Amid global tensions, Korea's arms exports hit all-time high
'Big 4' — Hanwha Aerospace, Hyundai Rotem, LIG Nex1, KAI — secure massive orders, eye expansion in Europe, Middle East, Southeast Asia
Korea's defense exports surpassed $4 billion for the first time last year as the top industry leaders, namely Hanwha Aerospace, Hyundai Rotem, LIG Nex1 and Korea Aerospace Industries, enjoyed record-setting annual performances while continuing to expand their presence on the global stage amid ongoing geopolitical uncertainties worldwide.
According to data from the Korea International Trade Association, the country's weapons exports totaled $4.05 billion last year, roughly a 10-fold increase from 2015.
The biggest importer of Korean defense systems was Poland, which purchased Korea-made weapons worth about $2.51 billion, more than four times what it bought in 2023. The most-exported items were from Hanwha Aerospace, which shipped 212 units of its K9 self-propelled howitzers, and Hyundai Rotem, selling 134 units of the K2 battle tank.
Middle Eastern countries occupied most of the top five spots among importers of Korean weapons as regional tensions escalated due to the conflicts involving Israel, Hamas, and the Houthis in Yemen.
Saudi Arabia ranked second with $530 million worth of defense imports. The United Arab Emirates and Turkey placed fourth and fifth, respectively, with $145 million and $113 million in purchases of Korean-made weapons. The United States was the third-biggest importer of Korean weapons at $219 million.
Since the Russia-Ukraine war began in 2022, Korean defense firms have made the most of their business opportunities, continuously securing large-scale orders. With backlogs of orders at Hanwha Aerospace, Hyundai Rotem, LIG Nex1 and KAI exceeding 80 trillion won ($5.64 billion), they appear poised to keep the momentum going.
According to defense industry sources, Hanwha Aerospace is expected to soon close a deal with Vietnam to export the K9 self-propelled howitzers, a contract expected to be worth 1 trillion won. Hyundai Rotem is also reportedly nearing the final stage of inking a second agreement with Poland for K2 battle tanks that could be worth over 7 trillion won. LIG Nex1 has supposedly been in talks with Malaysia to export its surface-to-air missile system Cheongung. KAI is looking to export its KF-21 fighter jet to the Middle East.
As the Korean defense companies continue racking up orders and looking to expand their list of clients worldwide, J.P. Morgan released a report on the four major players -- Hanwha Aerospace, Hyundai Rotem, LIG Nex1 and KAI -- last month, increasing their stock price targets by an average of 28 percent while pointing out that there is 'plenty of room to go' for their values to rise.
The report surprised investors, industry officials and analysts as it set the target prices of the four defense companies higher than the domestic market consensus. J.P. Morgan adjusted the target stock prices of Hanwha Aerospace, Hyundai Rotem, LIG Nex1 and KAI to 950,000 won, 90,000 won, 370,000 won and 120,000 won, respectively. As of noon Thursday, about 40 days after the report was released, none of the stocks had hit the projections.
J.P. Morgan noted that it estimates an annual new order market of 19 trillion won -- 14 trillion won from Europe and 5 trillion won from the Middle East -- for Korean land weapons systems companies, adding that it is too early to discuss order peak concerns.
'Korean-made weapons remain one of the top choices for Eastern European countries facing national security issues,' said Lee Tae-hwan, an analyst at Daishin Securities.
'Discussions about ordering conventional weapons will gain momentum. The K9 self-propelled howitzers and K2 tanks are excellent candidates with strong potential for scoring additional export deals in Eastern Europe.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
a day ago
- Korea Herald
Political uncertainty falls below pre-martial law levels: BOK
The level of political uncertainty in South Korea has returned to levels seen prior to the martial law incident, following the recent presidential election, the central bank said Friday. According to data submitted by the Bank of Korea to Rep. Cha Gyu-geun of the Rebuilding Korea Party, the political uncertainty index stood at 1.5 as of June 4, the day after the election, in which Democratic Party candidate Lee Jae-myung defeated conservative rival Kim Moon-soo. The index, which had been around 0.4 in early December, spiked to a record high of 12.8 in mid-December, following former President Yoon Suk Yeol's surprising declaration of martial law on Dec. 3. Though the index rose slightly above 1 after the election, the BOK noted that such minor fluctuations are common in normal times and should not be interpreted as meaningful. The index is compiled by the BOK's research department by tallying the number of media articles that include both the keywords "politics" and "uncertainty" in their headlines or main text. It reflects relative values, with the long-term average from the beginning of 2000 set at zero, the BOK said. The previous record high was 8.8, recorded on March 17, 2004, following the passage of the impeachment motion against the late former President Roh Moo-hyun. The economic uncertainty index also fell to 1.2 as of June 4, a level similar to the 1.1 recorded on Dec. 3. The index had surged to 5.4 on Jan. 2 but gradually declined, reaching as low as 0.5 on May 15, the BOK said. "The political uncertainty that has weighed on the economy over the past six months is expected to ease significantly," BOK Gov. Rhee Chang-yong said at a press briefing last week. "Political factors are no longer having a meaningful impact on the won-dollar exchange rate." The Korean won had weakened sharply earlier this year, nearing 1,500 won per US dollar, largely due to the domestic political turmoil and concerns over the sweeping tariff measures under US President Donald Trump's administration. But it rebounded to its strongest level in about seven months Thursday, closing at 1,358.4 won per dollar. (Yonhap)
Korea Herald
a day ago
- Korea Herald
Bills to probe Yoon, wife pass National Assembly
Bill on suspected interference in investigation of Marine's death also passed; Presidential office says 'there is very little reason' to veto them The ruling Democratic Party of Korea-controlled National Assembly on Thursday passed contentious bills mandating special counsel probes into charges and scandals surrounding former President Yoon Suk Yeol and his wife, Kim Keon Hee. Three probe bills reintroduced by the Democratic Party were approved during a parliamentary plenary vote held in the afternoon. One pushes to launch a permanent special counsel to investigate 11 charges tied to Yoon's failed martial bid in December; another seeks to mainly investigate Kim's alleged inappropriate interference in the People Power Party's candidate nomination process in previous general and by-elections as well as her luxury bag scandal; the third looks into the allegations that the Yoon administration interfered in the military's investigation into a young Marine's death in 2023. All three bills were passed in a 194-3 vote with one abstention, in a package deal. The move came a day after President Lee Jae-myung, who was the Democratic Party Chair, was sworn into office. He won Tuesday's early election, securing 49.42 percent of the vote against his rival and People Power Party candidate Kim Moon-soo, who saw 41.15 percent. Lee was highly likely to approve and endorse the bills, as an official at the presidential office said, 'there is very little reason' to veto them, with all three 'receiving People's support,' in a press briefing after the plenary vote. People Power Party, which became the main opposition party on Wednesday, highlighted its party line against the passage of the bills ahead of the plenary vote. The majority of the party lawmakers boycotted all three votes. All three bills passed on Thursday had previous versions that were scrapped by former President Yoon's veto power. The bill mandating a permanent special counsel investigation against Yoon will look into 11 different charges tied to his martial law bid, including insurrection and military mutiny. The previous versions of the bill were vetoed and scrapped twice. The latest version expanded the scope of the charges from six to 11. Special counsel candidates will be nominated by the Democratic Party and the minor liberal Rebuilding Korea Party, from the parliament's side. The bill also eases regulations to access presidential archives. It lowers the threshold from the current approval needed from two-thirds of lawmakers or from a high court chief judge to three-fifths of the Assembly or permission from a district court chief judge. The bill concerning the first lady will look into her alleged role in a stock manipulation scandal as well as the inappropriate acceptance of a luxury bag from a Korean-American pastor and election-related scandals involving political broker Myung Tae-kyun. An amendment passed alongside the bills expands the scope of the number of assistant special prosecutors from four to seven and raises the cap on dispatched prosecutors from 40 to 60.
Korea Herald
a day ago
- Korea Herald
Korean shipbuilders suffer 35% drop in orders through May: report
South Korean shipbuilders saw a 35 percent year-on-year drop in new orders from January to May, according to shipping industry tracker Clarkson Research Services on Thursday. During the five-month period, Korean shipbuilders secured a total of 3.81 million compensated gross tonnage, representing 24 percent of the global market — second to China, which led with 7.86 million CGT, or 49 percent. The decline is partly attributed to selective order-taking, as Korea's major shipbuilders — HD Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries — have prioritized high-value-added vessels such as liquefied natural gas carriers rather than container ships. Their docks are currently occupied with orders scheduled for delivery over the next three years. However, the drop in orders is also reflects a sharp downturn in the global shipbuilding market. Total new global orders during the period fell 45 percent from a year earlier to 15.92 million CGT, raising concerns among some industry observers about the possibility of the current market cycle slowing in the coming years. Industry sources noted that many shipping companies are delaying new orders amid uncertainties in global trade and falling freight rates, driven in part by ongoing geopolitical tensions between the US and China. The Shanghai Containerized Freight Index, a widely used indicator of shipping rates, exceeded 3,000 in June last year but dropped to just over 1,200 in May this year. Although it has seen a sharp rise over the past three weeks, securities firms suggest this is a temporary increase driven by the US' short-term tariff deferral on Chinese goods. As a result, Korean shipbuilders saw a decrease in their backlog, with total outstanding orders falling by 8 percent, or 3.09 million CGT, compared to the same period last year. As of early June, HD Korea Shipbuilding & Offshore Engineering — parent company of HD Hyundai Heavy Industries and two other smaller shipbuilders — had only achieved 38.7 percent of its annual order target of $18 billion. Samsung Heavy Industries had reached 27 percent of its full-year sales goal of $9.8 billion.
