On June 16, South Korean defense stocks experienced significant gains, with Hanwha Aerospace rising by 11.8%, Hyundai Rotem increasing by 12.67%, and LIG Defense & Aerospace nearing a 30% limit gain on the Kospi index. This surge is attributed to expectations that defense export pipelines will reopen and orders from the Middle East will increase as the conflict in Iran appears to be winding down.
Analysts from Mirae Asset Securities and DS Investment and Securities highlighted that the end of the war could act as a 'positive catalyst' for the Korean defense industry. Notably, LIG's Cheongung air defense system, which has shown comparable performance to the U.S. PAC-3 interceptor at a significantly lower cost, may see renewed interest.
Furthermore, Hanwha Aerospace's stalled negotiations with Saudi Arabia and Hyundai Rotem's plans to export 250 K2 main battle tanks to Iraq are seen as promising indicators for future contracts.
Vikas Pershad from M & G Investments emphasized that defense spending is increasingly influenced by long-term strategic factors, suggesting sustained demand for South Korean defense products beyond immediate geopolitical events