Victek Co. led gains in South Korea’s defense-related stocks on the second anniversary of the North’s shelling of Yeonpyeong Island and after a report that the U.S. detected preparations by the reclusive regime to launch long-range missiles.
Victek, a maker of electronic warfare equipment, rallied 7.8 percent to 1,520 won at the close on the Korea Exchange, its steepest gain since April 23. Firstec Co., a maker of components for helicopters and armored vehicles, advanced 3.2 percent to 1,910 won, while Speco Co. added 5.8 percent to 2,270 won.
The U.S. told Japan and South Korea it detected preparations indicating North Korea could be preparing to test long-range ballistic missiles as early as this month, the Asahi newspaper reported today. South Korea is unable to confirm the report, a press official at South Korea’s Joint Chiefs of Staff said on condition of anonymity due to military policy.
“Some thematic defense stocks rallied on the reports, while the broader stock market reaction appears to be calm,” said Heo Pil Seok, chief executive officer at Midas International Asset Management Ltd., which oversees $5 billion. “No more detailed reports on the potential preparations followed, and previous cases have shown that the North’s threats mostly turn out to have only one-off impact on markets.”
North Korea’s shelling of the Yeonpyeong Island on the western sea border with the South on Nov. 23, 2010, killed four South Koreans. The two Koreas technically remain at war after the 1950-1953 conflict ended without a peace treaty.