Despite the Wind of Renewable Energy, Nuclear Power Stocks Remain 'Strong'... Why?

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Despite the global trend toward renewable energy, nuclear power stocks are showing strength. The positive factor of President Yoon Suk-yeol's pledge to abandon the nuclear phase-out policy has already been priced in, and although the stocks declined due to the global stock market downturn, there are forecasts that a second nuclear power boom will occur in the second half of this year.

According to the Korea Exchange on the 27th, Doosan Enerbility (formerly Doosan Heavy Industries), considered a representative nuclear power stock, was trading at 17,100 KRW at 9:35 a.m., up 0.88% from the previous trading day. Doosan Enerbility rose about 5.6% over the two days from the 23rd to the 24th. Other nuclear-related stocks are also showing strong performance. At the same time, KEPCO Engineering & Construction was trading at 62,300 KRW, up 5.06% from the previous trading day, having risen 4.22% from the 23rd to the 24th. BHI was up 6.49% at 5,580 KRW, and Woojin was up 2.21% at 11,550 KRW.

Until now, nuclear power stocks had been stagnant due to the fact that positive factors had already been exposed and the global stock market downturn overlapped, but they are recently being reappraised. Global electricity demand is steadily increasing, while the transition to renewable energy takes some time. In particular, raw materials for coal and gas have experienced supply disruptions due to the Russia-Ukraine war, leading to the view that there is no alternative other than nuclear power for the time being.

Accordingly, the securities industry sees that momentum for nuclear-related stocks still remains and recommends increasing their weighting. Shinhan Financial Investment selected Doosan Enerbility, BHI, and Woojin as their top preferred nuclear-related stocks and issued a 'weight increase' opinion.

Jung Min-gu, a researcher at Shinhan Financial Investment, said, "The period known as the first nuclear boom was from 2008 to 2011, during which the average stock price increase rate of domestic nuclear-related companies was 473.5%," adding, "We view the second half of this year as 'Nuclear Renaissance 2.0' and recommend increasing the weighting of domestic nuclear companies."