Shares of South Korean construction companies and other reconstruction-related stocks climbed after a Russian news agency reported that the United States and Iran had agreed to a ceasefire. Many Korean builders have experience working in Iran.
As of 10:19 a.m. on the 26th, GS Engineering & Construction (006360.KS) was trading at 37,850 won, up 8.14% from the previous session, according to the Korea Exchange. Hyundai Engineering & Construction (000720.KS) changed hands at 131,000 won, up 8.00%, while Daewoo Engineering & Construction (047040.KS) rose 7.83% to 19,000 won. Other large construction stocks also gained across the board, including DL E&C (375500.KS), up 4.55%, and Samsung E&A, up 4.03%.
The rally appears to stem from a report overnight by RIA Novosti, Russia's state-run news agency, which cited sources as saying that the United States and Iran had agreed to a ceasefire. According to the report, a Pakistani military source and an Iranian security source said a ceasefire deal had been reached that included free passage through the Strait of Hormuz. They said the ceasefire agreement between the two countries would be announced within days. It remains unknown how credible these sources are.
If the United States and Iran agree to a ceasefire, Korean builders with extensive experience in the Middle East could take part in local reconstruction projects. Hyundai Engineering & Construction, GS Engineering & Construction and DL E&C are said to have won construction contracts in Iran. In the case of Ukraine, where postwar reconstruction demand is large, European countries that have actively provided support are more likely to win contracts, but for Iran, Korean firms have a better chance of securing project rights, according to the construction industry.
The New York Times recently reported that the United States is preparing to return diplomats to its Middle East embassies, from which its own personnel had withdrawn following the war with Iran. As expectations grew for an easing of the conflict, prices for global Brent crude and U.S. West Texas Intermediate (WTI) fell in overnight New York trading, and U.S. Treasury yields also stabilized.
