Lotte gets approval for China property project as bilateral tensions ease

Lotte

06/11/2017 03:10

* Chengdu land project gets approval for 2nd stage of 
building 
    * Lotte hardest hit by past Beijing-Seoul friction 
    * Shares in Lotte firms climb on hopes for China earnings 
rebound 
 
    By Joyce Lee 
    SEOUL, Nov 6 (Reuters) - Lotte Corp  004990.KS  said on 
Monday that a major property development in China had received 
approval from local authorities to start a second phase of 
construction - the latest sign that tension between Beijing and 
Seoul is easing. 
    The announcement comes one week after an unexpected detente 
between the two countries which have been at odds over the 
deployment of a U.S. anti-missile system in South Korea - a 
dispute that has battered South Korean businesses that rely on 
Chinese consumers.  urn:newsml:reuters.com:*:nL4N1N643M 
    The Lotte conglomerate has been among the hardest hit by the 
political tension after it agreed to hand over land for the 
defence system, angering Beijing which says the system's radar 
can penetrate its territory. 
    A Lotte spokesman said the approval to build commercial 
complexes at its 66,000 square metre Chengdu land project, worth 
some 1 trillion won ($895 million), came on Oct. 31 - the same 
day that Seoul and Beijing announced they had agreed to mend 
ties.  
    "Investors are hoping that from 2017 earnings will improve 
drastically as relations between South Korea and China get 
better and Chengdu is one piece of news that is adding to that," 
said Joo Young-hun, analyst at Eugene Investment & Securities. 
    But construction at Lotte's Shenyang project, which covers 
1.45 million square metres, remains suspended, said the 
spokesman for Lotte Corp, the conglomerate's holding company. 
    Construction has been halted since a December inspection for 
fire hazards. Lotte plans to build apartments and a theme park 
at the Shenyang project in addition to a department store and a 
movie theatre that are already open.  urn:newsml:reuters.com:*:nL4N1FT2P4 
    Lotte's retail outlets have been particularly hurt by the 
political tension with most of its hypermarkets and supermarkets 
in China shut down. They are set to sold for a fraction of what 
it invested. 
    Shares in key Lotte units continued to climb on hopes of 
better earnings amid the thaw in tensions, with Lotte Shopping 
Co Ltd  023530.KS  up 3.9 percent on Monday, bringing its gains 
since Oct. 31 to 12.9 percent. Hotel Shilla Co Ltd  008770.KS  
was up 3.7 percent and has risen 6.1 percent since last week. 
     
($1 = 1,117.4000 won) 
 
 (Reporting by Joyce Lee; Editing by Edwina Gibbs) 
 ((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters 
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net)) 
 
Keywords: LOTTE CHINA/