Defense and construction stocks surge; LIG Nex1 forms joint venture with Rheinmetall
LIG Nex1 (referred to on air as LIG Defense and Aerospace) jumped more than 17% intraday after announcing a strategic partnership with Germany's Rheinmetall, a major ground-based air defense company, to form a joint venture in which Rheinmetall will hold the largest stake. The move reflects expectations of expanded access to European markets amid rising NATO defense spending. Hanwha Aerospace gained over 8%, while Samyang Comtech and Firstec rose around 7% and 9% respectively.
Defense stocks rallied even amid ceasefire news because the Middle East conflict, longer and more intense than expected, depleted regional munitions stockpiles, fueling expectations of rapid replenishment orders. Hosts characterized this as investment in deterrence rather than in warfare itself.
Hosts praised Korean defense firms for shifting away from the historically weak strategy of solo overseas expansion toward joint ventures with local partners. Because European defense markets are shaped by strong national-security protectionism, solo entry is difficult; a model in which Korea supplies technology and capital while local partners handle legitimacy and approvals was described as more effective for winning contracts. With the US historically covering roughly 60% of NATO defense spending and President Trump repeatedly signaling a pullback, European domestic defense orders were expected to grow.
Construction stocks also rallied, with Daewoo E&C up 18% and DL E&C up around 12%. However, actual reconstruction orders are not expected to materialize until the second half of 2027 at the earliest, and it was noted that Gulf oil-producing governments, which lack broad tax revenue and rely directly on oil income for spending, may have less fiscal flexibility than commonly assumed.
Reports also emerged that the US is considering an Iran reconstruction fund. President Trump reportedly floated a $300 billion fund, structured to be led by private parties rather than direct US government payments, with South Korea, Japan, and Australia — major oil importers — mentioned as potential participants. Hosts interpreted this as a compromise designed to avoid the appearance of war reparations while still providing Iran with tangible compensation, cautioning that details remain unconfirmed.