Hanwha Aerospace Invests in Hyundai Rotem, KAI, Hanwha Systems, etc.
Proven Defense Technology and Active Government Support Forecast Strong Exports This Year
▲ On the 5th, at the 'K Defense Fn ETF New Listing' press conference held at Conrad Seoul Hotel in Yeouido, Han Doo-hee, CEO of Hanwha Asset Management, is giving a greeting.
[Asia Economy Reporter Kwon Jae-hee] Hanwha Asset Management listed the 'ARIRANG K Defense Fn ETF' exchange-traded fund (ETF) on the Korea Exchange on the 5th. It is the first domestic ETF that allows investment in the growth potential of the domestic defense industry and the first new ETF introduced by a domestic asset management company this year.
At a press conference held at the Conrad Hotel in Seoul on the same day, Han Doo-hee, CEO of Hanwha Asset Management, said, "'ARIRANG K Defense Fn ETF' is the first ETF launched on the Korea Exchange this year," adding, "With the export volume of defense companies expected to exceed 20 trillion won this year, we are honored to introduce a thematic investment product to customers for the first time this year."
The 'ARIRANG K Defense Fn ETF' invests in 10 representative companies engaged in the defense industry among domestic listed companies. The main constituent stocks include ▲Hanwha Aerospace (20.94%), ▲Korea Aerospace Industries (20.94%), ▲Hyundai Rotem (19.31%), ▲LIG Nex1 (10.62%), ▲Hanwha (9.57%), ▲Hanwha Systems (6.58%), ▲Poongsan (5.89%), ▲SNT Motiv (3.03%), ▲SeAH Besteel Holdings (2.23%), and ▲Firstec (0.89%), which produce Korea's representative weapons such as the K9 self-propelled howitzer, K2 tank, and FA50 light attack aircraft.
Following the Russia-Ukraine war, the importance of self-reliant defense has been highlighted worldwide, and last year, South Korea's defense industry export orders reached a record high. Poland, which shares a border with Ukraine, reinforced its defense gap caused by war material support by ordering approximately $12.4 billion worth of weapons from South Korea.
This year, the export growth trend of domestic defense stocks is expected to continue. Additional orders are anticipated from Europe, Southeast Asia, Oceania, and other regions. Lee Bong-jin, a researcher at Hanwha Investment & Securities, explained, "With the onset of the new Cold War system, NATO countries are planning to increase defense spending to about 3% of GDP," adding, "Looking at the increase rate of defense spending outside China, it is growing at an average of 5% annually." As countries worldwide strengthen their defense capabilities, the demand for South Korean defense materials is significantly increasing.
Kim Sung-hoon, head of the ETF business division at Hanwha Asset Management, said, "The global emphasis on self-reliant defense is favorable to the defense industry, and we believe that Korea's defense industry, with a clear roadmap for entering new and advanced markets, is a suitable industry for growth investment," adding, "The government's will and active support to foster the defense industry as a national strategic industry are also positive factors for the increase in exports of domestic defense companies."
Han Doo-hee, CEO of Hanwha Asset Management, explained, "In this high-interest-rate environment, we plan to launch various products that meet different investment objectives, such as short- and long-term bond ETFs that can pursue returns, making it easier for both individual and institutional investors to meet their investment goals."
Meanwhile, Hanwha Asset Management plans to continue proactive efforts to create customer value in 2023, starting with this K Defense ETF. Depending on changes in the investment environment, they are preparing to expand the ETF lineup to include not only stocks but also bonds and multi-assets, with plans to introduce comprehensive bond ETFs and ultra-long-term bond ETFs in the first quarter.
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