‘U.S. Investment and AI Data Centers’—Everything Is a Positive Catalyst... Construction Stocks Also Take Flight [Stocks NOW]

[Financial News] Construction stocks are trading higher on the 8th. Investor sentiment toward construction stocks is improving as investment projects in the U.S. take shape and an AI tailwind provides additional support.
According to the Korea Exchange, as of 2:30 p.m. that day, Daewoo Engineering & Construction was trading at 20,750 won, up 12.71% from the previous day. Hyundai Engineering and Construction rose 6.93%, Samsung E&A 4.58%, GS Engineering & Construction 2.27%, and DL E&C 2.95%. The KRX Construction Index was also up 5.93% from the previous day at 1,489.17.
Expectations for increased investment in power infrastructure originating in the U.S. are cited as a key factor behind the strength of construction stocks. As the Texas Encinal gas combined-cycle power project takes shape as the first investment project in the U.S., expectations are growing that Korean construction companies will win overseas power-plant orders.
Kim Seung-jun, a researcher at Hana Securities, analyzed, "The first investment project in the U.S. is expected to be the Texas Encinal gas combined-cycle power project. Listed construction companies capable of handling combined-cycle power-generation EPC—engineering, procurement, and construction—include Samsung C&T, Hyundai Engineering and Construction, DL E&C, and Doosan Enerbility. The beneficiaries could differ depending on which companies participate in the EPC work."
Expanded investment in artificial intelligence (AI) is also a positive catalyst for construction stocks. In addition to orders for AI data-center construction, both nuclear and gas-fired power generation are expected to benefit over the medium to long term from rising electricity demand. Construction stocks have in fact been recovering since hitting a low in late July. The KRX Construction Index is up 13.45% from a month ago.
Shin Dae-hyun, a researcher at KIWOOM Securities, said, "We believe the pace of revenue growth will be determined by the progress of the East Sea AI data-center project." Kim Sun-mi, a researcher at Shinhan Investment & Securities, also noted, "Nuclear-power orders based on Team Korea are serving as a sector-wide momentum driver. If order competitiveness is confirmed through actual contracts beginning in the fourth quarter, we expect valuations to receive a premium."
[email protected] Han Young-jun Reporter