Shares of defense companies from Japan and South Korea have reached record highs on the stock markets. As IZ reports with reference to the Financial Times, the growth was possible due to the fact that Europe is increasing spending on military equipment against the backdrop of an unstable international situation. After Donald Trump's statements about the possible withdrawal of the United States from the “security umbrella”, European countries began to more actively increase their defense potential, which led to an increase in demand for products from Asian weapons manufacturers.
For example, shares of Hanwha Aerospace, South Korea’s largest artillery maker, have risen 134% this year, while Japan’s Mitsubishi Heavy Industries has gained 26%. On Monday, their values rose an additional 6.8% and 12.2%, respectively, after Germany announced an increase in its defense budget to 500 billion euros. This was a positive signal for the defense market, which attracted the attention of investors.
Demand for Asian weapons is growing amid Europe’s rapid rearmament following Russia’s invasion of Ukraine. South Korean companies such as Hyundai Rotem and Korea Aerospace Industries, which make tanks and fighter jets, also saw significant growth, up 123% and 55% respectively. South Korea, which has never cut back on defense production since the Cold War, is now among the world’s top 10 arms exporters, while Japanese companies such as IHI and Kawasaki Heavy Industries have strengthened their positions in the global market.
Recall that we previously wrote about why Americans are buying coffee en masse.