Hanwha Group Stocks ETF Loses Momentum as Defense and Shipbuilding Stocks Correct

Hanwha Group Stocks ETF, Which Soared Earlier This Year,
Now Shows Weakest Performance Among Group Stock ETFs
PLUS Hanwha Group Stocks ETF Falls Nearly 8% This Month

As defense and shipbuilding stocks, which led the market in the first half of the year, entered a correction in the second half, the unstoppable upward momentum of the Hanwha Group Stocks Exchange-Traded Fund (ETF) has also been halted. This month, it has shown the weakest performance among group stock ETFs.

According to the Korea Exchange on August 27, the PLUS Hanwha Group Stocks ETF has fallen by 7.96% so far this month. This is the lowest return among major group stock ETFs.

The PLUS Hanwha Group Stocks ETF had outperformed other group stock ETFs this year, recording a 131.75% increase. However, the rally has stalled this month as defense and shipbuilding stocks have entered a correction. Last month, the PLUS Hanwha Group Stocks ETF had also risen by 14.68%. The ETF is heavily weighted towards defense and shipbuilding, with Hanwha Ocean (25.30%), Hanwha Aerospace (18.63%), and Hanwha Systems (13.74%) together accounting for more than half of its portfolio. This month, Hanwha Ocean fell by 4.01%, Hanwha Aerospace by 9.64%, and Hanwha Systems by 12.96%.

In particular, defense stocks had previously surged, but have recently shown weak performance as the possibility of an end to the Russia-Ukraine war has been raised. Choi Junghwan, a researcher at LS Securities, commented, "Although there was a US-Russia summit in Alaska on August 15, an immediate ceasefire was not achieved. Nevertheless, due to the ongoing peace negotiations since June this year, the multiples of defense companies and the accompanying Geopolitical Risk Index (GPR Index) have declined, resulting in two months of weak stock performance." He added, "In the mid- to long-term, demand for defense supplies is expected to remain solid regardless of the end of the war. This is because, in the current international diplomatic environment, power politics among major countries is intensifying, and the value of defense supplies to protect national territory will persist."

Outside of Hanwha Group stocks, the TIGER LG Group+Fundamental ETF (-0.66%) and TIGER Hyundai Motor Group+Fundamental ETF (-0.29%) also recorded negative returns. This is believed to be due to the impact of US tariffs.

On the other hand, the ACE POSCO Group Focus ETF rose by 2.72%, posting the highest return among major group stock ETFs. This is attributed to a recovery in secondary battery stocks, which had previously underperformed, following a rise in lithium prices. Choi Yonghyun, a researcher at KB Securities, said, "With expectations that the Chinese government will control lithium supply, lithium prices have risen, leading to an anticipated improvement in POSCO Holdings' performance." He added, "The increase in multiples due to the alleviation of concerns over profit-generating capabilities, as well as an increase in book value through additional capacity investment, suggest that a revaluation of POSCO Holdings' lithium business segment is possible."

Samsung Group stocks also performed relatively well. The ACE Samsung Group Equal Weighted ETF rose by 2.37% this month, ACE Samsung Group Sector Weighted by 2.47%, KODEX Samsung Group by 1.24%, KODEX Samsung Group Value by 1.68%, and TIGER Samsung Group Fundamental by 1.91%. This was driven by Samsung Electronics stabilizing at the 70,000 won level this month, and high returns from group affiliates such as Samsung SDI (9.95%), Samsung Life Insurance (10.48%), Samsung Electro-Mechanics (7.26%), Samsung Heavy Industries (8.19%), and Samsung E&A (8.68%).

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