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| Hyundai Asan employees watch TV news covering the summit between U.S. President Donald Trump and North Korean leader Kim Jong-un at the company's headquarters in Jongno-gu, Seoul, Thursday. Yonhap |
By Nam Hyun-woo
The breakdown of the summit between the United States and North Korea came as a shock to Hyundai Group and other firms having high hopes for inter-Korean economic cooperation, according to company officials, Friday.
However, some analysts said the shock will soon dissipate as businesses return to normalcy and wait for something that may break the current impasse in inter-Korean relations, as they have over the past decade.
"As construction firms' shares underperformed due to the shocking ending to the summit, uncertainty is clouding their outlook for next week too," Hana Financial Investment analyst Chae Sang-wook said.
"From a broader prospective, however, they don't need to get off a running horse. The two parties' will attempt to have another summit within this year, and other negotiations are believed to be ongoing."
A day earlier, U.S. President Donald Trump and North Korean leader Kim Jong-un ended their talks in Vietnam earlier than expected after Trump refused to lift sanctions as requested by Kim.
This came as a huge disappointment to the Hyundai Group, which has multiple business licenses in North Korea, including seven social overhead capital projects and the operation of tours to Mount Geumgang.
The group said it has yet to receive an official statement about the no-deal summit, but added that it will "not lose expectations and hope for inter-Korean economic cooperation, and will continue preparations."
Before the summit, the group had been busy readying itself to jumpstart its businesses in the North.
To fund its North Korea projects, Hyundai Asan, the group's business unit in charge of them, conducted a 50 billion won ($44.48 million) rights offering and earmarked 35 billion won of that for refurbishing facilities in the North.
Hyundai Group Chairwoman Hyun Jeong-eun has already visited North Korea three times this year, stressing the group's members must fulfill their "responsibilities in contributing to inter-Korean cooperation and coexistence."
Hyundai Asan CEO Bae Kook-hwan and other executives even celebrated the 20th anniversary of the company's North Korean businesses at Mount Geumgang earlier this month.
Hyundai Asan's tour program taking South Koreans to Mount Geumgang started in 1998, but was halted in 2008 after a tourist was shot and killed by a North Korean guard.
After the summit abruptly ended, the share price of Hyundai Elevator plunged 18.55 percent to close at 95,300 won Thursday. Hyundai Elevator has a 70 percent stake in Hyundai Asan and participated in its rights issue.
According to Pstock, a domestic over-the-counter market tracker, Hyundai Asan shares fell 10.53 percent the same day.
Not only Hyundai Group but also other companies related with businesses opportunities in North Korea saw drops in their share prices.
Hyundai Steel, which makes train rails, edged down 2.25 percent to 1,150 won, as the imminent project of rejoining inter-Korean railways became uncertain after the talks. Hyundai Steel is a Hyundai Motor Group company.
Construction facility and machinery firms saw their stock prices shedding previous gains on weakened expectations.
Doosan Infracore, which makes excavators and other heavy machinery, dipped 2.81 percent from the session earlier to close at 7,610 won. Hyundai Construction Equipment, which has a similar portfolio, declined 4.27 percent to 53,800 won.
"Though the summit result came as a disappointment for companies who had put hopes on business opportunities in North Korea, their current business activities were not directly hit, because it has been years that such companies have been holding on to the slim chance of the sanctions being lifted," a conglomerate official said.
"Since the no-deal summit does not rule out the possibility of future talks, companies have to hunker down for another uncertain period and prepare themselves for future possibilities."
