Hyundai Construction Equipment has debuted in the stock market this month after being spun off from Hyundai Heavy Industries. The appearance of Hyundai Construction Equipment was welcomed by investors as the world's construction market is finally moving out of the long-running downturn.
According to Off-Highway Research, a British consulting and research firm specializing in the construction equipment industry, the global construction equipment business has suffered a setback for four consecutive years since 2012. Last year, the declining pace stopped as the market grew 1 percent. The research firm predicted the market would make a 9-percent growth this year.
This is based on the following three grounds. The first is the cycle to replace obsolete equipment has come. Given a large number of construction equipment was sold in the 2006-2011 period, the replacement demand would likely continue for the time being. In addition, construction companies will begin purchasing new machines in order to comply with much-toughened environmental regulation.
The second factor has to do with the recovery of the raw materials market. Construction equipment is used to mine raw materials as well as to build homes and infrastructures. In addition, resource-rich countries in the Middle East and Asia will likely invest in infrastructures with money earned from selling raw materials.
Third, it is highly likely that major economies in the world are trying to invest more in infrastructure, such as the One Belt One Road initiative by the Chinese government and the bid by the U.S. government to invest more than $1 trillion in the nation's infrastructure.