[Edaily Reporter Shin Ha-yeon] With the U.S.-Iran conflict effectively ending after 106 days yesterday, construction stocks are rallying across the board on the domestic stock market. Expectations for reconstruction contracts are also emerging in the securities industry.
According to MP Doctor on the 16th, as of 9:17 a.m. today, #Daewoo Engineering & Construction is trading at 26,050 won, up 13.76% from the previous trading day. At the same time, #DL E&C (9.62%), #GS Engineering & Construction (3.80%), and #IPARK Hyundai Development (1.47%) are also trading higher.
The securities industry is also suggesting that interest in the construction sector should be heightened following the U.S.-Iran ceasefire agreement.
Kim Seon-mi, a research analyst at Shinhan Investment Securities, stated in a report released today, “The key factor determining who benefits from reconstruction will be each company’s available workforce capacity, rather than their track record in Middle Eastern plant construction,” adding, “We expect DL E&C and GS Construction to secure reconstruction contracts.” Analysts also anticipate expanded business opportunities for Hyundai Engineering & Construction and Samsung E&A, which are emerging as key partners in the restructuring of the energy market over the medium to long term.
First, prices for construction materials—which had risen due to the prolonged war—are expected to stabilize. Research Fellow Kim explained, “While construction companies had been defending against rising costs by utilizing existing inventories and diversifying supply chains, a continued war beyond the third quarter would have been expected to inflict significant damage through cost increases.” He added, “Considering the improved escalation clauses following the Russia-Ukraine war, the cost impact is expected to be limited to temporary price increases for certain items not reflected in the construction cost index.”
Contracts for reconstruction projects and expanded investment in energy infrastructure are also cited as key factors driving growth. The International Energy Agency (IEA) noted that more than 40 key energy assets across nine countries have been damaged, and Rystad Energy estimated the scale of reconstruction projects at up to $58 billion.
Research Fellow Kim predicted, “Non-sanctioned countries such as Qatar, the United Arab Emirates (UAE), and Saudi Arabia will immediately begin recovery efforts to minimize economic losses,” adding, “Full-scale reconstruction will be considered 3 to 12 months after damage assessments and safety inspections, primarily through amended contracts with existing EPC firms such as Samsung E&A, GS Engineering & Construction, DL E&C, and Hyundai Engineering & Construction.”