South Korean defence stocks surge as high as 30% amidst ongoing US-Iran war

Defence stocks in South Korea have seen a sharp surge on Tuesday amidst the ongoing US-Iran war, that has now entered its fourth day. The equity markets in South Korea were shut on Monday on account of a holiday.Shares of Hanwha Aerospace, the largest defence manufacturer in the country, surged as much as 22%, while those of Korea Aerospace Industries saw gains of over 7% on Tuesday.

Lignex1, the maker of the South Korean Air Defence systems, soared 30%, while Victek and Firstec, which are into the manufacturing of electronic warfare systems and anti-aircraft missile components respectively, also saw gains of over 20% on Tuesday.
Shares of other companies such as Poongsan rose 14%, while Hyundai Rotem, which manufactures the K2 main battle tank saw gains of 18%.The South Korean defence sector is outperforming the broader KOSPI index on Tuesday, which is down by over 2% and is leading the losses among the Asia-Pacific indices. The country aspires to become the fourth-largest defence industry globally by 2030.

Local South Korean industry has seen a rise in prominence off late due to orders from countries such as Poland and Romania. European countries have already announced a substantial increase in defence spending due to the ongoing Russia-Ukraine war.

Defence stocks globally had seen a sharp surge on Monday with the escalation of the war in the Middle East. Indian stocks such as Paras Defence and ideaForge were up between 6% to 7%, while others such as Solar Industries and Bharat Electronics gained between 2% to 4%.

In the European Stoxx 600 index, Germany’s Hensoldt and Britain’s BAE Systems were the top performers on Monday with gains of over 5% each. On Wall Street, shares of Lockheed Martin and Northrop Grumman gained between 3% to 6% overnight.