South Korean stocks tied to improved relations with the North have climbed by as much as 500%

South Korean Presidential Blue House via Getty ImagesKim Jong Un with South Korean leader Moon Jae-in.

One of the best stock market strategies in recent months has been to bet on companies in South Korea that stand to benefit from strengthening relations with their northern neighbour.

Global markets were relatively subdued in their response to the historic negotiations between US President Trump and North Korean leader Kim Jong Un this week.

But on the more stock-specific level, there are been some big winners in the wake of cooling tensions between the so-called Hermit Kingdom and the outside world.

Of note, Busan Industrial, which manufactures materials for the construction sector.

The small company, listed on South Korea’s KOSPI Index, rocketed higher by around 500% this year:

Source: Investing.com

It’s reflective of a broader theme on the KOSPI index, with other South Korean construction companies (such as Hyundai Cement, up more than 300%) also posting strong gains in recent months.

The catalyst for the gains was the meeting between Kim Jong Un and South Korean President Moon Jae-in on April 26.

It marked the first time any leader of North Korea has set foot in South Korea, as the pair announced plans to denuclearize the Korean peninsula and hinted at a possible reunification.

Any such plans would involve considerable investments in infrastructure such as new road and rail links.

As a result, shares in companies such as Busan surged to the point that its returns over the last two months now exceed the entirety of its gains in the previous 10 years, the WSJ reports.

While South Korean stock investors lent considerable weight to the meeting between the two Korean leaders, they were less excited by this week’s events in Singapore.

Shares in Butan Industrial dipped further off their recent highs following Trump’s get-together with Kim Jong Un, closing around 10% lower.

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