European Defense Stocks Decline

(MENAFN) In the days leading up to the scheduled peace discussions between Russia and Ukraine in Türkiye, shares of European defense companies experienced a noticeable decline.

On May 11, Russian President Vladimir Putin expressed his intention to restart direct dialogue in Türkiye, emphasizing his willingness to do so "without preconditions".

He made a formal request to Turkish Leader Recep Tayyip Erdogan to host the negotiations.

Following this proposal, Leader Erdogan acknowledged "Türkiye’s readiness to facilitate negotiations for a fair and lasting peace between Ukraine and Russia."

The initiative sparked optimism among investors that a potential long-term peace agreement could lead European nations to scale back their military budgets.

This expectation has had a tangible effect on the market.

Firms listed in the European Union’s defense index began to experience a steady decline in share prices over the five days leading up to the prospective peace talks.

Specifically, the STOXX Europe Aerospace and Defense index fell by approximately 2 percent during that period.

German weapons producer Rheinmetall, a key player in the industry, witnessed a significant decrease in its stock value—around 9 percent—to EURO1,592 (USD1,784), down from a high of USD1,954 reached on May 9.

Over the course of five days, the company's shares dropped by 3.25 percent.

This drop marks a sharp contrast to earlier trends.

Since the outset of the Ukraine conflict, European governments had notably expanded their defense budgets.

Rheinmetall, known for manufacturing Leopard 2 tanks and as the continent's leading ammunition producer, had seen its stock price soar by over 1,400 percent since the beginning of the war.

At its peak, the company’s valuation surpassed USD78.4 billion, exceeding even the market capitalization of Volkswagen, the region's top automaker.

MENAFN15052025000045017167ID1109554010