[Special Stock] Hyundai Rotem Rises 9% on Export Boost Expectations Amid Visible Amendments to the Mercury Law

Amendment to Mercury Act Passed by National Assembly Subcommittee on 21st
Law Revision Expected to Ease Export Restrictions
Other Defense Stocks Also on the Rise

Hyundai Rotem surpassed 30,000 KRW during trading for the first time in five months. This is interpreted as being influenced by the visible progress of the passage of the amendment to the Export-Import Bank Act (Su-eun Act), which was the biggest issue in the defense industry.

As of 11:07 AM on the 22nd, Hyundai Rotem was trading at 32,550 KRW, up 9.05% (2,700 KRW) from the previous day. This is the first time Hyundai Rotem’s stock price has surpassed 30,000 KRW since September 18 of last year. The stock, which opened at 30,900 KRW, has been on a steady rise since the early trading hours.

The day before, the National Assembly’s Planning and Finance Committee held an economic subcommittee meeting and passed a bill to increase the capital limit of the Korea Export-Import Bank from the existing 10 trillion KRW to 25 trillion KRW. Since the subcommittee, composed of representatives from both ruling and opposition parties, reached an agreement, it is expected to pass smoothly at the plenary session on the 29th.

The amendment is expected to ease the bottleneck in defense exports. In the international community, it is customary for the exporting country’s bank to provide loans to the importing country in arms transactions. However, the financial support limit of the Export-Import Bank was mostly exhausted during the first export contract with Poland, raising concerns that subsequent export contracts might face difficulties, which was the biggest risk in the industry.

In 2022, South Korean defense companies, including Hyundai Rotem, signed an arms trade agreement with Poland worth approximately 20 trillion KRW. Among the items in the agreement were 1,000 units of Hyundai Rotem’s K2 tanks. Of these, 180 units have already been delivered. Negotiations are ongoing for the remaining quantities under the execution contracts. With the amendment resolving the financial support risk, the industry has been relieved.

Other defense-related stocks are also on the rise, including LIG Nex1 (1.60%), Korea Aerospace Industries (1.13%), and Hanwha Aerospace (1.23%).