--- title: "The Middle East situation is in a tug-of-war, and Asian defense stocks are 迎来结构性行情" type: "News" locale: "en" url: "https://longbridge.com/en/news/283286400.md" description: "The fluctuating situation in the Middle East is driving global military demand, and Asian defense stocks are once again favored by investors. Institutions such as Bank of America Securities believe that this market trend has long-term growth support. Bloomberg data shows that Asia occupies three positions among the best-performing defense companies globally. With the escalation of tensions in the Middle East and rising defense demand, Asian defense exporters are expected to take on global orders. Experts point out that the proportion of defense spending to GDP is still low, indicating room for future increases" datetime: "2026-04-20T03:02:06.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/283286400.md) - [en](https://longbridge.com/en/news/283286400.md) - [zh-HK](https://longbridge.com/zh-HK/news/283286400.md) --- # The Middle East situation is in a tug-of-war, and Asian defense stocks are 迎来结构性行情 According to the Zhitong Finance APP, the fluctuating situation in the Middle East has driven up global military demand, and Asian defense stocks have once again attracted funding. Institutions, including Bank of America Securities, believe that this round of market activity is not a short-term geopolitical trade but a structural opportunity supported by long-term growth. The Bloomberg Aerospace and Defense Index shows that among the five best-performing defense companies globally this year, three are from Asia: South Korea's Hanwha Systems, LIG Defense Aerospace, and Japan's AstroScale Holdings. Bank of America Securities and Jupiter Asset Management noted that the ongoing tensions in the Middle East highlight the essential demand for defense, and the rise of Asian defense stocks may only be the starting point for long-term growth. Before the ceasefire agreement expires on Tuesday, the outlook for the Iranian conflict remains unclear, with significant differences in expectations for peace talks. U.S. President Donald Trump stated on Sunday that the U.S. Navy fired on and seized a cargo ship flying the Iranian flag, marking the first major conflict since the U.S. blockade of the Strait of Hormuz began a week ago. Several European countries have planned to increase their defense budgets, and Middle Eastern nations have also prioritized military spending. Meanwhile, Asian defense exporters are expected to take on global orders due to cost advantages, supply chain flexibility, and faster delivery capabilities. Wei Li, BlackRock's Global Chief Investment Strategist, stated: "The conflict in the Middle East has accelerated the development of structural themes such as defense. Our investors bought defense stocks at low prices during the sell-off because they know the strategic value of defense continues to strengthen, and we remain optimistic about its long-term value." Asian defense stocks have risen since the outbreak of the Iranian war. ![6d161006ccb7554d0700752736f525fc.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260420/1776653118187674.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) **Expansion of Defense Budgets Supports High Prosperity** Defense stocks benefit from a surge in export demand, particularly from Eastern Europe and the Middle East, where governments are shifting from passive defense to more proactive deterrence strategies. Sam Konrad, an investment manager at Jupiter Asset Management in Singapore, pointed out: "The sector still has considerable room for growth because, for decades, many countries' defense spending as a percentage of GDP has not been high. Even if the Iranian war officially ends tomorrow, Middle Eastern countries will still plan to increase defense spending." NATO has set a goal for member countries to increase defense spending to 5% of GDP by 2035, laying the foundation for significant regional military spending increases. Bloomberg Industry Research data shows that European defense spending has grown by about 10% annually in dollar terms since 2021, driven by the need to restructure military capabilities following the Ukraine conflict. Analysts indicate that Asian defense manufacturers benefit from the region's strong manufacturing base. TJ Thornton, Head of Research Marketing at Bank of America Securities, stated that these manufacturers have transformed from major weapon buyers to participants with R&D capabilities, continuous innovation, and integration into U.S. and European supply chains. Thornton stated: "Many people think of Asia as a region that purchases defense systems. For decades, that has indeed been the case. But Asia is rapidly becoming a very different region." Francis Tan, Chief Strategist for Asia at CA Indosuez Wealth Asset Management, believes that South Korean companies stand out due to their high cost-performance ratio, advanced technology, and the fastest global delivery speed. The restructuring of military capabilities in Europe, NATO's equipment standardization, cost advantages, and backlog orders have collectively built a prosperous landscape that has lasted for years. Since mid-2025, Indian defense stocks have lagged behind regional peers, but they are gradually becoming a highlight in the market. This is thanks to the Indian government's support for domestic production. So far this year, the Indian defense industry index has risen by about 14%. ST Engineering Ltd., headquartered in Singapore, is another company that has performed well, with its stock price rising by 13% since the war began. **Unfazed by Shortage Volatility, Long-term Capital Firmly Positions Itself** During the Iran war, defense stocks experienced significant volatility, and some investors believe that the "conflict premium" has been priced in by the market. Since the outbreak of the war, the Bloomberg Aerospace and Defense Index has fallen by about 5.5%, mainly affected by profit-taking and fluctuating expectations regarding the situation. However, some large investors have not been deterred. Gary Tan, a fund manager at Allspring Global Investments, described the decline during the peak of the Iran conflict as "broad portfolio de-risking," rather than a result of fundamental changes. 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