Amid escalating tensions in the Middle East following a U.S. airstrike on Iran, no direct damages have been reported by Korean construction companies so far. However, a recent securities industry report suggests that, in the short term, investor sentiment toward construction stocks is likely to be negatively affected.
On March 3, Jang Moonjun, a researcher at KB Securities, stated in a report titled "Impact of Middle East Tensions on Construction Stocks," "It appears that there have been no casualties or property damage at Middle Eastern construction sites operated by Korean companies." Over the past weekend, the U.S. launched an airstrike on Iran, and Iran responded with a counterattack, significantly heightening geopolitical risks originating from the Middle East.
Jang pointed out, "Korean construction companies do not currently operate any sites in Iran." He added, "According to the Overseas Construction Association, the Middle East accounts for approximately 25% of Korean builders' overseas orders in 2025, which is not insignificant. Therefore, it is necessary to closely monitor whether instability in the Middle East will continue to spread going forward."
He noted, "This is a factor that affects orders more than revenue, and revenue more than profit." He further explained, "Plant sites currently under construction may experience slower overall progress due to logistics issues and other challenges." In addition, he projected, "As Middle Eastern clients may delay decisions on new facility investments (CAPEX), it could take more time to secure new orders."
Jang assessed that the current Middle East risk could have a negative impact on construction stock investor sentiment in the short term. However, he also emphasized that, unlike in the past, the perception that Korean construction companies' overseas businesses are heavily concentrated in the Middle East has eased considerably. He stated, "Compared to the past, both the concentration and importance of the Middle Eastern market have declined. From a stock market perspective as well, construction investors do not have high expectations for the Middle East."
By company, expectations for nuclear power generation projects have recently been a key driver of share prices for Hyundai Engineering & Construction, Daewoo Engineering & Construction, and DL E&C, while expectations for the domestic housing business have been a main catalyst for GS Engineering & Construction and HDC Hyundai Development Company. Regarding SAMSUNG E&A, he noted, "Although the company has been recognized as a major player in the Middle East and petrochemical markets, and is thus negatively affected in the short term, it established global and energy market expansion as its mid- to long-term direction in the fourth quarter 2025 earnings announcement. Therefore, during a stock price adjustment, it will be important to focus more on its performance in markets outside the Middle East."
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