[Special Stock] Construction Stocks Jump on Government's 50 Trillion Won Liquidity Supply Measure... DL E&C Up Over 7%

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Construction stocks, which had deteriorated investor sentiment due to the LegoLand-related adverse news, collectively rebounded thanks to the government's liquidity supply measures.

As of 9:43 AM, DL E&C is trading at 37,300 KRW, up 7.96% from the previous trading day. At the same time, Hyundai Construction (4.39%), GS Construction (5.99%), and Daewoo Construction (7.55%) are also showing a rising trend.

Small and medium-sized construction companies are also recording gains. These include Taeyoung Construction (13.00%), Gyeryong Construction (5.37%), and Dongbu Construction (14.69%).

Although construction stocks recently plunged due to the LegoLand-related adverse news, they are interpreted to have rebounded in the short term thanks to the government's announcement of a liquidity supply program.

The day before, the government announced a liquidity supply program worth '50 trillion KRW + α' after an emergency macroeconomic and financial meeting. This measure was taken to address the sharp cooling of the short-term funding market following the LegoLand ABCP (Asset-Backed Commercial Paper) default incident.

This measure is a total liquidity supply program of 50 trillion KRW, including the reactivation of the bond fund and strengthened purchase measures of corporate bonds and CP by policy financial institutions. To stabilize the PF ABCP market, liquidity support for securities firms through Korea Securities Finance and guarantee support for PF operators will also be implemented.

Kang Kyung-tae, a researcher at Korea Investment & Securities, analyzed, "Since the government's immediately deployable available resources are limited and the rating criteria for securities to be purchased are high, the actual purchase effect will be minimal." However, he added, "Considering that additional resources are planned to be injected from November, some bottlenecks in refinancing bridge loan securitization are expected to be alleviated."