Shares of South Korean nuclear power companies rallied broadly in early trading after reports that Seoul and Washington are discussing the construction of up to eight large nuclear reactors in the United States as part of a Korean investment package. While the details have yet to be finalized, expectations that roughly $120 billion could flow into nuclear projects have fueled hopes of expanded orders for Korean nuclear firms.
KEPCO Engineering & Construction (052690) traded at 136,600 won as of 9:27 a.m. on the 8th, up 14,300 won or 11.69% from the previous session, according to the Korea Exchange. The stock climbed as high as 143,100 won during the session. Doosan Enerbility (034020) traded at 91,600 won as of 9:26 a.m., up 4.21%, after hitting an intraday high of 93,500 won.
Korea Electric Power (015760) and KEPCO KPS (051600) also advanced. KEPCO rose 3.05% to 33,750 won, while KEPCO KPS gained 2.01% to 48,300 won. Buying spread across the nuclear value chain — from design to main equipment to operations and maintenance — led by KEPCO E&C.
Driving the gains were expectations that Korean investment funds earmarked for the United States could be channeled into American nuclear construction. According to government and political sources, the Ministry of Trade and Industry told a closed-door meeting with the ruling party the previous day that Seoul and Washington are discussing a gas-fired combined-cycle power plant in Encinal, Texas, as the first project under the $350 billion investment package agreed by the two countries, to be followed by the construction of up to eight large reactors.
Expectations grew further after reports that the U.S. side proposed allocating $120 billion of the $200 billion in unassigned investment funds to build the eight reactors. Analysts said the share prices reflect the possibility that Korean companies could participate in design, main equipment manufacturing, construction and maintenance if the project materializes.
The scale of the project and how Korean companies would take part remain undecided. The ministry said talks between the two countries are under way and that specifics have not been determined. The government is expected to release a joint investment statement on the Texas power plant, the first project in the package, around the 18th of this month after reporting to the National Assembly.
Expectations for domestic nuclear expansion are also supporting the shares. "Hopes are building that nuclear companies' medium- to long-term order backlogs could grow as the possibility of new reactor construction being included in the 12th Basic Plan for Electricity Supply and Demand converges with expanding overseas reactor exports," an official in the financial investment industry said.
