The construction sector continues to show strength. The sector is near the lowest price-to-book ratio (PBR · market capitalization ÷ net worth), and there are expectations that if economic stimulus measures are introduced after the presidential election, the construction market may gain momentum, pushing up stock prices.
GS Engineering and Construction shares were traded at 22,450 won on the KOSPI market at 9:11 a.m. on the 28th. The stock price rose by 6.9% (1,450 won) compared to the previous day. At the same time, Hyundai E&C, Daewoo E&C, and HDC Hyundai Development Company were also on an upward trend.
The main reason for the rebound in the construction sector is expectations for economic stimulus. Many believe that the new government will move to draft an additional budget after the presidential election. Furthermore, the Bank of Korea is also likely to lower the base rate further.
As a result, the likelihood of the housing market reviving increases. Since the proportion of sales from the dwelling business accounts for nearly 50% for domestic construction companies, the housing sales price is a key variable for construction sector stock prices.
Lee Seon, a researcher at BNK Securities, noted that "the turning point for the rise in the construction sector is above all expectations for a turnaround," adding, "It is important whether the performance improvement in the dwelling institutional sector can continue trend-wise, and I am optimistic about it."