South Korean Arms Maker Hanwha Aerospace Seeks to Profit from Defense Boom

South Korea’s Hanwha Aerospace Co. has emerged as the world’s best-performing defense stock, as investors bet that U.S. President Donald Trump’s reshaping of security alliances will trigger a surge in arms purchases—particularly for the affordable conventional weapons the company has been producing for decades, Heejin Kim and Sangmi Cha reported the news for Bloomberg News.

Hanwha Aerospace has been one of the top two gainers in Asia’s stock market this year. I Photo: Hanwha Aerospace

Hanwha’s parent company, Hanwha Group, South Korea’s seventh-largest family-controlled conglomerate, hopes to capitalize on the expected defense boom through a massive share sale for its weapons unit, aimed at funding large-scale investments and international deals.

However, regulators and some investors are beginning to question whether the company may be overextending itself.

Hanwha Aerospace shares have soared more than 3,100% over the past five years, making it the best-performing defense stock in Bloomberg’s WORLD index.

Alongside its smaller competitor, Hyundai Rotem, Hanwha Aerospace has been one of the top two gainers in Asia’s stock market this year, with both companies more than doubling in value.

Although relatively unknown outside South Korea, both firms play a crucial role in preparing the country’s military for potential conflict with its heavily armed neighbor, North Korea.

Last year, Hanwha Aerospace secured a deal to supply more K9 self-propelled howitzers to Poland, as part of a broader weapons agreement between South Korea and the Eastern European nation.

Investor expectations for international expansion have helped nearly double Hanwha Group’s market capitalization since the beginning of the year, reaching approximately 73 trillion Korean won ($50 billion), Youkyung Lee also reported for Bloomberg News.