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Shares of KAI hit 52-week low on corruption probe

Shares of Korea Aerospace Industries Co. (KAI), the country‘s sole aircraft manufacturer, closed at a record low on the main bourse this week amid alleged corruption in major defense projects, market watchers said Saturday.

KAI closed at 47,950 won (US$42.85) on the main bourse on Tuesday, hitting a 52-week low, the bourse operator Korea Exchange said. The company managed to slightly rebound to close at 50,400 won on Friday.

The company has been involved in high-profile defense projects to develop the Surion utility helicopter, T-50 supersonic trainer jet and FA-50 light attack fighter. State auditors found KAI gained illicit profits by manipulating development costs.

On July 14, the Seoul Central District Prosecutors’ Office raided the KAI headquarters in Sacheon, 437 kilometers south of Seoul, and its office in Seoul for evidence related to the allegations.

“Although we cannot predict the result, the investigation may continue for a long period as President Moon Jae-in expressed a strong willingness to root out defense-related corruption,” said Chung Dong-ik, a researcher at KB Securities Co.

Other analysts, on the other hand, said the Moon administration is also focusing efforts on improving self-reliant defense capabilities, which may emerge as new opportunities for KAI. (Yonhap)