Business / Financial Markets

Shares of small Japanese shipping firms jump on hopes of North Korea detente

Reuters

Shares of small Japanese shippers jumped last week after the historic summit between U.S. President Donald Trump and North Korean leader Kim Jong Un sparked hopes of new business ties with the reclusive country.

Japanese retail investors are snatching up shares of the firms that may benefit from a potential thaw between Tokyo and Pyongyang, even though the Japanese government has been a staunch supporter of “maximum pressure” on North Korea.

Shares of Rinko Corp., a marine transportation company, jumped 17 percent last week with the heaviest trading volume in more than two years.

The firm is based in the port city of Niigata, a major hub for trade with areas surrounding the Sea of Japan, such as the Russian Far East and the Korean Peninsula.

Niigata was once served by the Mangyongbong, a North Korean cargo-passenger ship connecting the Japanese port and the city of Wonsan in North Korea. It was one of a very few connections between the two countries before Japan banned the ship from entering in 2006, after it imposed sanctions following Pyongyang’s missile and nuclear tests.

Shares of some other companies with perceived geographical advantages have also soared.

Fushiki Kairiku Unso rose 38 percent, its biggest weekly gain in almost two decades. The transportation firm, based in Toyama Prefecture, also on the Sea of Japan, has business ties with Russia.

Its trading volume this week exceeded 100,000 shares, larger than its trading volume for the whole of last year.

Similarly, Hyoki Kaiun, which operates cargo shipping services to countries including Russia and South Korea, jumped 24 percent in massive trading volume.

But market participants said the gains were driven purely by retail investor speculation.

“Because there aren’t many sellers, just a small number of bids could lift prices,” said Masayuki Otani, chief market analyst at Securities Japan, Inc.

“Retail speculators seem to be trying to make quick money — they have great imagination.”

Tomoichiro Kubota, senior market analyst at Matsui Securities, said there was no clarity on whether sanctions against North Korea will be lifted, let alone what impact such a development might have on these companies’ earnings.

Indeed, U.S. Secretary of State Mike Pompeo said Friday tough sanctions will remain on North Korea until its complete denuclearization.

Following last week’s Singapore summit,Japan is eyeing a meeting between Prime Minister Shinzo Abe and North Korean leader Kim Jong Un.

The issue of Japanese abducted by Pyongyang has been a major stumbling block in any rapprochement. The two countries still do not have diplomatic relations.

To lay the groundwork, the government is considering arranging a meeting between the Japanese and North Korean foreign ministers on the sidelines of the Association of Southeast Asian Nations’ regional forum in Singapore in early August, informed sources have said.

The matter was brought up at the recent U.S.-North Korea summit.

Tokyo hopes to understand where Pyongyang stands on the issue through the ministerial meeting, the sources said Friday.

The ASEAN forum will take place from July 30 to Aug. 4 and will likely bring together Foreign Minister Taro Kono and his North Korean counterpart, Ri Yong Ho.

If the Kono-Ri talks come to fruition, it will be the first official meeting between the foreign ministers of the two countries since August 2015 in Malaysia.

Information from Jiji added