By Fabiana Negrin Ochoa
Shares of South Korean shipbuilder Hanwha Ocean slid over 20% on Tuesday after it lost out on a Canadian submarine contract to ThyssenKrupp's naval division TKMS.
The stock fell as much as 24% to 88,200 won, or US$57.69, in early trade, on track for its worst one-day percentage loss in nearly a decade, according to LSEG data. Other shipbuilding stocks were broadly lower, with HD Hyundai Heavy and Samsung Heavy Industries down about 6% each. The benchmark Kospi was 5.8% lower.
That came after Canada said it will start negotiations with TKMS to purchase up to 12 submarines as part of a push to ramp up defense spending.
Canada didn't provide an estimated cost for the German-made submarines, but Prime Minister Mark Carney said the deal would be the largest military procurement in the country's history.
If negotiations with TKMS are unsuccessful, Canada may designate Hanwha as the preferred supplier and initiate talks.
In a post on Facebook, South Korean President Lee Jae Myung said that though the result wasn't what they had hoped for, Korea-made submarines have again shown that they can compete against global counterparts.
Seoul and Ottawa have been deepening their economic relationship, announcing last month an expansion of co-operation on energy resources and critical minerals.
In statements carried by local media, Hanwha said it had made every effort to win the bid, but ultimately couldn't "overcome the high wall of the NATO alliance." It added that it would analyze the process to keep expanding in the global market.
Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com