South Korean defense stocks plunge as U.S. defense shares weaken; Hyundai Rotem down 12% [Stocks NOW]

[Financial News] Domestic defense stocks also fell in tandem intraday on the 20th, as major U.S. defense stocks declined. Weak earnings and concerns over delayed export contracts weighed on domestic stocks, while uncertainty over defense budget increases emerged as a burden in the United States.
According to the Korea Exchange, as of 10:55 a.m. that day, Hyundai Rotem was trading at 87,800 won, down 13,000 won (12.91%) from the previous trading day. Hanwha Aerospace was trading at 807,000 won, down 10.83%. Hanwha Systems (-14.15%), LIG Defense & Aerospace (-8.38%), and Korea Aerospace Industries (-5.83%) were also weak.
Unlike semiconductor stocks, which rebounded overnight on the New York stock market, and the S&P 500, which rose 0.41%, defense stocks performed poorly. On the 19th (local time), Northrop Grumman closed at $510.65, down 1.77%, while Lockheed Martin and RTX fell 0.70% and 0.93%, respectively.
Concerns are mounting in the United States that increases to the defense budget could be blocked depending on the outcome of next month’s midterm elections. Foreign media have reported that the possibility of Democrats taking control of Congress is weakening expectations for increased defense spending under the Trump administration and affecting investor sentiment toward defense stocks.
Pressure from earnings was added to the factors weighing on domestic defense stocks. Hyundai Rotem’s third-quarter operating profit was 247.1 billion won, down 11% from a year earlier and 10.5% below market forecasts. Samsung Securities lowered its target price that day from 250,000 won to 156,000 won, citing delays in export orders and exchange-rate changes.
Earnings expectations for Hanwha Aerospace were also lowered. DS Investment & Securities forecast third-quarter operating profit of 980.5 billion won, about 17% below market forecasts. It cut its target price from 1.83 million won to 1.65 million won, reflecting delays in recognizing revenue from export volumes and falling exchange rates.
[email protected] Joo Won-gyu Reporter