SEOUL -- Shares in Hanmi Science and LG Display have soared in the month since South Korean President Moon Jae-in took power on May 10, while SK Innovation and Korea Electric Power, or Kepco, saw their stock tumble, illustrating the wide disparity in reactions to the new government's economic policies.
Pharmaceutical company Hanmi's shares jumped 33.42% to 87,000 won between May 8 and June 9, leading the gains among 42 South Korean companies that are part of the Nikkei's Asia300 index. Panel maker LG Display saw the second biggest rally, rising 20.72% to 36,700 won during the same period. The benchmark Kospi index rose 3.87% to 2,381.69 over the month.
The pharmaceutical and biotechnology industry is a key sector that the Moon government seeks to support as part of its strategy to nurture new high-value businesses. The governing Democratic Party said that it would help local drugmakers reach the global market by improving the country's health insurance system, which decides drug prices.
"Investors picked up chips in the pharmaceutical and bio industry which had underperformed before," said Han Byung-hwa, an analyst at Eugene Investment & Securities. "Expectations for big pharma companies' license deals in the second half also stimulated their appetites."
Shares of Celltrion, the nation's largest biosimilar company, increased 6.96% to 101,400 won during the same period. The Incheon-based company is exporting its drugs to European and U.S. markets, including its benchmark immune disease treatment, Remsima, which has 40% market share in Europe.
Tech companies also enjoyed a sharp rise in their stock prices thanks in part to the Moon administration's support for the development of artificial intelligence and big data. Shares in internet company Kakao rose 15.57%, while web portal Naver's stock jumped 14.67% over the last month. Kakao is investing in developing its voice assistant program, while Naver is testing its autonomous driving technology on the country's roads, having won a license from the transport ministry.
However, not all companies are happy with the liberal government. The nation's largest refinery SK Innovation's stock tumbled 8.72% and state-run utility Kepco saw its shares drop 4.69% during the same period, hit by Moon's energy policy which is shifting resources to renewables from fossil fuels.
"The Moon Jae-in government is pursuing plans to cut coal-powered generation while increasing generation from [liquefied natural gas]. It is raising concerns for Kepco which relies on cheap coal for more than half of its fuel costs," said Shon Ji-woo, an analyst at SK Securities.
Shares of Hyundai Engineering & Construction also dropped 3.68% on fears that the new government might place controls on the real estate market. The government is expected to announce its new housing policy soon which could include tightened regulations on mortgage loans.
Korea Aerospace Industries, the state-run defense company, saw its shares slip 0.62% over the last month, at the same time as military tensions have risen on the Korean Peninsula with neighboring North Korea. However, analysts said its shares would appreciate in the long term as the Moon government has vowed to invest in defense and develop high-end weapons.