Korean Shipbuilders Expect to Benefit from US-China Conflict

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Korean shipbuilding stocks have been rallying as expectations grow that the Korean shipbuilding industry will enjoy reflective benefits from US sanctions against China.

According to the Korea Exchange on April 23, Hanwha Ocean closed at 34,750 won (US$25.35), down 2550 won, or 7.92 percent, from April 22 but it has risen nearly 20 percent in four trading days.

On April 17 (local time), the White House said the Office of the United States Trade Representative (USTR) was investigating China’s unfair trade practices in the shipbuilding, offshore and logistics sectors. On April 18, Hanwha Ocean’s stock price rose 14.83 percent. The stock underwent two minor adjustments on April 19 and 22 but rose by nearly 8 percent on April 23, climbing by a total of 19.83 percent in four trading days.

“The U.S. sanctions against China may not have much desired effects as the United States has no shipbuilding industry, but may weaken China’s price war fueled by subsidies and taxational support,” said Lee Dong-heon, a researcher at Shinhan Securities & Investment, adding that it is an incentive to raise ship prices in the long run.

In addition to Hanwha Ocean, other Korean shipbuilders such as HD Korea Shipbuilding & Offshore Engineering (5.03 percent), HD Hyundai Heavy Industries (3.75 percent) and Samsung Heavy Industries (1.58 percent) also enjoyed increases in their stock prices.

Source: Business Korea