Hanwha Asset Management's 'PLUS K Defense' Surpasses 600 Billion KRW in Net Asset Value

Hanwha Asset Management announced on the 14th that the net asset value of the 'PLUS K-Bangsan' exchange-traded fund (ETF) has surpassed 600 billion KRW.

According to the Korea Exchange Information Data System, as of the 10th, the net asset value of the PLUS K-Bangsan ETF was recorded at 604.5 billion KRW. This comes about a month after surpassing 500 billion KRW on the 12th of last month. The performance of PLUS K-Bangsan over various periods is as follows: 59.75% over the past 3 months, 67.64% over 6 months, 116.47% over 1 year, 73.48% since the beginning of the year, and 247.32% since its listing (listing date: January 5, 2023).

Hanwha Asset Management expects PLUS K-Bangsan to be relatively free from the impact of the tariff policies recently announced by U.S. President Donald Trump. The main export regions for K-Bangsan's key weapon systems are Europe, the Middle East, and Asia, and currently, there are no weapon systems exported to the United States.

The steady inflow of funds into PLUS K-Bangsan is based on the improved performance of major companies included in the ETF. Hanwha Aerospace and Hyundai Rotem recorded operating profit margins of 30-35% in the defense sector's overseas exports in the fourth quarter of last year.

The demand originating from Europe, estimated at around 1,200 trillion KRW, is also supporting K-Bangsan. The European demand started from the European self-strengthening doctrine, including the 'EU ReArm Plan' announced after the breakdown of the Trump-Zelensky meeting. The recently announced European rearmament roadmap, 'Readiness 2030,' includes building a pan-European military equipment market, fostering the regional defense industry, and cooperation with partners in other regions.

This year, orders from the Middle East are also expected. With the replacement period for ground weapon systems in Saudi Arabia and the UAE approaching, export routes for K-Bangsan to the Middle East have opened. In the case of the K9 self-propelled howitzer and K2 tank, previously, German engines and powerpacks were used, requiring German approval for exports, but with the successful localization of engines and powerpacks, an environment favorable for exports has been established.

Choi Young-jin, Executive Director at Hanwha Asset Management, said, "With the Russia-Ukraine war, conflicts in Israel and the Middle East, and the intensification of U.S.-China hegemonic competition, the era of peace is ending and an era of conflict and confrontation has arrived." He added, "Considering that this situation will last for at least 10 to 20 years, investment in the defense industry should be approached from a long-term perspective."

He continued, "We suggest investing a certain proportion of long-term assets, such as pension funds, in the PLUS K-Bangsan ETF," emphasizing, "Attention should be paid to the long-term growth potential of K-Bangsan."