In the stock market, military stocks have long been considered a reliable investment, often thriving amidst global instability and military conflicts.
However, 2023 has defied this conventional wisdom with a remarkable decline in the capitalization of major military companies, even as various parts of the world remain embroiled in war.
In particular, data acquired and calculated by Finbold indicates that between January 1, 2023, and October 11, 2023, major military stocks recorded a cumulative outflow of $98.08 billion in market capitalization.
In January 2023, these ten major stocks boasted a cumulative market cap of $665.48 billion, which dwindled to $567.40 billion as of October 2023.
Raytheon Technologies emerged as the biggest loser, shedding $41.60 billion in market capitalization after beginning the year with a market cap of $148.36 billion. Following closely, Lockheed Martin saw the second-largest decline in market cap, losing $17.93 billion. Northrop Grumman recorded the third-highest losses, totaling $13.61 billion in market cap.
Boeing, which started the year with a market cap of $126.94 billion, lost $10.21 billion in capitalization. Other notable losers are BAE Systems ($6.44 billion), L3Harris Technologies ($6.06 billion), General Dynamics ($3.50 billion), Leidos ($1.43 billion), and Huntington Ingalls Industries ($0.46 billion).
Rheinmetall was the only exception among the top 10 major military stocks, gaining $3.16 billion, with its market cap increasing from $9.20 billion to $12.36 billion.
Intrigues behind drop in market cap
The report underscored intrigues surrounding military stocks during armed conflicts. According to the research report.
“In an industry that traditionally thrives during times of global unrest, the outflow in the market cap of military stocks may come as a surprising turn of events, especially in light of the ongoing major conflicts such as Russia’s invasion of Ukraine, which ranks at the forefront.
Notably, the complex web of arms manufacturers, defense contractors, and government interests has historically thrived in times of conflict.”
It is worth noting that the shift in market cap does not signify the demise of the military-industrial complex; certain investors continue to appreciate its stability. Governments across the globe uphold significant defense budgets, guaranteeing the sector’s enduring presence.