North Korean aggression is a drain on South Korea's economy, but it's a boon for the defense contractors looking to flood the peninsula with new weapons systems.
As Seoul awaits a possible North Korean missile launch this week, the country is watching its benchmark KOSPI become Asia's worst-performing index this year. At the same time, stocks for defense contractors with existing business ties with Seoul are surging.
These firms are currently vying to equip South Korea with a mix of radar systems, fighter jets, drones, and missile defense systems, and include everyone from Boeing to Lockheed Martin to Northrop Grumman to Raytheon to BAE Systems. While the South's major acquisition decisions are made with a long-term view, Pyongyang's apocalyptic rhetoric doesn't exactly hurt the efforts of silver-tongued weapons salesmen. We took a quick glance at the market valuation of the firms we're talking about on Thursday.
Not bad. And how about the stock peformance since Pyongyang's belligerence began in March?
Even better. The below graph features a blue line representing the above defense stocks and a red line representing the S&P 500. Despite the fact that the S&P is having a record-breaking month, it's no match for surging investor interest in defense stocks in the wake of Pyongyang threats:
So what do these companies have to gain? Here's a breakdown of the existing and future bids these firms are trying to lock down with South Korea:........