Hanwha K-Defense·Shipbuilding·Nuclear Power Fund Launched...Invests in Three Next-Generation Core Industries

Hanwha Asset Management announced on August 14 that it will launch the "Hanwha K-Defense·Shipbuilding·Nuclear Power Fund," which invests in three next-generation core industries where South Korea holds a comparative advantage. This fund is an index fund that tracks the FnGuide K-Defense·Shipbuilding·Nuclear Power Index.

The fund selects the top five companies in each of the defense, shipbuilding, and nuclear power sectors, allocating weights of 40%, 30%, and 30% respectively. It applies a free-float market capitalization weighting method, reflecting the market cap of each stock in its allocation, and rebalances the portfolio every six months. During rebalancing, the sector and individual stock limits are capped at 10%, allowing for partial profit-taking in stocks that have risen and additional investment in stocks whose weights have decreased.

The K-defense, shipbuilding, and nuclear power industries are expected to achieve long-term structural growth, given the global rearmament trend and evolving market environments such as eco-friendliness and AI.

K-defense, known for its outstanding production capacity and cost-effectiveness, has entered an unprecedented boom cycle amid a global increase in defense spending and rearmament trends. According to experts, considering political factors and production capacity, South Korea is virtually the only country capable of meeting the explosively growing demand for weapons. It is expected to fulfill a significant portion of the demand from countries that find it difficult to actively procure expensive advanced weaponry. Leveraging this competitiveness, K-defense is seeking to enter new markets beyond Europe, including the Middle East and South America.

K-shipbuilding is on an upward trajectory, driven by stricter environmental regulations, the arrival of the period for replacing aging vessels, active cooperation requests from the U.S. government, and sanctions against China. The United States is currently focusing on exporting liquefied natural gas (LNG) but lacks the capability to build LNG carriers domestically. As a result, Korean shipbuilding companies are cooperating in various areas, including new vessel construction and MRO (maintenance, repair, and operations). Long-term, sustained growth is expected in tandem with the U.S. LNG cycle.

In addition, globally, demand for eco-friendly ships and replacement of aging vessels is converging, and Korea’s top five shipbuilders, which have strengths in high value-added ships such as LNG carriers and special-purpose vessels, are showing significant performance growth.

In the newly arrived nuclear renaissance era, unlike major countries that have lost much of their nuclear construction experience due to nuclear phase-out policies, K-nuclear power has emerged as a leading sector thanks to its standardized construction capabilities and stable equipment procurement. As the AI supremacy race drives a surge in power demand, nuclear energy, a high-efficiency and eco-friendly energy source, has become a key resource for energy security. In particular, growing interest in small modular reactors (SMRs), which have fewer location constraints and are relatively stable, is expected to position Korean companies supplying related value chains as important players in the global market.

Choi Youngjin, CMO of Hanwha Asset Management, stated, "The defense, shipbuilding, and nuclear power industries have all entered a phase of structural growth due to changes in the international order, such as the reorganization of global supply chains," adding, "The Hanwha K-Defense·Shipbuilding·Nuclear Power Fund is a product that enables efficient long-term investment in major industries where South Korea has a relative competitive advantage and high growth potential."

Starting August 14, the fund will be available through Hanwha Investment & Securities and the direct sales app PINE, and from August 18, it will also be available for investment via Samsung Securities.

This content was produced with the assistance of AI translation services.