South Korea Defense Stocks Jump as Iran War Boosts Sector

South Korean defense stocks surged on Tuesday after markets reopened from a public holiday, as investors reacted to escalating conflict involving Iran.

Shares of Hanwha Aerospace, the country’s largest defense manufacturer, jumped nearly 25% in early trading before trimming gains to around 13%. Korea Aerospace Industries also rose more than 12% before easing to about 2%.

Other defense-related companies posted strong gains. LIG Nex1, which produces air defense systems, surged around 25%. Electronic warfare systems maker Victek climbed over 20%, while missile components manufacturer Firstec rose more than 15%.

Ammunition producer Poongsan gained about 8%, and Hyundai Rotem, known for manufacturing the K2 battle tank, advanced over 5%.

The rally stood in contrast to the broader Kospi index, which fell 4.36%, leading losses across Asian markets.

Global Defense Stocks Rise

Defense stocks have been rising globally as investors anticipate increased military spending amid growing geopolitical tensions.

South Korea’s defense industry has expanded rapidly in recent years, especially after the Ukraine-Russia conflict. The country has set a goal to become the world’s fourth-largest arms exporter by 2030.

European countries such as Poland and Romania have placed significant orders with South Korean defense firms as they increase military budgets.

Defense stocks in Europe also moved higher. Germany’s Hensoldt and the UK’s BAE Systems posted gains, while U.S. defense giants Lockheed Martin and Northrop Grumman also advanced.

Analysts say geopolitical uncertainty often drives demand for defense stocks, as governments boost military spending in response to security risks.