Hanwha Asset Management announced on the 26th that it will newly list the 'PLUS K defense-related materials, parts, and equipment' exchange-traded fund (ETF) that invests in corporations related to the domestic defense industry.
This product started from the perspective that the 'spillover effect' of large contracts received by domestic finished defense corporations can lead to material, parts, and equipment supplying corporations (hereinafter referred to as material, parts, and equipment corporations).
The main components include ▲ K2 tank engine production by HD Hyundai Infracore ▲ K9 self-propelled artillery engine production by STX Engine ▲ Transmission supply by SNT Dynamics ▲ Drive system and hydraulic system provided by MNC Solution ▲ Ammunition production by Poongsan ▲ Infrared imaging sensor supply by i3system.
Until now, domestic defense material, parts, and equipment corporations have effectively conducted 'indirect exports' by supplying parts to finished goods export corporations. However, recent direct contracts with foreign companies for 'direct exports' have been increasing, and Hanwha Asset Management notes that higher margins compared to indirect exports are expected.
For instance, in the past, the K2 tank, which adopted a German power pack (engine + transmission), had its exports to the Middle East blocked due to sanctions imposed by Germany, the core parts production country. However, with the recent localization of the K2 tank's engine and transmission, there are prospects for expanded exports to the Middle East.
Choi Young-jin, Chief Marketing Officer (CMO) at Hanwha Asset Management, said, 'While the PLUS K defense ETF focused on the global structural growth of large defense corporations, the PLUS K defense material, parts, and equipment ETF can invest in corporations that are being fostered by national policy, aiming for the spillover effect of receiving system corporation contracts, expanding direct exports, and growth opportunities resulting from parts localization.'