Hanwha Asset Management, 'PLUS K Defense'... "Net Asset Value Surpasses 200 Billion Won"

Hanwha Asset Management announced on the 16th that the net asset value of the exchange-traded fund (ETF) 'PLUS K-Bangsan,' which invests in key domestic defense industry companies, has surpassed 200 billion KRW.

According to the Korea Exchange Information Data System, the net asset value of the 'PLUS K-Bangsan' ETF recorded 210.7 billion KRW as of the closing price on the 13th. This achievement came about four months after surpassing 100 billion KRW in April this year. Notably, since the ETF brand changed to 'PLUS' on the 23rd of last month, 49.3 billion KRW of funds have flowed in.

This performance is interpreted as a result reflecting the earnings growth of major investment stocks in the first half of the year, such as Hanwha Aerospace, Hyundai Rotem, and LIG Nex1. The combined operating profit of the four major domestic defense companies (Hanwha Aerospace, Hyundai Rotem, LIG Nex1, and Korea Aerospace Industries) in the second quarter of this year was 594.9 billion KRW. This shows a growth rate of more than three times compared to the combined operating profit of 194.4 billion KRW in the same period last year.

The earnings growth of domestic defense companies in the first half of the year is attributed to increased weapons demand mainly from European and Middle Eastern countries following the Russia-Ukraine war. Export performance of products such as the K9 self-propelled howitzer, K2 tank, and light combat aircraft FA-50PL and FA-50M drove sales. As geopolitical tensions escalate, the trend of increasing defense budgets is expected to continue, raising expectations for further earnings growth of domestic defense companies in the second half of the year.

The upcoming U.S. presidential election in November this year is also expected to present new opportunities for domestic defense companies. Predictions are strong that global defense demand will increase regardless of which candidate wins. In particular, one of the leading candidates, former President Trump, has demanded increased NATO (North Atlantic Treaty Organization) defense spending, and the current situation of strengthened cooperation between Korea and NATO could lead to an expansion of defense exports.

'PLUS K-Bangsan' is the only product investing in representative domestic defense industry companies, with a year-to-date return of 48.3%. Since its listing on January 5, 2023, the return has been 90.8%. Especially during the market shock when the KOSPI fell more than 8% on the 5th, and the market rebounded until the 13th, 'PLUS K-Bangsan' rose 12.5%, showing more than 5 percentage points of excess performance compared to the KOSPI (7.4%), demonstrating high resilience.

Choi Young-jin, Head of Strategic Business Division at Hanwha Asset Management, stated, “The worsening situation of the Russia-Ukraine conflict and the escalation of the Israel-Hamas conflict are very unfortunate, but they have increased international interest in K-defense. The increase in self-reliant defense demand from countries worldwide is an obvious situation, so it is necessary to approach it from a long-term perspective.”