Korean defense stocks soar amid Middle East tensions

(Yonhap News)

South Korean defense stocks rallied Monday morning as tensions between Israel and Iran continued to escalate, fueling investor interest in military and aerospace firms.

Hanwha Systems stock was trading at 61,800 won ($45.29) as of 9:32 a.m., up 13.60 percent from the previous session on the Kospi after hitting an intraday high of 63,500 won - a 16.73 percent gain and a new record.

Other defense-related stocks also surged to 52-week highs: LIG Nex1 rose 4.18 percent, Hyundai Rotem climbed 3.64 percent, Korea Aerospace Industries advanced 1.23 percent, and Hanwha Aerospace gained 2.75 percent.

The rally comes amid ongoing hostilities between Israel and Iran, which began early on June 13th, 2025 (local time) following Israeli airstrikes. Several key facilities, including Iranian Foreign Ministry buildings and Israeli airports, have sustained damage due to continuous strikes.

U.S. President Donald Trump called for negotiations but remarked that “sometimes they have to fight it out, but we’re going to see what happens.”

KB Securities said that Israel, as one of the world’s major arms exporters, maintains both cooperative and competitive ties with Korea and that export restrictions on Israeli weapons could create short-term opportunities for Korean defense companies. However, the firm also cautioned that a prolonged or full-scale conflict may drive up raw material costs and logistical expenses, potentially disrupting joint development efforts and causing production or export delays due to supply chain issues.

Hanwha Systems shares closed at 64,200 won.