Summit stirs market optimism

With the historic first-ever meeting between a North Korean leader and a sitting U.S. president about to take place in Singapore, there’s growing optimism in Seoul over economic cooperation between the two Koreas and the positive impact that could have on the South Korean stock market.

On Friday, related stocks closed lower than the previous day. Hyundai Elevator, the de facto holding company of Hyundai Group, fell nearly 5 percent. Hyundai Group had the exclusive rights to North Korea’s tourism industry before shutting down its operation in 2008 after a South Korean tourist was shot to death.

Other related stocks like Hyundai Rotem and Hyundai E&C saw a sharp drop. Cement companies also fell.

These stocks have been rising rapidly since the relationship between the two Koreas started to show signs of improvement.

Things took a turn for the worse on Friday, most likely because investors were looking to profit from the recent growth.

In fact, the price of Hyundai Rotem stocks has fallen more than 8 percent since the start of this month as foreign investors net sold 179.6 billion won ($167.2 million) worth of the train developer’s stocks. Hyundai Elevator has seen a sharper drop at 9.68 percent.

A study by the Korea Exchange between the beginning of this year and May 15 showed that on average the value of the 63 stocks that are considered to be inter-Korean economic cooperative companies saw their value more than double.

American investor Jim Rogers projected that the Singapore summit will have a positive influence on the South Korean stock market and economy during a meeting with Samsung Securities’ CEO Koo Sung-hoon that took place on Friday in Singapore.

Rogers said that synergy could be created when combining South Korea’s capital with talented young North Koreans and the reclusive state’s abundant natural resources.

However, Rogers said that global investment banks currently lack data on the North Korean economy.

Meanwhile, the National Assembly is seeing an increase in the number of bills from legislators pushing greater economic exchanges with North Korea.

Rep. Youn Kwan-suk of the ruling Democratic Party proposed amendments to three acts related to rail construction, to pave the way for rail development projects to link the two Koreas.

Kang Hoon-sik, another lawmaker from the same party, proposed a raft of bills to lay the legal groundwork to allow nearly a dozen public firms’ participation in inter-Korean projects.

Rep. Kim Kyung-hyup has also proposed a bill aimed at strengthening private-sector exchanges, especially between nonprofit organizations.

BY LEE HO-JEONG, YONHAP [lee.hojeong@joongang.co.kr]