Aerospace stocks are gaining attention in South Korea after the successful test launch of a space vehicle by Innospace, a local space startup, which has raised expectations that the aerospace industry will become a new growth engine and that private companies will play a bigger role in the development.

According to Korea Exchange on Monday, shares of Korea Aerospace Industries (KAI), the country’s leading aerospace and defense company, closed at 43,650 won ($33), up 2.46 percent from the previous session. Shares of Hanwha Aerospace Co., which supplied the engines for Korea’s homegrown rocket Nuri and has been expanding investments in space development, also hit the ceiling during the day to pass over 98,000 won on Monday before closing 0.63 percent higher at 95,700 won.

Shares of Hanwha Systems Co. also finished 0.49 percent higher at 12,230 won.

The rise in the aerospace stocks came despite the sluggish Kospi market. It is driven by growing expectations for a successful launch of the first civilian-made space rocket HANBIT-TLV by Innospace.

Korea has launched two space satellites into orbit ? Naro-1 and Nuri. Development was led by the government.

There are two ways for investors to invest in the local aerospace industry ? through public offering funds and exchange traded funds (ETFs).

NH-Amundi Global Aerospace Fund, offered by NH-Amundi Asset Management Co., is a public offering fund that invests in companies from home and abroad with outstanding technology. The fund has been delivering a 10.25 percent return since its listing in May 2022.

Hanwha ARIRANG Aerospace & UAM iSelect ETF is the only ETF that invests in Korean space development companies, including Hanwha Aerospace and KAI and satellite company Satrec Initiative Co.

“The Korean aerospace industry is at an early stage,” said Kim Sung-hoon, head of ETF business at Hanwha Asset Management Co. “It is advised that investors diversify their investments in key companies that are expected to grow in the future.”

The aerospace industry has emerged as an attractive investment source after 2020 with the rise of U.S. rockets and spacecraft company Space Exploration Technologies Corp.

Government-led projects had required hundreds of billions of won to launch a space vehicle but the joining of private entities has lowered the costs. Private companies are now engaging in new space businesses, like Amazon that has been working on the development of high-speed satellite internet services.

According to Morgan Stanley, the global space industry is projected to generate annual sales of $1 trillion by 2040.

By Won Ho-sup and Han Yubin

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