Defense stocks were strong early on the 3rd. Investor sentiment appeared to be buoyed by expectations of increased demand for the defense industry as Middle East tensions escalated following U.S. and Israeli airstrikes on Iran on the 28th.
As of 9:09 a.m., Hanwha Aerospace was trading at 1,354,000 won, up 159,000 won (13.31%) from the previous transaction day on the Korea Exchange. At the same time, LIG Nex1 was soaring 22%, and Hanwha Systems was up 20.86%.
Earlier, the United States and Israel simultaneously struck key military and command facilities, including in Tehran, Iran's capital, and after that Iran launched a retaliatory attack using missiles and drones, widening the hostilities. As military tensions rise across the Middle East, the potential for increased demand for air defense systems and interceptor missiles is coming into focus.
Yang Seung-yoon of Eugene Investment & Securities said, "From a defense industry perspective, we again confirmed that this is a world that speaks through the 'logic of power,'" and noted, "With the rapid depletion of air defense missiles in the Middle East, demand for restocking is expected to expand."
In this regard, Yang picked LIG Nex1 and Hanwha Aerospace as direct beneficiaries of expanding air defense demand in the Middle East. LIG Nex1's Cheongung interceptor missile exported to the United Arab Emirates (UAE) has entered mass production, drawing attention to the possibility of additional procurement, and Hanwha Aerospace could also benefit if Gulf states carry out counterattacks, as there is a possibility that the UAE and Saudi Arabia will use the Chunmoo system.