Korean construction firms rally on prospects of U.S. power plant investments

Korean construction companies saw a pronounced rise in share prices after news that the United States is nearing a $350 billion investment program that could fund nuclear and other power projects, with a gas-fired combined-cycle plant in Encinal, Texas identified as a possible first project. The Ministry of Trade, Industry and Resources highlighted this potential project, and the bilateral talks could involve over $100 billion in energy investments, including eight nuclear plants.

Consequently, the KRX Construction Index recorded a 9.44 percent increase from Sept. 1 to 11, the best performance among Korea Exchange sector indexes and well above the KOSPI’s rise. Analysts from KB Securities and Shinhan Securities caution that the market’s optimism may already be priced in, and that future stock sensitivity will hinge on the actual order volume and profit margins of Korean participants, who may work alongside U.S. contractors or supply major equipment. Industry Minister Kim Jung-kwan recently met U.S. Commerce Secretary Howard Lutnick in New York to finalize the investment plan, which is slated for presentation to the National Assembly and an initial investment later this month.