Korea auto-parts makers gain on US trade optimism

Mando Corp led gains by South Korean makers of automobile parts in Seoul trading on speculation their earnings will benefit from a free-trade agreement with the US.

Mando, a maker of brakes and steering systems, climbed 1.9 per cent to 165,500 won at the close on the Korea Exchange. Hyundai Mobis Co, South Korea’s biggest auto-parts maker, gained 1.6 per cent to 281,500 won. The benchmark Kospi index added 0.2 per cent.

A free-trade agreement reached more than four years ago between the US and South Korea will take effect on March 15, South Korean Trade Minister Bark Tae Ho told reporters yesterday in Seoul. The country’s auto-parts makers will attract investor attention as tariffs will be immediately removed once the accord comes into effect, Korea Investment & Securities Co said in a report today.

“Investors are cheering the latest newsflow on trade pact,” Lee Sang Hyun, an analyst at NH Investment & Securities Co, said by phone today. “The tariff removal will help boost part-makers’ margins.”

South Korea’s National Assembly in November ratified the agreement initially made by Presidents George W. Bush and Roh Moo Hyun in 2007. The accord was delayed as South Korean leader Lee Myung Bak and President Barack Obama worked to build support for the measure.

The agreement may help South Korea’s economy expand by 5.7 per cent within a decade and create 350,000 jobs, according to the nation’s finance ministry. The biggest deal for the US since the 1994 North American Free Trade Agreement will boost exports as much as $10.9 billion in its first year of full effect, according to the US International Trade Commission.

Hanil E-Wha Co, which makes door trims and seats, rallied 3.5 per cent to 10,200 won.