Soaring Defense Stocks Driven by Global Military Spending
(MENAFN) Global shares in the defense and aerospace sectors have seen notable growth, primarily due to increased military budgets—particularly across Europe—as the conflict in Ukraine continues. This surge in spending has led to a sharp rise in the valuation of companies operating in these industries.
European nations have significantly boosted their defense expenditures, especially following the inauguration of US President Donald Trump.
His administration’s stance prompted European leaders to reassess their strategic and security frameworks, which in turn fueled further investment in defense-related firms.
The divergence between the United States and Europe in both economic and defense strategies became more apparent during Trump's tenure.
In May, he finalized a series of defense and investment agreements valued at over $3 trillion during diplomatic visits to Saudi Arabia, Qatar, and the United Arab Emirates (UAE).
A standout component of these deals was a monumental $142 billion weapons agreement between the US and Saudi Arabia.
This transaction, hailed as the largest arms sale in recorded history, played a crucial role in bolstering the market performance of defense corporations.
At the same time, leaders of the NATO alliance reached a consensus to increase defense budgets to 5% of gross domestic product (GDP) by the year 2035.
In a show of unity, the heads of all 32 NATO member states reaffirmed their dedication to Article 5, which ensures mutual defense among members.
Earlier in the year, defense firms in Asia also reported robust stock gains amid escalating hostilities between India and Pakistan.
From January through September, several major companies saw exceptional returns. Hanwha Aerospace of South Korea yielded a 239% return for shareholders.
Meanwhile, Germany's Rheinmetall achieved 221.9%, Türkiye’s Aselsan posted 196.6%, and Sweden’s Saab followed with 145.8%.
Rolls-Royce, headquartered in the UK, reported a 109.3% increase, while Italy's Leonardo rose by 108.3%, and Britain’s BAE Systems climbed by 79.3%.
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