[Edaily Reporter KIM YOON-JEONG ] Amid a string of adverse factors—including the collapse of negotiations for a Czech nuclear power plant construction contract, poor earnings from defense companies, and bidding sanctions—foreign investors have been buying up domestic construction and defense stocks in large numbers. While securities analysts note that recent sharp stock price declines have eased valuation pressures, uncertainties regarding individual companies’ order intake and whether their earnings will recover remain key variables.
According to the Korea Exchange on the 1st, five of the top seven stocks with the highest net foreign buying on the KOSPI market between the 23rd and 30th of last month were construction and defense-related stocks.
#SamsungE&A ranked second overall with 354.8 billion won, while LIG Nex1 Co., Ltd.(079550)(LIG D&A) took third place with 106.8 billion won. HANWHA AEROSPACE(012450)(96.6 billion won, 4th place), HyundaiEngineering&Construction(000720)(58.0 billion won, 5th place), and HYUNDAI ROTEM(064350)(44.6 billion won, 7th place) also made the top list. KOREA AEROSPACE INDUSTRIES(047810) also ranked 12th with 36.4 billion won. The total net foreign buying for these six stocks amounted to 697.2 billion won.
SamsungE&A is drawing attention for its earnings and order outlook. Third-quarter operating profit reached 500.6 billion won, an increase of 183.6% year-over-year. Although this figure included a reversal of provisions of approximately 100 billion won, analysts note that profitability in the high-tech, chemical, and new energy sectors also improved.
In the construction sector, stock performance varied amid the negative news of the breakdown in negotiations for a Czech nuclear power plant construction contract. On the 29th of last month, Korea Hydro & Nuclear Power announced that it was terminating negotiations with the consortium of DaewooEngineering&Construction(047040), andDOOSAN ENERBILITY(034020) regarding the construction of the Dukovany Nuclear Power Plant in the Czech Republic due to disagreements over construction costs and the scope of work.

On that day, DaewooEngineering&Construction’s stock price fell 18.57%, while DOOSAN ENERBILITY’s dropped 7.65%. From the 23rd to the 30th of last month, foreign investors made net purchases of 58 billion won worth of HyundaiEngineering&Construction stock, while they made net sales of 42.5 billion won worth of DOOSAN ENERBILITY stock. Net purchases of DaewooEngineering&Construction stock also amounted to only 2.8 billion won.
Analysts in the securities industry believe that while damage to the existing consortium’s expectations of winning the contract is inevitable, the likelihood of the Czech nuclear power plant project itself being canceled is low. KHNP plans to select a new contractor in July, following a briefing for potential contractors in January and a call for bids in April.
The defense sector has also experienced a sharp decline recently. On the 20th of last month, HANWHA AEROSPACE fell 11.71%, LIG D&A dropped 8.21% (down 9.78% on October 26), and HYUNDAI ROTEM declined 13.70%. Concerns over delays in securing orders and the possibility of reduced U.S. defense spending were cited as factors dampening investor sentiment.
In particular, while LIG D&A was barred from participating in bids for 24 months by the Defense Acquisition Program Administration (DAPA), the sanction’s effect was temporarily suspended until the 20th of this month following a court order for a provisional stay of execution. Uncertainty remains, as a formal hearing on the stay of execution is scheduled for the 5th.
HANWHA AEROSPACE reported third-quarter operating profit of 452 billion won, falling 61.1% short of market expectations. This was due to the concentration of export deliveries—including those for the Poland project—in the fourth quarter.
Han Ji-young, an analyst at KIWOOM Securities, explained, “With valuation pressures easing in both sectors following a series of sharp declines, expectations for expanded housing supply and redevelopment contracts, as well as the normalization of defense exports in the fourth quarter, may have contributed to net foreign buying.”