By Kwanwoo Jun

Hanwha Ocean shares surged to lead a rally in South Korean shipbuilding stocks after President-elect Donald Trump said he may turn to allies to help the U.S. Navy build up its fleet.

South Korea, a close U.S. military ally, is home to the world's leading shipyards, and Hanwha Ocean is one of the local shipbuilders with close business ties with the U.S.

Shares of Hanwha Ocean rose 13% on Tuesday as HD Korean Shipbuilding & Offshore Engineering and its affiliate HD Hyundai Mipo added 2.7% and 2.2%, respectively, outperforming the benchmark Kospi index's 0.1% gain. Another shipmaker, Samsung Heavy Industries, advanced 3.6%.

The shipbuilders' rally came after Trump said in an interview on U.S. radio program The Hugh Hewitt Show on Monday that he plans to bolster the U.S. naval fleet, potentially with the help of allies, in order to compete with China and its own continuously expanding fleet.

"We used to build a ship a day. We don't build ships anymore. We want to get that started and maybe, we'll use allies also in terms of building ships," Trump said in a transcript of the interview posted on the radio show's website.

Daiwa Capital analysts Mike Oh and Daeho Son said in a recent research note that Hanwha Ocean, which supplies the South Korean navy with warships and submarines, has better defense business opportunities than its local peers under the incoming Trump administration. That's because the company secured approval to do maintenance, repair and operations work on certain U.S. Navy vessels after acquiring Philly Shipyard in Philadelphia for $100 million in 2024, they said.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

January 07, 2025 02:20 ET (07:20 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.