These South Korean Stocks Are at the Mercy of North Korea's Kim

  • Shinwon’s stock has dropped every time a missile was fired
  • Kospi, won remain resilient despite missile sent over Japan

Markets Shrug Off North Korea Worries

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While South Korean markets may have brushed off renewed geopolitical concerns on the Korean peninsula, one stock is not joining the party.

Seoul-based Shinwon Corp., which has factories in the Kaesong industrial region, just north of the Demilitarized Zone, fell for a second day on Wednesday after North Korea fired a missile over Japan on Tuesday, renewing tensions in the region. The clothing manufacturer’s stock has sunk every time North Korea has fired missiles while ratcheting up its hostile rhetoric against its neighbors.

Since South Korean President Moon Jae-in took office in May with pledges of rapprochement with North Korea, companies in the Kaesong Industrial Complex -- where 120 South Korean firms employed 50,000 North Korean workers -- have watched their shares decline as the country’s benchmark equity gauge rallied. Shinwon’s shares are down almost 26 percent since May as North Korea taunted its neighbors and the U.S. with a volley of missile tests. Good People Co., an underwear maker, has tumbled 29 percent since this year’s high in May.

The vulnerability to inter-Korean policies and geopolitical tensions has also hit Hyundai Elevator Co., the biggest stakeholder of Hyundai Asan which has engaged in a number of North Korea-related projects. Hyundai Elevator’s shares have tanked more than 20 percent since Moon’s election.

— With assistance by Heejin Kim

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