(C) Defence 24 

SEOUL – Shares of Hanwha Aerospace Co. surged to a record high on Friday, as U.S. President Donald Trump’s proposal for a massive increase in the American defense budget combined with escalating global geopolitical tensions to fuel a powerful rally in South Korean defense stocks.

As of 2:20 p.m. KST, Hanwha Aerospace was trading at 1,206,000 won, up 10.64% from the previous session. Earlier in the day, the stock touched an intraday high of 1,219,000 won, marking a 52-week high and a historic milestone for the company. The stock has climbed more than 200,000 won in just two trading days.

The primary catalyst was President Trump’s social media announcement on January 7. Trump declared that the U.S. defense budget for fiscal year 2027 should be increased to $1.5 trillion—a staggering 50% jump from the previous $1 trillion target. "In these chaotic and dangerous times, we must build the 'Dream Military' to keep us safe regardless of the foe," Trump stated, citing tariff revenues as a key funding source for this expansion.

The "dangerous times" mentioned by Trump are already manifesting in aggressive U.S. military maneuvers. On January 3, U.S. special operations forces successfully captured Venezuelan leader Nicolás Maduro in Caracas, extraditing him to New York to face drug trafficking charges. Combined with the recent seizure of a Russian-linked oil tanker and renewed pressure regarding Greenland’s territory, these events have sent a clear signal to the market: global defense spending is set to skyrocket.

South Korean defense firms, often called "K-Defense," are seen as primary beneficiaries due to their rapid delivery capabilities and cost-effectiveness. Hanwha Aerospace, in particular, is gaining traction with its K9 Thunder self-propelled howitzer. The company is currently positioning its new wheeled K9 variant for U.S. Army testing scheduled for the third quarter of 2026 at the Yuma Proving Ground in Arizona.

The rally was not limited to Hanwha. Other major defense players also saw significant gains: Korea Aerospace Industries (KAI) rose 5.46% amid the full-scale production of the KF-21 fighter jet, while LIG Nex1 and Hyundai Rotem gained 3.01% and 2.36%, respectively.

"Investors are betting on a prolonged 'super-cycle' for the defense industry," said a Seoul-based market analyst. "With the U.S. pushing for a $1.5 trillion budget and South Korea's own defense spending set to rise by over 8% in 2026, the growth visibility for these companies has never been higher."

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