Whoever says investors aren’t excited about the prospect of thawing relations between North Korea and the world hasn’t been looking at South Korean construction stocks.
A small company called Busan Industrial Co. has become the best performer in Korea’s benchmark Kospi index this year—and one of the biggest gainers in all of Asia. The South Korean construction-materials manufacturer, which sports a market cap of just $174 million according to FactSet, has soared by 498% this year. The overall index has risen 0.05%.
Busan is one of many infrastructure stocks that Korean investors, mostly retail, have embraced as they search for companies that will benefit from the potential opening up of North Korea, said Paul Choi, head of research for Korea at brokerage CLSA.
Other big year-to-date winners in Korea’s stock market include Hyundai Cement Co. , which makes construction materials and has rallied 383%. Shares of Namkwang Engineering & Construction Co. have risen 297%. They all fell on Tuesday.
Busan Industrial’s recent rally stands out from the rest. Its shares started surging on April 26, a day before Kim Jong Un became the first North Korean leader to set foot in the South since the Korean War. Two weeks later, the stock had quadrupled in value. By June 1, at its peak, the stock was up nearly 700% for the year.
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