February 22, 2011 / 3:07 AM / 8 years ago

S.Korean builders halt Libya projects; shares slide

* Worries about Libya protest hit S.Korean builder shares

* Hyundai E&C shares tumble 10 pct, Daewoo Eng down 8 pct

* Daewoo says its construction projects are on standby

SEOUL, Feb 22 (Reuters) - Major South Korean builders put their construction projects in Libya on hold amid a bloody revolt against authoritarian rule by its leader Muammar Gaddafi, as construction shares in Seoul fell sharply.

Last year alone, South Korea won nine contracts worth $2 billion in Libya, making it one of the biggest foreign players outside of the oil market which produces most of the country’s wealth.

A total of 24 South Korean builders are working in Libya, hiring 22,000 employees including 1,300 Koreans.

A foreign ministry official told Reuters the South Korean government was advising its nationals in Libya to leave as soon as possible if their business was not urgent.

“This applies to Korean companies as well, but they are reluctant to leave because they have invested so much. This is natural,” the official said.

South Korea’s biggest player in the country, Hyundai Engineering & Construction , last year agreed a $1.4 billion deal to build a power plant in Tripoli.

Shares in South Korean builders came under pressure on concerns that protracted protests in Libya could deal a major blow to projects there.

Hyundai E&C shares tumbled about 10 percent to its lowest level in almost two months, while Daewoo Engineering & Construction shares fell 8 percent to their lowest level in more than three months.

“All of our three construction projects, worth between $400-$530 million each, are on standby to monitor what is happening,” said a spokesman for Daewoo Engineering & Construction.

Hyundai also said its construction project in Benghazi was halted after attackers looted computers and other assets from its estate over the weekend.

The Libyan uprising is one of a series of revolts that has spread like wildfire across the Arab world since December, toppling the long-time rulers of Tunisia and Egypt and threatening entrenched dynasties from Bahrain to Yemen.

On Monday, 15 Bangladeshis and three South Koreans were wounded when hundreds of armed Libyans attacked a South Korean construction site near the capital Tripoli, the latest in a series of attacks against Korean sites in the past week.

Libya is the third biggest overseas construction market for South Korean builders, bringing nearly 300 orders worth $36 billion in the three decades, the construction ministry in Seoul said.

“Overseas orders from oil-rich nations were practically the only earnings driver for construction firms amid ongoing downturn in the domestic real estate sector,” said Byun Seong-jin, an analyst at Mirae Asset Securities.

“A key concern is this unrest could spread across the Middle East, which could sever order flows from this region. This will dampen the recovery momentum that builders were recently gaining.”

Other Asia companies with business interests in Libya also saw their shares knocked down on Tuesday. Shares of Singapore water firm Hyflux fell as much as 8.6 percent. (Reporting by Miyoung Kim, Ju-min Park, Jungyoung Park, Danbee Moon and Jeremy Laurence; Editing by Dhara Ranasinghe) (Created by Dhara Ranasinghe)

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