A K9 self-propelled howitzer, manufactured by Hanwha Aerospace Co., is on display during the Association of the United States Army (AUSA) 2024 Annual Meeting and Exposition at the Walter E. Washington Convention Center in Washington on Oct. 14, 2024. (Image courtesy of Yonhap)
SEOUL, March 4 (Korea Bizwire) — Shares of South Korean defense companies surged on March 4 following heightened geopolitical uncertainty after a failed summit between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky, fueling expectations of increased military spending in Europe.
According to the Korea Exchange, Hanwha Aerospace [012450] soared 18.01% to close at 701,000 won ($483), leading a rally across the defense sector. Other major gainers included Hanwha Ocean (up 14.54%), Hyundai Rotem (10.87%), Hanwha (9.96%), Hanwha Systems [272210] (8.67%), Poongsan (7.65%), LIG Nex1 [079550] (7.39%), and Korea Aerospace Industries [047810] (7.29%).
Additionally, HJ Shipbuilding & Construction [097230] and Hanil Forging [024740] both hit the upper limit, rising 30.00% and 29.81%, respectively.
The surge came after European Union (EU) leaders discussed additional aid for Ukraine and a significant increase in military spending following tensions between Washington and Kyiv. European defense stocks had already posted double-digit gains earlier, reflecting investor optimism about increased defense budgets.
DS Investment & Securities noted that if Eastern and Northern European countries expand their defense budgets to 5% of GDP, an estimated additional $56.3 billion (82 trillion won) in spending would be required compared to last year.
“With Europe prioritizing fast delivery and cost-effective weapons, South Korea is well-positioned to benefit from the rise in European defense spending,” the brokerage firm stated.
As geopolitical tensions escalate, South Korean defense firms are expected to remain in focus, with investors closely monitoring potential new contracts and supply deals with European nations.
M. H. Lee (mhlee@koreabizwire.com)
