Korean Shipbuilding Stocks Smile Amid Ukraine Crisis... Will Shipbuilding Shares Shine?

[Asia Economy Reporter Kwon Jae-hee] As the Ukraine crisis prolongs, shipbuilding stocks have emerged as beneficiaries. This is due to the rebound in international oil prices and Europe's efforts to diversify its energy supply chain to reduce dependence on Russian gas, which has increased expectations for LNG demand.

According to the Korea Exchange on the 28th, the stock prices of the three major shipbuilders have all risen over the past week. Hyundai Heavy Industries increased by 9.2%, Samsung Heavy Industries by 2.9%, and Daewoo Shipbuilding & Marine Engineering by 5.1%. Notably, foreign investors have been steadily buying Hyundai Heavy Industries shares since the 7th of this month. Last week, foreign investors and institutions purchased shipbuilding stocks worth approximately 15.58 billion KRW and 22.96 billion KRW, respectively.

The influx of demand for shipbuilding stocks is attributed to the diversification of the energy supply chain caused by the Ukraine crisis. Europe relies heavily on Russia for energy. As of last year, Europe imported 26.9% of its crude oil, 46.7% of its coal, and 41.1% of its natural gas from Russia. Amid this, Russia announced damage to the pipeline connecting Kazakhstan to the Black Sea, increasing the necessity for Europe to diversify its energy supply chain. This has led to expectations of increased orders for shipbuilders due to rising LNG demand. Additionally, the U.S. Department of Energy has approved the additional operation of LNG production facilities, with LNG exports expected to increase by 20% by the end of the year, further boosting demand for LNG carriers.

In fact, there has been a recent increase in orders for LNG carriers. Daewoo Shipbuilding & Marine Engineering secured orders for three LNG carriers worth a total of 863.5 billion KRW from shipowners in the Americas.

Lee Dong-heon, a researcher at Daishin Securities, analyzed, "Due to the Ukraine crisis, Europe has a stronger incentive to diversify LNG import sources beyond Russia."

However, there are also warnings to be cautious of volatility. Choi Kwang-sik, a researcher at Daol Investment & Securities, stated, "As these expectations have been strongly reflected in the recent stock prices of shipbuilders, volatility is inevitable for the time being."

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