Defense stocks are showing strong gains amid expectations for increased exports to the Middle East, despite news of a peace agreement between the United States and Iran.
According to the Korea Exchange, as of 9:45 a.m. on June 16, LIG Defense and Aerospace was trading at 1,077,000 won, up 232,000 won (27.46%) from the previous trading day. At the same time, Hanwha Systems rose by 10.55%, Hanwha Aerospace by 9.78%, Korea Aerospace Industries by 6.84%, and Hyundai Rotem by 8.69%.
Market analysts believe that the resumption of defense export negotiations in the Middle East, which had been stalled due to the conflict, is boosting investor sentiment.
Kang Tae-ho, a researcher at DS Investment & Securities, stated, "The end of the Iran war will serve as a positive catalyst for the South Korean defense industry," adding that there are numerous export opportunities to the Middle East that will materialize following the war's conclusion.
He highlighted potential projects, including Hanwha Aerospace's ground weapon modernization program in Saudi Arabia, Hyundai Rotem's negotiations for K2 tank exports to Iraq, and the export discussions for the Cheongung-II missile system by LIG Defense and Hanwha affiliates, as well as the KF-21 export negotiations by Korea Aerospace Industries, all of which are likely to gain momentum post-conflict.
Additionally, Kang noted that the end of the conflict has highlighted the valuation attractiveness of defense stocks, predicting that discussions for contracts in the Middle East will accelerate, leading to a rising trend in defense sector stock prices in the second half of the year.
* This article has been translated by AI.
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