Shares of smaller South Korean defense-related companies surged on the 23rd as an unverified rumor that North Korean leader Kim Jong-un had died spread online. Some stocks hit their daily upper price limit in early trading. No evidence has emerged to support claims that Kim is in poor health.
Defense Stocks Jump on Death Rumor as Speco Hits Price Limit
Speco traded at 2,055 won as of 1:10 p.m. on the 23rd, up 474 won, or 29.98%, from the previous session and at its daily upper limit, according to the Korea Exchange.
Bigtec rose 19.73% and Huneed Technologies gained 14.40% in morning trading. Other defense-related stocks also advanced, with Coats Technology up 4.48% and Pometal up 2.61%.
Analysts said the gains reflected investor reaction to recent speculation about Kim's health.
Defense theme stocks have repeatedly shown sharp moves whenever questions arise about the health of North Korea's leadership or the possibility of heightened military tension.
No new defense contracts or improved earnings have been confirmed in connection with the latest rally.
The Rumor That Shook Social Media
The rumor began spreading on the 18th, when Xie Wanjun, a Chinese dissident living in the United States, posted about it on the social media platform X, formerly Twitter. He claimed that Kim had collapsed from a brain hemorrhage, was rushed to a hospital in Beijing and ultimately died.
Speculation about Kim's health continued to circulate online afterward. No objective evidence has emerged to substantiate the claim.
North Korean state media, meanwhile, reported on Kim's public activities. The Korean Central News Agency said on the 20th that Kim had visited the National Clothing and Footwear Exhibition 2026 in Pyongyang the previous day with his wife Ri Sol-ju and daughter Kim Ju-ae, and published photographs of the event.
Suspicions resurfaced after North Korea's main state media websites became inaccessible. NK News, a U.S.-based outlet specializing in North Korea, reported that 42 North Korea-related websites, including those of the Rodong Sinmun and the Korean Central News Agency, experienced outages on the 21st.
Some observers linked the outages to Kim's condition, but no evidence of a connection between the two has been confirmed. North Korean authorities have issued no official statement on either the death rumor or the internet outages.
Market watchers said investors should be cautious about sharp price swings in defense theme stocks, given that unverified rumors about North Korea are driving sentiment.
Large Defense Stocks Fall on Lowered Earnings Forecasts
In contrast to the rally in some smaller defense theme stocks, major defense companies declined on earnings concerns.
As of 1:12 p.m. on the 23rd, Hanwha Aerospace (012450.KS) traded at 780,000 won, down 3.82% from the previous session. Hanwha Systems (272210.KS) fell 7.71% to 68,200 won, and Hyundai Rotem (064350.KS) dropped 4.21% to 81,900 won.
The TIGER K-Defense & Space exchange-traded fund, which holds defense and space-related stocks, also fell about 5%.
The declines reflect weakening sentiment as a series of forecasts indicated third-quarter results would fall short of market expectations.
Hyundai Rotem reported on the 19th that third-quarter operating profit fell 11.0%, coming in about 10% below analysts' estimates.
Kiwoom Securities (039490.KS) cut its target price for Hyundai Rotem to 195,000 won from 240,000 won. Samsung Securities (016360.KS) lowered its target to 156,000 won from 250,000 won, and Shinhan Securities (008670.KS) to 150,000 won from 230,000 won.
Earnings forecasts for Hanwha Aerospace were also reduced. DS Investment & Securities lowered its target price for the company to 1.65 million won from 1.83 million won on the 20th, while maintaining a buy rating.
Kang Tae-ho, an analyst at DS Investment & Securities, projected third-quarter revenue of 7.15 trillion won and operating profit of 980.5 billion won. Both figures are below market estimates of 7.5 trillion won in revenue and 1.18 trillion won in operating profit.
Kang said delays in delivery procedures for K9 self-propelled howitzers bound for Romania and Poland kept some revenue from being recognized in the third quarter. A decline in the won-dollar exchange rate also weighed on results, the analyst said.
Kang characterized the shortfall as a temporary delay in revenue recognition rather than a production problem.
Volumes not recognized in the third quarter could be included in fourth-quarter results, Kang said, adding that investors should watch for upcoming orders, including an additional K9 contract with Poland and defense cooperation with the United Arab Emirates.