South Korean Defense Stocks Fall 43% Average from March Highs Amid Middle East War Prolongation

According to Yonhapnews and Korean securities analysts, five major South Korean defense contractors saw their stocks decline sharply from peak levels reached in early March through mid-July. Hanwha Aerospace fell 43% from its March 4 high of 1.655 million won to 943,000 won on July 16; Hyundai Rotem dropped 44%, Korea Aerospace Industries declined 31%, Hanwha Systems plummeted 64%, and LIG Nex1 fell 33%. The five stocks averaged a 43% decline from their respective highs.

Analysts attribute the weakness to prolonged middle east conflict extending beyond four months, which has caused contract delays and financial burdens on purchasing nations. DS Investment Securities noted that long-term Iran-U.S. warfare hampers Korean defense contractors' existing regional pipelines. Despite recent weakness, brokerages assess fundamentals remain sound and expect renewed orders from Europe and U.S. markets in the second half of 2026.