Top 5 Defense Stocks Plunge 30–60% from Peak… Brokerages 'Expecting US/Europe Orders in H2'

Share prices of South Korea's five major defense companies have fallen by an average of 43% from their record highs. These firms, which surged earlier this year, have recently undergone a correction. Compared to their 52-week highs, Hanwha Aerospace dropped 43% by the 16th from its March 4 peak of 1.655 million won. Hyundai Rotem fell 44% from its April 30 high of 282,000 won, and Korea Aerospace Industries (KAI) declined 31% from its March 3 peak. Hanwha Systems plummeted 64% from the 184,000 won recorded on March 4, while LIG Defense & Aerospace adjusted downward by 33% from its April 22 high of 1.118 million won.

Brokerages cited the potential for delays in Middle East contracts due to the prolonged conflict between the U.S. and Iran, a void in major orders, and the failure to win the Canadian Patrol Submarine Project (CPSP) as reasons for the defense sector's weakness. Hanwha Ocean and HD Hyundai Heavy Industries bid for the Canadian submarine project but failed to secure the contract after Canada selected a German shipyard as the preferred bidder. DS Investment Securities researcher Kang Tae-ho noted that the prolonged war is acting as a negative factor for the Korean defense industry, which holds multiple pipelines in the Middle East.

Daishin Securities researcher Choi Jeong-hwan stated that as K9 self-propelled howitzers are already in operation in countries such as Poland, Estonia, Norway, and Finland, the impact of entry barriers is limited. Brokerages forecast that order results may emerge in the second half of 2026 regarding the K9 howitzer co-development project with Spain and U.S. tender bids.

On July 15 (local time), the U.S. Central Command (CENTCOM) announced it had struck Iranian cruise missile facilities. CENTCOM stated that the airstrikes degraded the ability to attack commercial merchant vessels in the Strait of Hormuz.