U.S. Cooperation and Domestic Momentum Drive Focus on Nuclear Energy Stocks

Nuclear Energy Stocks and ETFs Rally on September 8
Boosted by U.S. Cooperation and Westinghouse Prospects
Potential for 'Nuclear Expansion' in the 12th Power Supply Plan

Shares of nuclear power-related companies and exchange-traded funds (ETFs) posted significant gains on the back of optimism over potential benefits from nuclear cooperation with the United States. With expectations growing that nuclear plant construction will expand domestically in the future, the so-called "nuclear power momentum" is gaining attention.

According to the Korea Exchange on September 9, Korea Engineering & Construction posted a closing price of KRW 142,600, up 16.60% from the previous session. Other nuclear-related stocks also mostly finished higher, including Daewoo Engineering & Construction up 8.47%, Korea Plant Service & Engineering up 4.24%, Korea Electric Power Corporation (KEPCO) up 4.12%, Hyundai Engineering & Construction up 3.55%, and Doosan Enerbility up 1.82%.

Domestic ETFs containing these nuclear-related stocks also rose across the board, ranking first through fourth in daily returns. According to ETFCheck, TIGER Korea Nuclear Power closed up 4.32%—the highest gain among all domestic listed ETFs. This was followed by ACE Nuclear Power TOP10 up 3.83%, KODEX Nuclear Power SMR up 3.73%, and SOL Korea Nuclear Power SMR up 3.64%.

Expectations that the U.S. investment project will include the construction of eight large-scale nuclear power plants are seen as the main driver behind the stock rally. It was reported that this topic was discussed at a closed-door policy meeting between the government and ruling party on September 7. Another element fueling investor sentiment was the possibility that Korea could acquire a stake in Westinghouse Electric Company (WEC) from the U.S. government. Securing a stake in Westinghouse would free Korea from longstanding intellectual property issues that have been obstacles to nuclear power exports.

In particular, if the Korean government and Korea Electric Power Corporation secure a stake in Westinghouse, Korea Engineering & Construction and KEPCO are expected to benefit significantly. Hyejeong Jung, an analyst at KB Securities, said, "With existing major nuclear companies like Hyundai Engineering & Construction projected to perform well, we expect even larger benefits for Korea Engineering & Construction and KEPCO. As Westinghouse is struggling to secure more nuclear design personnel and lacks secondary system design capabilities, an expanded use of a KEPCO-led nuclear supply chain could make it possible for Korean companies to contribute to the design of parts of the AP1000 (Westinghouse's reactor model)."

Kiwoom Securities also highlighted Doosan Enerbility and Korea Engineering & Construction as beneficiaries of nuclear construction cooperation with the U.S. Jaewon Cho, an analyst at Kiwoom Securities, commented, "We are maintaining Doosan Enerbility as our top pick for the sector since it supplies equipment to both Korean-type nuclear plants and the AP1000, making its benefit straightforward. For Korea Engineering & Construction, the upward potential is even higher as expectations for a U.S. market entry have not yet been reflected in earnings estimates."

The domestic momentum remains strong as well. The 12th Basic Plan for Electricity Supply and Demand formulated by the government is expected to drive an increase in the construction of nuclear plants in Korea. Namhyun Jang, an analyst at Korea Investment & Securities, noted, "According to the revised power demand outlook released on August 20, Korea's maximum electricity demand for 2040 has been raised to 158.4GW, up 26.6GW from the previous projection. Even with aggressive expansion of renewables and battery energy storage systems (BESS) and considerable replacement of coal plants with LNG, the stable supply of electricity will require the construction of large nuclear power plants." Accordingly, the 12th plan is expected to newly include 2 to 6 additional large-scale nuclear reactors.

This content was produced with the assistance of AI translation services.