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| Crown Prince Mohammed bin Salman Al Saud of Saudi Arabia, left, shakes hands with Prime Minister Han Duck-soo upon his arrival in Seoul, Thursday. Courtesy of Office for Government Policy Coordination, Prime Minister's Secretariat |
By Anna J. Park
With Saudi Crown Prince Mohammed bin Salman Al Saud visiting Korea, Thursday, the stock prices of local corporations in various sectors saw an upward trend during the day's trading, reflecting the markets' buoyed expectations for bilateral business and construction partnerships with Saudi Arabia.
The resource-rich Middle Eastern country has been attracting top-notch global Korean companies, ranging from construction, chemical and technological to heavy industries, for the completion of Neom Smart City, its futuristic $500 billion project initiated by the crown prince in 2017. Located in the northwestern coastal region of the country by the Red Sea, the 26,500-square-kilometer-sized smart city is part of Saudi Arabia's long-term vision heading towards tech-based growth strategies, while distancing itself from oil-based industries.
As Saudi Arabia is actively forming business partnerships with Korean companies so as to bring about the smart city vision to reality, multiple Korean companies saw their stock prices continue to rise due to their business deals with the Middle Eastern country.
For instance, Hyundai Rotem, a heavy industry company that manufactures rolling stock, military equipment and plant engineering, saw its stock price rise by 5.45 percent at Thursday's closing, after announcing the same day that it signed an MOU with Saudi Arabia's Ministry of Investment on railway cooperation.
The stock price of Bifido, Korea's pharmabiotics microbiome company, also rose by 8.03 percent during Thursday's trading session, after signing an MOU with a Saudi Arabian biopharma company to cooperate on producing probiotics. The stock price of Eubiologics, another biopharmaceutical company, also rose by 0.85 at Thursday's closing with the firm agreeing to share vaccine technologies with a Saudi Arabia pharmaceutical firm.
BMT, a piping and valve company, also saw its stock price rise by 1.91 percent on Thursday, as it announced a cooperative deal with Saudi Arabia to produce fitting valves.
What is noteworthy about Thursday's stock action is that the prices of Korean conglomerates in the construction and energy sectors, including Hyundai E&C, Samsung C&T, Lotte Fine Chemical, Doosan Enerbility, DL and HanmiGlobal, which had been posting bullish upward moves since July over winning major contracts with Saudi Arabia, finished down on the day. This is because stock traders tried to realize their gains from the past months' bullish rise on the day of the Saudi crown prince's visit to Korea.
In the past month alone, Samsung C&T's stock price rose by nearly 20 percent. Hyundai E&C share price also increased by some 20 percent during the past four weeks from mid-October to Thursday. HanmiGlobal's stock price more than tripled since July.
Market analysts say that Korean companies are expected to benefit from the bigger global contract markets as Saudi Arabia's Neom project is slated to take concrete steps starting next year.
"Neom project is expected to kick off some of its key contracts in 2023, following last year's project management consulting as well as groundwork," said Chang Moon-joon, an analyst at KB Securities.
"Saudi Arabia's Neom is a massive construction project that will enlarge the entire pie size of global contract markets for the next 10 years," Moon Kyeong-won, an analyst at Meritz Securities, pointed out, adding that Hyundai E&C is expected to obtain $3.5 billion worth of contracts related to the Neom development project in 2023.
