Korean stocks linked to a Trump victory soar after shooting

Investors in the South Korean stock market rushed to stocks seen as connected to former US President Donald Trump on Monday, such as construction, nuclear power, defense and exchange-traded funds (ETFs) linked to Tesla Inc. as the odds of his return to the White House rose after last Saturday's election rally shooting. 

The main Kospi rose 0.14% to finish at 2860.52, and the junior Kosdaq climbed 0.30% to close at 852.88 on July 15, the first trading day after the apparent assassination attempt on the US presidential candidate.

The Korean stock market was steady on Monday. Some 53% of the 933 Kospi-listed shares rose, while 41% and 6% fell or remained flat, respectively. On the Kosdaq, some 51% of shares rose and 43% dropped; 6% remained flat.

Foreigners net sold 80.7 billion won ($58.3 million) worth of stocks on the Kospi and net purchased 89.8 billion won worth of Kosdaq-listed stocks on Monday. Korean institutional investors net bought 122.7 billion won worth of Kospi-listed stocks and net sold 15.8 billion won worth of Kosdaq shares on the same day.

“We are unlikely to see a sharp outflow of funds as the public opinion is that Trump’s victory will be favorable to (the Korean) stock market,” said Kim Jee-hyun, an analyst at Seoul-based Kiwoom Securities Co. “If Trump's win becomes more likely, the stock markets will see fewer uncertainties,” Kim added.

TRUMP-VICTORY TRADES

Korean stocks in nuclear power, construction, infrastructure and defense soared on Monday on expectations that a Trump victory will benefit such shares.

Shares of Korea Electric Power Industrial Development Co., a nuclear power equipment maintenance company, soared 10.64% to finish at 15,910 won on Monday. KEPCO Engineering & Construction Company Inc., a nuclear energy plant design and engineering firm, jumped 7.65% to close at 80,200 won. Automation equipment maker LS Electric Co.'s share price closed at 227,500 won, up 3.64%.

Shares of builders and construction equipment also surged on expectations of construction of new cities in the US, which Trump has pledged. GS Engineering & Construction Corp. soared 7.54% to close at 17,260 won, and Daewoo Engineering & Construction Co. jumped 6.77% to finish at 4,260 won.

HD Hyundai Construction Equipment Co. surged 9.89% to finish at 57,800 won, and HD Hyundai Infracore Co. jumped 9.93% to finish at 8,080 won.

Korean defense stocks also significantly rose on anticipation that global demand for weapons will increase following a Trump win. LIG Nex1 Co. surged 13.35% to close at 233,500 won, and Hyundai Rotem Co. jumped 7.51% to finish at 42,950 won.

TESLA ETFs UP; BATTERY, RENEWABLES DOWN

Korean ETFs linked to Tesla Inc. rose as co-founder and Chief Executive Elon Musk has expressed his strong support for the Republican candidate.  

KIM ACE Tesla Value Chain Active ETF, managed by Korea Investment Management Co., surged 9.23% to 12,355 won on Monday. Samsung KODEX Tesla Value Chain FactSet ETF, operated by Samsung Asset Management Co., rose 4.28% to 14,130 won on the same day.

Electric battery and renewable energy stocks declined on forecasts that Trump may roll back Inflation Reduction Act (IRA) tax credits for EVs and clean energy.

The world’s third-largest battery maker LG Energy Solution Ltd. share plunged 3.89% to finish at 358,500 won. Wind power equipment maker CS Wind Corp. dropped 2.42% to 48,300 won.

“It may be difficult for Trump to change the big frame of the IRA, but he would make giving subsidies more difficult through legislation amendments,” said Han Byung-hwa, an analyst at Seoul-based Eugene Investment & Securities Co. “If Trump wins, the growth rate of EV markets will significantly decline, more than currently expected,” Han added.

Write to Han-Shin Park at phs@hankyung.com

Jihyun Kim edited this article.