Quiet Biden Beneficiary Stocks (株)

Despite Large-Scale US Infrastructure Plan, Domestic Beneficiaries Decline
Reasons Include Anticipation of Factors, Profit-Taking, and Related Theme Adjustments
Stock Market May Face Downward Pressure Depending on Tax Revenue Plan Confirmation

[Image source=AP Yonhap News]

[Asia Economy Reporter Hwang Junho] Despite the news on the 31st of last month (local time) that U.S. President Joe Biden would announce a $2.25 trillion infrastructure investment plan, stocks expected to benefit in the South Korean market remained quiet. There is a view that expectations for the infrastructure investment plan have already been priced into the stock prices, and since it is the start of a long-term plan, analysts suggest monitoring future market conditions.

According to the financial investment industry on the 2nd, companies with a high sales proportion in the North American market and expected to benefit from eco-friendly infrastructure policies include Doosan Bobcat, LS, Hanwha Solutions, and Poongsan.

However, these stocks showed a downward trend in trading on the 1st. Doosan Bobcat and LS, which are involved in construction, power generation, and telecommunications businesses related to U.S. infrastructure investment, fell by 3.8% and 1.17%, respectively. Hanwha Solutions, which merged with Hanwha Q CELLS engaged in the solar power business, also dropped by 0.40%. Poongsan, which could benefit from rising copper prices due to U.S. infrastructure expansion, fell by 0.90%. KMH, a 5G equipment company, declined by 1.08%.

An asset management industry official said, "The infrastructure investment plan is certainly positive news, but it should be noted that it is not new material," adding, "This investment plan is expected to pass Congress as early as July or as late as September, and since it will proceed over eight years, investors' concerns have deepened."

However, given that the U.S. stock market rose after President Biden’s plan was actually announced on the 1st (local time), there is also a view that it is necessary to watch the related beneficiary stocks once again. Yoo Jong-woo, head of the research center at Korea Investment & Securities, analyzed, "The rise in beneficiary stocks was limited due to investors realizing profits following the plan announcement and adjustments in industries recently valued highly," adding, "Since policy responses at the government level to address climate threats continue, the eco-friendly energy industry is expected to experience sustained growth."

There is also an analysis that downward pressure could be applied to the stock market depending on the level of Republican opposition, as the funding for this plan will come from tax revenues. Kang Dae-seung, a researcher at DB Financial Investment, predicted, "If tax revenues are not secured due to Republican opposition, the government may increase bond issuance or reduce expenditure, which could increase interest rate volatility."

This content was produced with the assistance of AI translation services.