected the upcoming US-North summit to set the mood to gradually lift heavy economic sanctions slapped on Pyongyang after its latest act of provocation, and to revive the long-stalled inter-Korean economic cooperation.

Following Trump’s announcement to pull the plug on summit talks, the North Korean regime expressed regrets in a statement on May 25, but said it is still willing to talk face-to-face with the US president.

By Kim Young-won (wone0102@heraldcorp.com)