South Korean defense ETFs surge as geopolitical tensions mount

An Army artillery battalion fires shells from a K9 self-propelled howitzer manufactured by Hanwha Aerospace during an operation in Gangwon Province on Jan. 2, 2026. Yonhap

SEOUL, January 15 (AJP) -Growing geopolitical risks from Ukraine to Venezuela and Iran have lifted South Korean defense-related exchange-traded funds (ETFs) to the top of the country’s stock market rankings this year, outpacing even the red-hot semiconductor sector.

According to ETFCheck data as of Tuesday, leveraged defense ETFs dominated the performance leaderboard.

The PLUS K-Defense Leverage and KODEX K-Defense TOP10 Leverage surged 61.2 percent and 60.9 percent, respectively, far exceeding gains in shipbuilding and semiconductor ETFs. Even the non-leveraged TIGER K-Defense & Space and SOL K-Defense rose around 30 percent, filling most of the top ten spots by return.

Korean defense firms are also attracting overseas capital. The PLUS Korea Defense Industry Index ETF (KDEF), listed on the New York Stock Exchange last year in partnership with U.S. asset manager Exchange Traded Concepts, has risen 21.9 percent so far in 2026 — easily outpacing the S&P 500’s 1.4 percent increase.

Similarly, the WisdomTree Asia Defense Fund (WDAF) and Global X Defense Tech (SHLD), both heavily weighted toward South Korean companies, are up between 15 percent and 16 percent.

The resurgence of defense-themed funds comes as geopolitical risks intensify. U.S. President Donald Trump’s surprise military operation in Venezuela earlier this month — which reportedly resulted in the capture of President Nicolás Maduro — and subsequent comments about acquiring Greenland have added to global instability.

Meanwhile, ongoing unrest in Iran and a surge in European rearmament have contributed to investor anxiety.

Hanwha Asset Management, one of the biggest beneficiaries of the defense rally, said its Hanwha K-Defense, Shipbuilding & Nuclear Power Fund ranked first among domestic equity funds with a 21.5 percent gain this year, while its PLUS K-Defense Leverage topped all equity ETFs at 61.8 percent.

“Defense companies are entering a stage of structural growth, driven not by war but by the global demand for self-sufficient national defense,” said Choi Young-jin, vice president of Hanwha Asset Management. “However, investors should be mindful of the volatility that comes with leveraged products.”

The bullish sentiment has also spilled into the broader stock market. On Tuesday, Hanwha Systems jumped 14.2 percent, closing at 88,700 won ($60.3), while Hyundai Rotem, Hanwha Aerospace, and Korea Aerospace Industries each rose between 2 percent and 6 percent.

The Korean government has pledged to further strengthen the nation’s defense industry. Defense Minister Ahn Gyu-back said on Tuesday that “Korea’s goal of becoming one of the world’s top four defense exporters requires full-scale diplomatic and institutional support,” emphasizing that robust security capabilities remain the foundation of the industry’s growth.
Lee Jung-woo Reporter cannes2030@ajupress.com

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