South Korean defense stocks rallied during the global rearmament cycle before suffering a sharp sell-off this year. The combined market value of the four largest companies in the sector fell to about 62 trillion won from a 52-week peak of 170 trillion won. Investors are weighing disappointing earnings, a stronger won, delayed export orders and a shift in defense priorities toward drones, counter-drone systems and air defense. South Korean companies remain competitive in tanks, artillery and missile systems, securing new orders from Spain and Norway. They are also investing in drones and unmanned systems, although meaningful exports will take time because overseas buyers require a proven operational track record.
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