LIG Defense & Aerospace briefly joined the ranks of "emperor stocks" — shares trading above 1 million won ($685) — during intraday trading Wednesday, as renewed tensions in the Middle East drove a broad rally in defense shares. Uncertainty surrounding ceasefire negotiations, combined with expectations of large-scale orders, pushed the stock higher.
According to the Korea Exchange, LIG Defense & Aerospace traded at 1.03 million won as of Wednesday, up 121,000 won, or 13.31%, from the previous session. The stock briefly surged as high as 1.118 million won before paring some of its gains.
The move made LIG Defense & Aerospace the 10th emperor stock on the benchmark KOSPI. At the end of last year, only four stocks — Hyosung Heavy Industries, Korea Zinc, Samsung Biologics (207940.KS), and Samyang Foods — traded above the 1 million won threshold. Six additional names have joined the list this year, including Doosan, SK hynix (000660.KS), Taekwang Industrial, and HD Hyundai Electric.
Geopolitical risk in the Middle East has underpinned the rally. With the likelihood of a second ceasefire negotiation between the United States and Iran collapsing, concerns over a prolonged conflict have resurfaced, fueling expectations of stronger defense demand, analysts said. Tensions between the two sides have remained elevated amid an uncertain negotiation timeline, stimulating investor sentiment.
Order momentum has added to the momentum. In a regulatory filing after Tuesday's market close, LIG Defense & Aerospace disclosed a supply contract exceeding 2.5% of its recent annual revenue of 4.3069 trillion won ($2.95 billion). The contract runs through 2029, though the specific amount and counterparty were not disclosed. The deal has bolstered expectations for medium- to long-term earnings improvement.
"Supply shortages of Patriot interceptor missiles are continuing, and ramping up production in the short term is not easy, so expectations for expanded exports of the Cheongung-II will persist," said Chae Woon-saem, an analyst at Hana Securities. "Revenue recognition is expected to expand, centered on the United Arab Emirates (UAE), driving earnings growth."
Other major defense stocks also rose during the same period, with Hyundai Rotem up 5.64%, Hanwha Aerospace (012450.KS) up 1.87%, and Korea Aerospace Industries up 1.92%. Market observers say the premium on defense shares is likely to persist for the time being if geopolitical risks continue.
