By Kwanwoo Jun
Shares of South Korean defense companies rallied Tuesday as fighting between Israel and Palestinian militants in the Gaza Strip extended into a third day.
South Korea markets were shut on Monday so its first session of trading after the weekend’s attacks on Israel by Hamas saw defense-related companies power higher.
Shares of guided-missile maker LIG Nex1 rose as much as 12% to 96,600 won ($71.68) in early trade and were last 5.1% higher.
Self-propelled howitzer manufacturer Hanwha Aerospace surged 8.7% early and was last up 2.4% while artillery-shell and ammunition supplier Poongsan gained 4.8%.
In comparison, South Korea’s benchmark Kospi stock index was just 0.1% higher.
Israel has declared war on Hamas, launching airstrikes on the Palestinian enclave of Gaza and deploying four army divisions to the country’s south. The fighting has renewed investors’ interest in the South Korean defense industry, which is geared to quickly produce arms and other war materials as the Korean peninsula has been technically at war since the 1950-1953 Korean conflict.
The Israel-Hamas war could lead to a race for weaponry, especially artillery, ammunition and guided-missile systems, in the Middle East , SK Securities analyst Seungdoo Na said in a research note.
Demand to restock defensive materiel could continue to increase even after the current conflict ends, Na said. He noted that Turkey, the United Arab Emirates, Iraq and Egypt had already been in negotiations with LIG Nex1 and Hanwha Aerospace for fresh or additional deals.
South Korea emerged as a key exporter of self-propelled howitzers, guided missiles and other weapons to Europe since Russia invaded Ukraine in 2022.
Write to Kwanwoo Jun at [email protected]
Read the full article here
