After the U.S.-Israel airstrikes on Iran sent defense stocks surging, Hanwha Group's market capitalization ranking rose to No. 4, overtaking LG Group.
According to the Korea Exchange (KRX) on the 8th, as of the 6th, the combined market capitalization of 12 listed Hanwha Group companies was tallied at 180.674 trillion won. It ranks fourth after Samsung Group (1,433.272 trillion won), SK Group (826.593 trillion won), and Hyundai Motor Group (300.625 trillion won). LG Group (175.029 trillion won) fell to fifth in market cap ranking.
As instability in the Middle East escalated, shares of Hanwha Aerospace, Korea's leading defense stock, and Hanwha Systems, which makes defense-related electronic components, jumped sharply.
With the stock price rising, Hanwha Aerospace's market capitalization jumped from about 61 trillion won at the end of Feb. to 76 trillion won on the 6th. During the same period, Hanwha Systems' market cap also increased from 21 trillion won to 30 trillion won.
By contrast, LG Group shares, which had been strong on the artificial intelligence (AI) and robotics theme, have seen a sharp correction since the Iran situation. LG Energy Solution's market cap fell from 99 trillion won on the 27th of last month to 88 trillion won on the 6th, and LG Electronics' market cap also decreased from 23 trillion won to 19 trillion won.
Hanwha Group's market cap ranking has been steadily rising. At the end of 2024, Hanwha Group ranked eighth by market cap, but as defense and shipbuilding boomed last year, shares of affiliates including Hanwha Aerospace, Hanwha Ocean, Hanwha Engine, and Hanwha Systems all climbed, lifting it to sixth, ahead of POSCO Group and Celltrion Group.
With the defense sector's strength continuing this year, it rose to fifth, overtaking HD Hyundai Group, and after the Iran situation, it also surpassed LG Group.
Experts expected the strength in defense stocks to continue for the time being. Even after defense stocks jumped in a short period due to the Iran war, demand is likely to increase as Middle Eastern countries bolster their defense capabilities.
Jang Nam-hyeon, an analyst at Korea Investment & Securities Co., said, "The increase in demand for weapons systems due to heightened global geopolitical uncertainty from the Iran war is not a short-term event," adding, "The defense sector's core investment points of export growth and profit improvement will continue." Jang maintained an overweight view on the defense sector.
Lee Han-gyeol, an analyst at Kiwoom Securities, also said, "Even after the Iran situation settles, it will be difficult to quickly ease tensions over religion and regional hegemony in the Middle East," adding, "Accordingly, as Middle Eastern countries push to strengthen national defense, domestic defense companies' Middle East business will expand."