South Korea stock market: Hyundai Rotem to LIG Nex1 — defence stocks rise despite renewed fear of Trump's tariffs
Japan and South Korea are among the major trading partners of the US, from the countries, on which Trump has announced fresh tariffs of 25%.
However, Trump has given an extension in the tariff deadline to August 1 from July 9 earlier, to reach a trade deal or be subjected to new tariff rates, providing investors hope that trade negotiations would be reached.
Additionally, Trump said on Tuesday that South Korea should be paying for its own military protection, suggesting the US ally needed to pay more for the US troop presence there, a day after the tariff announcement.
Any increase in military autonomy may accelerate investments by South Korea in its own defence capabilities, which could boost domestic defence spending, leading to increased orders for local defence contractors.
This is positive for companies like Hanwha Aerospace, LIG Nex1, Korea Aerospace Industries (KAI), Hyundai Rotem, etc, further explaining the rise in South Korean defence stocks.
Against this backdrop, the South Korean defence stocks rallied up to 12% in intraday deals today, led by SolDefense. The company produces guided weapons, avionics, scientific training systems, and tactical communication systems. Additionally, LIG Next1 was trading 9% higher, Hyundai Rotem shares gained over 6% and Hanwha Aerospace was up nearly 5%.
South Korean shares rose for a third straight session on Wednesday, as financial stocks rallied on policy hopes, while the broader market's focus was on US tariffs and domestic monetary policy, as per a Reuters report.
The benchmark KOSPI was up 15.53 points, or 0.50%, at 3,130.48.
"A significant takeaway from the recent global market trends is that the markets are largely ignoring the noise from the tariff front and are waiting for clarity to emerge," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, explaining market reaction to Trump tariffs.
President Trump's latest declarations of 50% tariffs on copper imports, 10% tariffs for just being in BRICS, no further extension of the August 1st deadline and a potential 200 % tariffs on pharmaceutical imports with a grace period of one year… are all not taken seriously by the markets since Trump has a track record of chickening out and changing his announcements, he added. "In brief the markets are waiting for clarity to emerge on the trade front."
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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