South Korea’s construction stocks, which had been sluggish amid a slump in the local real estate market, rallied on Wednesday, reflecting favorable factors from overseas, such as the post-war reconstruction of Ukraine‘s infrastructure and the large-scale Neom project in Saudi Arabia.

Shares of HDC Hyundai Development Co. and Daewoo Engineering & Construction Co. closed up 1.57 percent and 1.26 percent, respectively in the main Kospi market on Wednesday. DL E&C Co. gained 0.68 percent, Hyundai Engineering & Construction Co. 0.62 percent and GS Engineering & Construction Corp. 0.46 percent. Some small and medium-sized construction stocks soared close to their daily limit during the intraday, with Sambu Engineering & Construction Co. climbing 8.8 percent, Dongbu Corp. 10.6 percent and Tae Young Engineering & Construction Co. 6.09 percent.

The construction stocks were boosted by news that South Korea’s Minister of Land, Infrastructure and Transport Won Hee-ryong signed a memorandum of understanding (MOU) with Ukrainian Deputy Minister of Infrastructure Oleksandra Azarkhina in Poland on the post-war reconstruction of the East European country the previous day. The Ukrainian deputy minister vowed to share data on post-war reconstruction projects established by the Ukrainian government with Korea ahead of an international release on June 21 to 22, according to the land ministry.

“Even if Ukraine’s reconstruction begins in earnest, winning actual projects will take a lot of time,” said Kang Kyung-tae, a senior researcher at Korea Investment & Securities Co. “We need to keep watching the development, but we see it as positive news.”

Expectations for overseas orders, including from the Middle East, are also rising. “Considering the size of cash injections by companies in the Middle East, uncertainties surrounding orders from the region will be low,” said Kim Seon-mi, an analyst at Shinhan Investment & Securities Co.

By Choi Hee-seok and Yoon Yeon-hae

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