"Domestic Nuclear Power ETFs" Hit a Snag on Their First Day of Listing

Simultaneous Listing of Domestic Nuclear ETFs by Mirae Asset and Shinhan Asset Management on the 19th
Controversy Over "Unequal Contract" With Westinghouse Triggers Sharp Drop in Nuclear Stocks
Long-Term Growth Expected... Anticipation for Incre

The upward trend in nuclear-related stocks, which has been one of the leading sectors driving the rise in the domestic stock market this year, has come to a halt. News that Korea Hydro & Nuclear Power and Korea Electric Power Corporation signed an unequal contract with Westinghouse in the United States has affected investor sentiment. Coincidentally, two newly listed domestic nuclear energy exchange-traded funds (ETFs) plunged on their first day of trading.

According to the financial investment industry on August 20, the 'TIGER Korea Nuclear ETF' fell by 5.52% from its reference price on its listing debut on the 19th. This was due to simultaneous declines in the ETF’s major holdings, including Doosan Enerbility, Hyundai Engineering & Construction, Korea Power Engineering Company (KEPCO E&C), KEPCO KPS, and Daewoo Engineering & Construction. In the domestic stock market the previous day, Doosan Enerbility dropped by 8.6%, while KEPCO KPS and KEPCO E&C each fell by more than 8%.

The 'SOL Korea Nuclear SMR ETF,' which was listed on the same day, also declined by 6.3%. This ETF includes a total of 12 stocks, such as Doosan Enerbility, Hyundai Engineering & Construction, Korea Electric Power Corporation, KEPCO E&C, KEPCO KPS, Woori Technology, BHI, Taewoong, and Samsung C&T.

Investor sentiment weakened after it became known that South Korea would have to pay about 1 trillion won per nuclear reactor to Westinghouse in the United States when exporting nuclear power plants. Concerns have been raised that there may be little profit left even if South Korea wins nuclear power projects overseas in the future.

Experts in the financial investment industry advised that the benefits from expanding exports to third countries and entering the U.S. nuclear power market should also be considered. Heo Minho, a researcher at Daishin Securities, explained, "Nuclear power is part of the energy industry and also a defense industry dominated by a few countries," adding, "Although the profitability of nuclear exports has declined compared to building nuclear plants domestically, attention should be paid to the fact that concerns over U.S. sanctions have lessened."

He further added, "After the completion of a nuclear power plant, Korea Hydro & Nuclear Power can earn operational revenue, KEPCO E&C can provide long-term engineering services, KEPCO KPS can handle regular maintenance, and Doosan Enerbility can supply equipment for maintenance and performance improvement. These are all positive factors."

Mirae Asset Global Investments and Shinhan Asset Management also emphasized that the nuclear power industry is expected to see steady growth in the future. They pointed out that the surge in electricity demand due to the spread of artificial intelligence (AI) and the increase in data centers, along with various factors such as climate change response and strengthening energy security, will inevitably drive the growth of nuclear power generation.

Jung Hyun, head of ETF Management at Mirae Asset Global Investments, stated, "Among U.S. allies, Korea is the only country capable of supplying major equipment and also handling construction," adding, "In addition to Team Korea's export of Korean-style nuclear power plants, in the future, Doosan Enerbility will manufacture nuclear plants designed by U.S. companies, and Hyundai Engineering & Construction will build them."

Kim Junghyun, head of the ETF business at Shinhan Asset Management, also analyzed, "The United States has strengths in original technology, but lacks the capability to consistently complete construction within budget and on schedule." He added, "Partnerships with Korean companies will create decisive synergies," and expressed expectations that "the nuclear power industry will play a leading role in the global market."

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