Foreign Investors Are Betting Big on Korea's Defense Boom

37.18%—that's how much of South Korea's stock market foreign investors now own, the highest level since the pandemic's early chaos in 2020. But this isn't just another investment wave. It's a calculated bet on conflict.

The numbers tell a story of strategic positioning. Foreign investors poured $9.7 billion into Samsung Electronics alone during the second half of 2025, but January's shopping list reveals a different appetite: Hanwha Ocean, Doosan Enerbility, and defense contractors are now the favorites.

Following the Tension Trail

The timing isn't coincidental. As Donald Trump rattles sabers over Greenland and global defense spending surges, international money is flowing toward Korea's military-industrial complex. The country's shipbuilders, who've mastered everything from container vessels to naval destroyers, suddenly look like essential infrastructure for an uncertain world.

Korea's defense sector offers something unique: proven technology without the political baggage of traditional arms exporters. While Western defense contractors face scrutiny over past conflicts, Korean companies like Hanwha are positioning themselves as the "clean" alternative—advanced enough to compete, politically neutral enough to sell anywhere.

The nuclear power revival adds another layer. As countries scramble to reduce carbon emissions while maintaining energy security, Korea's nuclear expertise becomes invaluable. Doosan Enerbility, a key player in nuclear plant construction, represents a bet on the atom's comeback.

The Semiconductor Foundation

This defense surge builds on last year's semiconductor rally. Foreign investors recognized that Korea's chip dominance—led by Samsung and SK Hynix—forms the backbone of everything from smartphones to missile guidance systems. The $9.7 billion Samsung investment wasn't just about memory chips; it was about securing access to the digital nervous system of modern warfare.

The convergence is striking: semiconductors enable smart weapons, shipbuilders construct the platforms that carry them, and nuclear power provides the energy to manufacture both. Korea offers a complete ecosystem for the militarization of technology.

Reading the Global Mood

From a Western investor's perspective, Korea represents stability in an increasingly unstable region. Unlike China (too risky) or Japan (too expensive), Korea offers advanced technology at reasonable valuations with a government that aligns with Western interests.

But there's a darker reading: this investment surge might signal expectations of prolonged conflict. Defense stocks typically outperform during periods of sustained military tension, and foreign investors may be positioning for a world where geopolitical risk becomes the norm rather than the exception.

The 37.18% foreign ownership level also raises questions about economic sovereignty. While foreign investment brings capital and expertise, it also means Korea's strategic industries are increasingly controlled by overseas interests—a potential vulnerability if geopolitical winds shift.