KJ Hwang

The last war isn't the next one; Asia and US defense fundamentals remain strong

Ron Epstein, KJ Hwang, T.J. Thornton

A comprehensive analysis of the global defense sector highlights record U.S. Treasury outlays and critical inventory depletion driving projected mid-single digit to double-digit growth through 2027. South Korea emerges as a key beneficiary with 45% earnings growth fueled by missile exports to Poland and emerging Gulf markets, while U.S. firms like Hanwha Aerospace secure strategic partnerships for ammunition and howitzer localization. Despite temporary valuation headwinds from sector rotation into AI, the market fundamentally supports continued investment due to shifting warfare dynamics toward hypersonic threats and high-volume counter-drone systems.