"US-China New Cold War Confrontation Likely to Persist for Decades"

Hanwha Asset Management Hosts K-Defense Conference
PLUS ETF Achieves 7.2 Trillion Won in AUM... Over 100% Growth from Last Year
'Arms Race' Continues as Nations Seek to Avoid War Risks
K-Defense Companies Gain Greater Bargaining Power

Hanwha Asset Management announced on the 27th that it held a press conference on the topic of "Restructuring of the Global Security Order and the 2026 Outlook for K-Defense."

The event, held at the Bulls Hall of the Korea Financial Investment Association in Yeouido, Seoul, featured presentations by Choi Youngjin, Chief Marketing Officer (CMO) of Hanwha Asset Management; Lee Seonyeop, CEO of AFW Partners; and Jang Namhyun, Research Fellow at Korea Investment & Securities.

In his opening remarks, CMO Choi introduced Hanwha Asset Management’s ETF business. He stated, "As of October this year, the PLUS Exchange-Traded Fund (ETF) has recorded a 112% increase in net assets compared to the end of last year," adding, "PLUS K-Defense, PLUS High Dividend, and PLUS 200 have each surpassed 1 trillion won in total net assets."

He continued, "Focusing on the forces that move the world, we have established three investment strategies: defense industry, artificial intelligence (AI)/advanced technology, and digital assets. Today, we will take an in-depth look at the first of these, the defense industry," emphasizing, "The bloc confrontation between the US-led Western powers and the China-led anti-Western bloc will become a 'new normal' that is likely to persist for decades."

CEO Lee Seonyeop highlighted that escalating global conflicts are fueling the growth of the global defense industry market. He analyzed that existing globalization-era agreements such as those from the World Trade Organization (WTO) and Free Trade Agreements (FTA) are being nullified, and that the United States is building new supply chains excluding China to revive its manufacturing sector, which is leading to a confrontation between South Korea, the US, and Japan on one side, and North Korea, China, and Russia on the other.

He explained, "Global supply chains are becoming bloc-based, and the war between Russia and Ukraine is spreading the fear of war across Europe," adding, "An arms race has begun as a means to avoid the risks of war."

Research Fellow Jang Namhyun addressed concerns about a 'margin peak,' noting that compared to 2022, Korean companies' bargaining power is actually increasing, stating, "We believe there is a high likelihood that high margins can be sustained." He cited as evidence: ▲ continued excess demand for weapons systems ▲ increased market share for Korean companies compared to 2022 ▲ Middle Eastern countries with greater capacity for defense spending than Poland.

Jang especially emphasized the need to focus on the Middle East market, pointing out that the global weapons systems market has a very limited number of suppliers.

He explained, "In the past, the United States, France, Germany, and the United Kingdom exported weapons to many Middle Eastern countries, but since the Russia-Ukraine war, they have shifted their focus to exports to Ukraine and other European countries, creating opportunities for K-Defense companies." He added, "Many tanks and armored vehicles in the Middle East are outdated and need to be replaced, and both Hanwha Aerospace and Hyundai Rotem are actively conducting marketing activities in the region."

Hanwha Asset Management was the first in the asset management industry to list the PLUS K-Defense ETF, which invests in major domestic defense companies, in January 2023. The PLUS K-Defense ETF has recorded a return of 212.35% year-to-date, reflecting the elevated status of K-Defense in the global defense market. This is the highest among all domestically listed equity ETFs (excluding leveraged ETFs).