By Kwanwoo Jun

Defense stocks in South Korea and Singapore rallied Tuesday on expectations of stronger security demand in the Middle East, as the conflict involving the U.S., Israel and Iran entered a third day.

In South Korea, guided-missile maker LIG Nex1 and multiple rocket-launcher developer Hanwha Aerospace jumped as much as 30% and 25%, respectively, in morning trade, leading gains in local defense shares.

Fighter-jet maker Korea Aerospace Industries rose as much as 13%.

The benchmark Kospi, however, fell more than 5% early Tuesday afternoon and suspended trade briefly to help ease market volatility as geopolitical tensions weighed on sentiment, with trading resuming after a public holiday in Korea on Monday.

The U.S. and Israeli forces launched air strikes on Iran on Saturday local time. Iran has since retaliated with missile and drone attacks on Israel and U.S. bases in the region.

Neighboring Middle East countries--including Saudi Arabia, Iraq, the U.A.E., Bahrain and Qatar--intercepted many incoming Iranian missiles and drones but still sustained some damage, said Yuanta Securities Korea analyst Baik Jong-min.

"This incident is expected to serve as an opportunity to expand demand for air defense systems in the Middle East," Baik said, noting that Saudi Arabia, Iraq and the U.A.E. have recently been the key buyers of South Korean air defense systems.

The Yuanta analyst said he sees growing demand in the Middle East to better protect oil facilities, airports and ports as well as U.S. military bases.

LIG Nex1 and Hanwha Aerospace, major developers of South Korean surface-to-air missile systems, are drawing particular investor attention, he added.

Elsewhere in Asia, shares of Singapore Technologies--a defense engineering company that develops military vehicles and surveillance systems--were recently up 6.6% in morning trade.

ST Engineering's defense and public security segment is expected to remain a structural growth driver, supported by the Middle East conflict and efforts to rebuild military readiness across Europe and parts of Asia, RHB Research analyst Shekhar Jaiswal said.

In his latest remarks on the Middle East conflict, U.S. President Trump said the military operation against Iran could last four weeks.

--Megan Cheah contributed to this article

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

March 02, 2026 23:13 ET (04:13 GMT)

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