Posted August. 05, 2008 04:03,
Shares of major Korean shipbuilders tumbled yesterday on news of canceled ship orders.
Daewoo Shipbuilding and Marine Engineering announced a canceled order worth 619 billion won (619 million U.S. dollars) for eight container carriers Friday. As a result, its share value plunged 13.85 percent.
Hyundai Mipo Dockyard, which also announced a canceled order the same day, suffered a fall of 6.58 percent.
The news caused a ripple effect in the shares of other shipbuilding firms such as Hanjin Heavy Industries (minus 13.65 percent), Hyundai Heavy Industries (minus 10.41 percent), Samsung Heavy Industries (minus 7.91 percent), STX Shipbuilding (minus 5.94 percent) and Doosan Heavy Industries (minus 3.26 percent).
The benchmark KOSPI index dropped 30.72 points or 1.95 percent to close at 1,543.05 yesterday, hit by the plunge in shipbuilders shares and the bearish U.S. stock market over the weekend.
With many experts warning that Korean shipbuilders, which have enjoyed booming business, could be affected by the global economic downturn, some say investment in the field has shrunk.
Yoon Pil-jung, an analyst at Samsung Securities, said, Lack of currency circulation stemming from the slower global economy caused this to happen. Shipbuilders shares fell by a large margin due to worry over the impossibility of predicting how similar things could occur down the road.
Jang Geun-ho, senior analyst at Hana Daetoo Securities, had a more optimistic view. The fundamentals of domestic shipbuilders remain strong, he said. I believe too much anxiety and excessive reaction in the stock market are responsible for the stock plunge.