<p><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3">The Trump-Kim Summit at Singapore on 12 June was a historic meeting between the leaders of these countries. Both countries signal their desire to establish peace and prosperity in the Korean Peninsula. </span></p><p><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3">A key attraction for North Korea leader Kim Jung Un is the promise by the US to rebuild North Korea’s economy if nuclear weapons are surrendered. Previously, a top concern is the Libyan model where Libya was thrown into disarray after its leader Gaddafi agree to disarm the country’s nuclear weapons. </span></p><p><span style="font-family: Calibri;" face="Calibri"><span style="font-size: medium;" size="3">These concerns have been allayed by US President Trump. He presented a video to Kim during the Singapore Summit. The video mimics the style of a movie trailer, persuading Kim to be a “hero” and choose skyscrapers overs warplanes. The video is an effective medium to transcend language barrier and convey the message of prosperity. In addition, President Trump has even agreed to halt the war games with South Korea as a sign of good faith.  </span></span></p><p><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3"></span><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3">North Korea is currently the poorest country in Asia. On the other hand, South Korea is amongst the wealthiest nation in the world. In the past, the economic disparity between both countries does not bear a semblance to the current situation. </span></p><p><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3">Prior to the 1970s, North Korea was a much wealthier nation than South Korea. However, a great famine in the 1990s resulted in great starvation and death to the nation. The fall of Soviet Union in 1991 further exacerbate the situation. Aid and trade concessions from Soviet Union stop flowing to North Korea. This resulted in a downward spiral in the economy. </span></p><p><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3"></span><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3">The Singapore Summit marks an important first step in the normalisation of relationships between the US and North Korea. The next milestone could be the removal of sanctions from the US. Should both countries take concrete steps towards peace, North Korea could recover and embark on a path of strong economic growth. </span></p><p><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3">The opening up of North Korea could result in long-term benefits for companies that are engaged in her economic development. Key beneficiaries include South Korean companies in the construction, steel, machinery and logistics sector. </span></p><p><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3"> </span></p><p><span style="font-family: Calibri; font-size: medium;" face="Calibri" size="3">We highlight some of the companies below: </span></p><ul><li><span style="font-size: medium;" size="3"></span><span style="font-family: Calibri;" face="Calibri"><span style="font-size: medium;" size="3"><b>Hyundai E&amp;C (000720 KS)</b> – Construction company in South Korea with past project experience in North Korea</span></span></li><li><span style="font-size: medium;" size="3"></span><span style="font-family: Calibri;" face="Calibri"><span style="font-size: medium;" size="3"><b>Doosan Infracore (000720 KS)</b> – Construction machinery manufacturer in South Korea</span></span></li><li><span style="font-size: medium;" size="3"></span><span style="font-family: Calibri;" face="Calibri"><span style="font-size: medium;" size="3"><b>POSCO (005490 KS</b>) – Largest steel company in South Korea</span></span></li><li><span style="font-size: medium;" size="3"></span><span style="font-family: Calibri;" face="Calibri"><span style="font-size: medium;" size="3"><b>Hyundai Steel (004020 KS)</b> – Steel company with large exposure to long steel which is used for construction </span></span></li><li><span style="font-family: Calibri;" face="Calibri"><span style="font-size: medium;" size="3"><strong>CJ Logistics (000120 KS)</strong> <span>– <span>Leading logistics company in South Korea</span></span></span></span> </li></ul><p> </p><p><b>Edmund Chan, CFA</b></p>