The recent conflict between Israel and Hamas had distinct impacts on defense and aviation stocks in Japan and South Korea:
In South Korea:
- Hanhwa Aerospace and Korea Aerospace Industries (KAI), two prominent defense companies, saw notable gains. Hanhwa Aerospace, specializing in artillery and air defense systems, rose by 2.23%. KAI, known for producing fighter jets and aviation platforms, recorded a 4.07% increase.
- Smaller defense players like Victek (focused on electronic warfare systems) surged by nearly 30%, while Firstec (manufacturer of fire control systems and guided munitions) jumped 20%.
- Kawasaki Heavy Industries experienced a significant gain of almost 6.5%. This company is involved in manufacturing aircraft and naval vessels for Japan’s Self Defense Forces.
- Mitsubishi Heavy Industries, which produces aircraft, naval vessels, and missiles for the Japanese Self Defense Forces, saw a rise of 5.86%.
- Other Japanese defense stocks, such as IHI (specializing in rocket engines) and Hosoya Pyro-Engineering (pyrotechnics manufacturer), also witnessed increases of 4.01% and 5.27%, respectively.
In both South Korea and Japan:
- Shares of airlines faced declines due to airlines globally canceling flights to Israel. Japanese carriers ANA Holdings and Japan Airlines experienced drops of 0.85% and 1.93%, respectively.
- In South Korea, Korean Air saw a decline of 2.61%.
The market reactions reflect the impact of geopolitical events on these specific sectors. Defense stocks often benefit from increased defense spending during conflicts, while aviation stocks can suffer when travel disruptions occur due to security concerns. These market movements may continue to evolve as the situation develops.