Win lifts defense stocks

Donald J. Trump’s victory in the U.S. presidential election sharply divided Korea’s stock markets, sending safe haven assets higher.

Defense-related shares received a dramatic boost on Wednesday as the Republican’s threat to pull U.S. troops out of Korea or charge the country more for their presence would likely bolster the role and demand of the defense industry in a country that is still technically at war with North Korea.

Firstec, a gun manufacturer and aviation business, was the biggest gainer as it surged 30 percent.

Victek, a Kosdaq-listed defense parts company, surged 29.9 percent while LIG Nex1, an aerospace manufacturer, gained 5.6 percent.

PaperCorea, a Seoul-based paper manufacturing company, was an unexpected winner with a 15.6 percent bump on Wednesday.

PaperCorea’s steep rise was related to land it owns in the Saemangeum area on the southwest coast since multiple media reports said the Trump Group is interested in development there.

By contrast, the shares of the companies that likely would have benefited from a Clinton victory faced huge losses as investors bet against the Democratic nominee.

“Since Clinton’s policy was focused on boosting economy and protecting environment through renewable energy, the related shares were supposed to receive a boost when she won,” said Lee Joon-hee, an analyst at NH Investment & Securities.

Hillary’s support for Obamacare was expected to aid pharmaceutical and bio companies producing cheaper biosimilars. But, the renewable energy sector and the bio industry were among the most affected. Shares of CS Wind, a wind energy company, plunged 18.2 percent and Shinsung Solar Energy, a solar energy firm, fell 14.5 percent. Woongjin Energy lost 13.9 percent.

The pharmaceutical sector on both the Kospi and secondary Kosdaq lost 4.2 percent on average, the highest decline among all industry sectors.

The companies hit hard included Jeil Pharmaceutical which lost 11.3 percent as Kolon Life Science declined 5.4 percent and Komipharm fell 4.5 percent. The election is set to lead an investor rush to safe assets such as gold and yen since Trump’s ethos increased market uncertainties, analysts say.

The pharmaceutical sector on both the Kospi and secondary Kosdaq lost 4.2 percent on average, the highest decline among all industry sectors.

“Trump’s victory entails geopolitical risks and clouding prospects in key policy areas,” said Kim Ji-na, a fixed income analyst at IBK Securities.

Others say that the search for haven assets will be short term.

“We should keep in mind that the overall economic policy by Trump is corporate friendly,” said Kim Yoo-kyum, an economist at LIG Investment & Securities. “So in the long run, it will be good news for equity market and bad news for bonds market.”

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]