Home Business News Investments in defence stocks up 140% amid Putin election victory and Trump NATO comments

Investments in defence stocks up 140% amid Putin election victory and Trump NATO comments

by Thea Coates Finance Reporter
18th Mar 24 12:58 pm

The growing fears of a European conflict with Russia has seen one investment bank report an almost 140% increase in trading on defence company shares over the past year.

Investment platform Saxo reports the amount of customers trading in shares in firms involved in the defence industry has gone up 148% year on year.

The news comes as Vladimir Putin won a fifth term in office as President of Russia, with increasing tensions across Europe with the country.

With Donald Trump hinting he will withdraw NATO spending if he is re-elected as US President, there is a growing acceptance nations across Europe will have to increase their defence spending.

Concerns are growing at the perceived threat of Russia to European stability, with only last week the country hacking the plane of British Defence Secretary Grant Shapps – leading to an immediate increase in UK funding to buy preventative equipment to protect assets.

Only last week, Denmark Prime Minister Mette Frederiksen appealed to people and companies to start buying arms industry stock privately because the nation could not afford the spending alone.

The looming problems have led to a growth in buying stock in defence companies – with trading in Rheinmetall, the German company which manufactures grenades for tanks and artillery, second only to Microsoft for overseas shares in Denmark.

Saxo’s investment strategist Oskar Bernhardtsen said, “Two or three years ago and before the invasion of Ukraine, it was a no-no sector, together with oil and tobacco, that you didn’t want to invest in.

“Many European countries will have to invest heavily in defense equipment in order to meet the NATO goals. And it also benefits the European defense companies and their shares in particular.”

Saxo’s Head of Equity Strategy, Peter Garnry added, “Rheinmetall’s results and outlook last week confirmed that growth is surprising even the most optimistic estimates as European NATO member states are rapidly expanding military expenditures due to perceived threats from Russia.

Trump’s comments this year that he would not help a NATO country that was free-riding against the 2% spending requirement has set off alarm bells in European capitals.

“As a result, and as Saxo has previously noted, European defence stocks will continue throughout this year to be a strong trend in financial markets.”

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