Victek, Defense Shares Gain on N. Korea Rocket Plan: Seoul Mover

Victek Co. (065450) led gains among South Korean defense-related stocks in Seoul trading after North Korea said it will fire a long-range rocket.

Victek, a maker of electronic warfare equipment, jumped by the daily limit of 15 percent to 1,940 won as of 10:03 a.m. on the Korea Exchange, poised for its biggest gain since April 23. Firstec Co., a maker of components for helicopters and armored vehicles, rose 11 percent to 2,060 won, while Speco Co. (013810) added 15 percent to 2,825 won.

North Korea said it will fire a long-range rocket between Dec. 10 and Dec. 22, in defiance of international sanctions and as South Koreans hold an election for a new president. South Korea “sternly” warned its neighbor against the plan, saying the firing would bring a “forceful response” from the world.

“Bets that geopolitical risks may rise are driving some defense stocks higher,” Kim Gi Bo, a Seoul-based fund manager at Friend Investment Management, said today. “Previous provocations by the North turned out to have a short-lived and limited impact on our markets and I think this time will be the same.”

The communist state will launch a polar-orbiting earth observation satellite atop an Unha-3 rocket, the state-run Korean Central News Agency said on Dec. 1. The planned liftoff, from the Sohae Space Center about 130 kilometers (80 miles) northwest of the capital, Pyongyang, may complicate international efforts to engage North Korea. An unsuccessful attempt to fire a long-range rocket earlier this year cost the impoverished country a food-aid deal with the U.S.

A “safe flight path” has been chosen so that potential debris won’t affect neighboring countries, KCNA said. North Korea will fully comply with relevant international regulations regarding satellite launches, it said.

North Korea, ruled by third-generation dictator Kim Jong Un, is developing missiles that may be able to reach North America and carry warheads weighing as much as 1,000 kilograms, according to U.S. and South Korean estimates. The U.S. has previously called North Korea’s satellite announcements a cover for testing long-range ballistic missiles.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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