[Market Focus] Defense Stocks Hit Consecutive Record Highs Amid Middle East Crisis

Shares of defense companies surged and hit a series of record highs following the aftermath of airstrikes by the United States and Israel on Iran.

As of 9:09 a.m. on March 3, Hanwha Systems was trading at 1,379,000 won, up 243,000 won (21.39%) from the previous session. During intraday trading, it climbed as high as 1,381,000 won, setting a new 52-week high. Korea Aerospace Industries also gained 5.48%, reaching 2,030,000 won intraday and marking another 52-week high. Hyundai Rotem was up 9.54% at 2,525,000 won, hitting an intraday peak of 2,570,000 won and recording a 52-week high. LIG Nex1 also soared to 6,610,000 won intraday, setting another 52-week record. LIG Nex1 was trading at 6,250,000 won, up 22.79%.

Chae Woonsaem, a researcher at Hana Securities, analyzed, "From a global defense investment perspective, the recent U.S.-Israel attack on Iran could have two major effects." He stated, "First, it strengthens the justification for increasing the 2027 U.S. defense budget to 1.5 trillion dollars, as advocated by U.S. President Donald Trump. Second, even if the war ends early, the possibility of subsequent Iranian attacks and ongoing regional uncertainty could lead to a mid- to long-term increase in arms imports in the Middle East."

Chae added, "Korean defense companies are expected to benefit from rising arms demand in the Middle East. Hanwha Aerospace is focusing on securing ground weapons contracts in Saudi Arabia, while Hyundai Rotem is concentrating on winning tank orders from Iraq. Korea Aerospace Industries and LIG Nex1 are drawing attention as beneficiaries in the Korea-UAE defense cooperation framework (worth 35 billion dollars). Korea Aerospace Industries and LIG Nex1 are considered relatively attractive, as product deliveries are likely to accelerate from 2026, given their currently low performance base."