Government's 50 Trillion Won Liquidity Support... Construction Stocks All Successfully Rebound

Excessive Concerns Over Real Estate PF from Legoland
Short-Term Bottom Nearing Evaluation

[Asia Economy Reporter Kwon Jaehee] Construction stocks, which plunged due to negative news from Legoland, rebounded on the 24th thanks to government liquidity support. In the securities industry, there are opinions that concerns about real estate PF are excessive and that the short-term bottom is near.

According to the Korea Exchange as of 9:12 a.m. on the 24th, Hyundai Engineering & Construction is trading at 35,400 KRW, up 3.66% from the previous trading day. At the same time, GS Engineering & Construction rose 5.30% to 22,850 KRW, Daewoo Engineering & Construction increased 6.42% to 4,230 KRW, and DL E&C rose 8.68% to 37,550 KRW. Small and medium-sized construction companies are also on the rise. At the same time, Taeyoung Engineering & Construction (13.61%), Dongbu Construction (23.78%), and Gyeryong Construction (5.07%) continue their upward trend.

It is analyzed that the valuation attractiveness has increased as the recent decline in construction stocks was significant. In fact, Hyundai Engineering & Construction fell 20% over the past month. During the same period, GS Engineering & Construction (-19%), Daewoo Engineering & Construction (-15%), and DL E&C (-13%) also recorded significant declines.

Korea Investment & Securities gave an overweight rating on Hyundai Engineering & Construction, GS Engineering & Construction, Daewoo Engineering & Construction, and DL E&C, stating that they are "close to a short-term bottom." They analyzed that even assuming the worst cases such as liquidity depletion and large-scale capital increases, the current stock prices have fallen excessively.

Furthermore, the government's expansion of liquidity support is interpreted as having influenced the market sentiment reversal. As concerns about tightening in the funding market grew due to the Legoland-related asset-backed commercial paper (ABCP) default crisis, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho announced that the liquidity supply program would be expanded to 50 trillion KRW plus alpha.

Kang Kyung-tae, a researcher at Korea Investment & Securities, said, "The reason for maintaining purchases in the construction sector despite negative news is the solid financial strength that has been built up more firmly than market concerns," adding, "Construction companies are trading at the lowest multiple levels since 2010, and they are expected to reach a strong support level where rebounds occurred when approached closely."

Baek Kwang-je, a researcher at Kyobo Securities, also interpreted, "Although the construction sector index has continued to decline due to concerns about market slowdown caused by recent raw material price increases and interest rate hikes, considering the turnaround after the third quarter earnings bottom and the recovery of overseas market conditions, the stock price is judged to be close to the bottom."

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