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

Expectations of benefits from cooperation with the United States in the nuclear power sector have driven up share prices of nuclear-related stocks and the returns of exchange-traded funds (ETFs). With forecasts suggesting that nuclear power construction will expand in Korea, optimism is growing regarding 'nuclear momentum.'

According to the Korea Exchange on September 9, Korea Hydro & Nuclear Power Engineering closed at 142,600 won on the previous day, up 16.60% from the previous session. Other nuclear-related stocks also mostly ended higher, including Daewoo Engineering & Construction up 8.47%, Korea Power Engineering 4.24%, Korea Electric Power Corporation 4.12%, Hyundai Engineering & Construction 3.55%, and Doosan Enerbility 1.82%.

Domestic ETFs that include these nuclear-related stocks also all saw increases, taking the top four spots in returns. According to ETF Check, TIGER Korea Nuclear Power rose 4.32% that day, posting the highest gain among listed domestic ETFs, followed by ACE Nuclear POWER TOP10 at 3.83%, KODEX Nuclear Power SMR at 3.73%, and SOL Korea Nuclear Power SMR at 3.64%.

The stock rally is believed to stem from expectations that the Korea-US investment project will include the construction of eight large-scale nuclear power plants. This was discussed at a closed-door policy consultation meeting on September 7. Investor sentiment was also driven by the possibility that Korea could acquire a stake in Westinghouse (WEC) from the U.S. government. Acquiring a stake in Westinghouse would free Korea from intellectual property rights issues that have been a hurdle for nuclear power exports.

In particular, if the Korean government and Korea Electric Power Corporation acquire a stake in Westinghouse, analysts say that the benefits for Korea Hydro & Nuclear Power Engineering and Korea Electric Power Corporation would be significant. Hyejeong Jung, an analyst at KB Securities, stated, "While established major nuclear power companies such as Hyundai Engineering & Construction are expected to perform well, the benefits for Korea Hydro & Nuclear Power Engineering and Korea Electric Power Corporation are expected to be even greater." She added, "Given that Westinghouse is having difficulties expanding its nuclear power plant design workforce, and since Korea has secondary system design capabilities that Westinghouse lacks, it is anticipated that if Korea Electric Power Corporation-led supply chains are utilized more widely, partial design for the AP1000 (Westinghouse's reactor model) will also be possible."

Kiwoom Securities pointed to Doosan Enerbility and Korea Hydro & Nuclear Power Engineering as key players in Korea-US nuclear construction cooperation. Jaewon Cho, an analyst at Kiwoom Securities, said, "We continue to prefer Doosan Enerbility as our top pick in the sector. Since it supplies equipment for both the Korean-type nuclear reactors and the AP1000, the potential for benefit is clear and direct," adding, "Korea Hydro & Nuclear Power Engineering could have even greater upside potential, as current earnings estimates do not yet reflect the potential impact of its expansion into the U.S. market."

Domestic momentum is also evident. This is because the government’s 12th Basic Power Supply Plan calls for an increase in domestic nuclear power construction. Namhyeon Jang, an analyst at Korea Investment & Securities, said, "According to the revised power demand outlook released on August 20, Korea’s peak power demand for 2040 has been revised up to 158.4GW, an increase of 26.6GW compared to previous forecasts." He further explained, "Even if renewable energy and battery energy storage systems (BESS) are extensively expanded and a considerable portion of coal-fired power is replaced with LNG, the stable supply of electricity will still require the construction of new large-scale nuclear plants." As a result, he predicted that the 12th Basic Power Supply Plan would include an additional 2 to 6 new large nuclear reactors.

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