[Edaily Reporter Kim Kyung-eun] On the 16th, defense stocks such as #Hanwha Aerospace, #LIG Defense & Aerospace, and #Hyundai Rotem continued to rise in early trading despite signs of a potential end to the conflict between the U.S. and Iran.
According to MP Doctor, as of this morning, Hanwha Aerospace is trading at 1.2 million won, up 116,000 won (10.70%) from the previous trading day, while LIG Defense & Aerospace has surged 244,000 won (28.88%) to 1.089 million won. Hyundai Rotem is also trading at 236,000 won, up 23,000 won (10.80%). Hanwha Systems is trading at 114,150 won, up 14,650 won (14.72%).
While some view that investment sentiment in the defense sector may temporarily wane due to concerns over declining demand for weapons as the end of the U.S.-Iran conflict comes into view, the securities industry is offering a contrary analysis, suggesting that new opportunities will open up for the K-defense sector.
Kang Tae-ho, an analyst at DS Investment & Securities, stated, “One of the traditional misconceptions about the defense industry is the view that a decline in stock prices is inevitable once the war ends,” adding, “The end of the Iran war will actually serve as a positive catalyst for the Korean defense industry.” He explained that this is because there are numerous export pipelines to the Middle East that will gain momentum after the war ends.
In fact, Hanwha Aerospace has been in discussions with Saudi Arabia’s Ministry of National Guard (MNG) regarding a ground weapons modernization project involving armored vehicles and self-propelled artillery, and orders are expected to materialize as negotiations resume following the end of the war. Hyundai Rotem has also been in talks with Iraq regarding the export of approximately 250 K2 tanks, and analysts assess that the likelihood of signing a contract in the second half of this year or the first half of next year is increasing as the situation in the Middle East stabilizes.
Researcher Kang stated, “Export negotiations for the Cheon-gung II system from LIG Defense & Aerospace, Hanwha Aerospace, and Hanwha Systems are expected to proceed with numerous Middle Eastern countries,” adding, “We anticipate new exports to countries that have not yet adopted the system—such as Kuwait and Qatar, which have been directly attacked by Iran—as well as additional orders from existing customers.”