Hyundai Dev't Leads Fall In Construction Stocks

Source : The Business Times, July 8, 2008

(HONG KONG) Hyundai Development Co, the South Korean builder that gets more than half of its sales from residential homes, led declines in construction stocks in Seoul trading on concern tighter lending will crimp property sales.

Hyundai Development fell 3.5 per cent to close at 44,100 won, the lowest since October 2006.

Hyundai Engineering & Construction Co, South Korea's largest builder by market value, dropped 6.1 per cent to 60,100 won.

South Korea's property market may be saddled with more unsold new homes as the government said it will tighten lending to curb inflation, which rose the most in almost 10 years last month.

The number of unsold apartments in February reached the highest since July 1996.

'The housing market could get worse in the second half,' said Kim Suk Joon, an analyst at SK Securities Co in Seoul.

'It will be difficult for the government to come up with measures that will help bolster the industry since they're focused on curbing inflation.' He has a 'neutral' rating on the construction industry.

South Korea's government will focus on cooling inflation by stabilising the exchange rate and freezing price increases on some public services, the Ministry of Strategy and Finance said in its semi-annual policy report on July 2.

Bank of Korea forecast on July 1 inflation for 2008 will quicken to the highest in a decade on climbing fuel and food costs.

A total of 180 builders collapsed in the first half, 45 per cent more than a year earlier, after banks tightened lending and raw material prices surged, the Seoul Economic Daily reported July 4, citing industry groups including the Korea Specialty Constructors Association.

Daelim Industrial Co, the country's fifth-largest builder, fell 5.3 per cent to 90,000 won.

Samsung Engineering Co, South Korea's largest engineering company, slipped 8.2 per cent to 72,400 won. -- Bloomberg