(Bloomberg) -- If you’re trying to figure out how it’s all going to play out on the South Korean stock market on Monday after Kim Jong Un’s historic call for peace, don’t worry, we’ve got the list for you.
South Korea’s Kospi index was closed before the North Korean leader and South Korean President Moon Jae-in agreed to finally end a seven-decade war this year, and pursue the “complete denuclearization” of the Korean Peninsula. On Sunday, Kim promised to close his main nuclear weapons test site in May.
It all sounds very promising for the South Korean stock market Monday. The benchmark equity index has been trading at a substantial valuation discount compared with its peers mainly due to worries about political risk and corporate governance. And strategists and fund managers have said in the past that the Kospi index could surge if the political risk is removed.
Aside from the Kospi index in general, here are the stocks to watch:
Land-Mine Removal
Shares of South Korean companies specializing in land-mine removal equipment surged last week, as investors bet that the inter-Korean summit on Friday would reduce tensions along one of the most heavily fortified borders in the world.
Stocks that may move include Firstec Co., a developer of mine-clearing robots, and Welcron Co., a maker of clothes for mine-clearance operation.
Thaad Missile
With an agreement to end the war and Kim’s promise to denuclearize, there may not be a need to deploy the U.S.-built Terminal High Altitude Area Defense (Thaad) system. China, which saw this missile system as a threat, had enforced painful economic measures against South Korea like ordering travel agencies to stop selling tour packages to South Korea.
Consumer and tourism-related stocks that depend on revenues from Chinese tourists could see a bump Monday: AmorePacific Corp., LG Household & Health Care Ltd, Korea Kolmar Co., Hotel Shilla Co., Hana Tour Service Inc.
Korean airlines, including Asiana Airlines Inc., Korean Air Lines Co. and Jeju Air Co., are also standing to gain from a likely influx of visitors from China.
Inter-Korean Businesses
Watch stocks of companies that may benefit from potential investments in North Korea: fertilizer maker Namhae Chemical Corp., Hyundai Elevator Co., train manufacturer Hyundai Rotem Co. and cement makers including Ssangyong Cement Industrial Co. and Hanil Cement Co.
Most strategists are anticipating a short-term rally on Monday, at the very least. However, there’s one company you won’t be able to trade on: Samsung (LON:0593xq) Electronics (KS:005930) Co. The stock will be offline Monday through Thursday as the Korea Exchange staff completes its 50-to-1 stock split.
