War in Ukraine: Defense values ​​rally – spending likely to rise

The prospect of multi-billion dollar orders for new weapons sent defense company shares up sharply on Monday.

In view of the Russian attack on Ukraine, Germany wants to significantly upgrade the Bundeswehr and provide a one-off amount of 100 billion euros. In addition, more than two percent of economic output in Germany is to be spent on defense in the future.

Above all, investors expect opportunities for Rheinmetall and the defense electronics manufacturer Hensoldt. Rheinmetall shares soared significantly and at times were quoted at 160 euros, higher than ever. In the end, they were up almost 25 percent. The shares of the defense electronics manufacturer Hensoldt went up by almost 43 percent.

Papers are increasing strongly

Thyssenkrupp also benefited with just over 11 percent. In addition, the papers of the provider of security software Secunet went up by a further 20 percent. BAE Systems rose by around ten percent on the London Stock Exchange. In Paris, Thales shares closed trading with a plus of around twelve percent.

Russia’s invasion of Ukraine has fundamentally changed the market environment for Europe’s defense sector, wrote JPMorgan analyst David Perry. For example, future European defense spending is likely to be much higher than previously expected. With regard to sustainability criteria, too, more investors are now likely to accept that “defense” is necessary to preserve peace and democracy.

In view of the planned additional expenditure, Germany could invest an estimated 33.5 billion euros per year in the equipment of the Bundeswehr, around four times as much as before, according to the analysts from the investment house Stifel. Since Rheinmetall is the largest supplier of the Bundeswehr’s main weapon systems, the Düsseldorf-based company should be able to secure a significant share of the sum.