Geopolitical Tensions Drive Global Defence Stocks Higher

Global Defence Stocks Rally as Military Spending Hits Record $2.7 Trillion Amid Rising Geopolitical Risks

Global Military Expenditure Reaches All-Time High Led by US, China, and India

Amidst intensifying global geopolitical tensions, defence and aerospace stocks worldwide are experiencing robust investor demand, driven by a historic surge in military spending. According to the Stockholm International Peace Research Institute (SIPRI), global defence expenditure soared to an unprecedented $2,718 billion in 2024, registering a 9.4% increase over the previous year—the sharpest annual rise since the Cold War era. The top five military spenders—the United States, China, Russia, Germany, and India—jointly accounted for 60% of the total, indicating a strong concentration of defence investments across a few key economies.

Highlights:

• Global military spending in 2024 reached $2,718 billion, up 9.4% YoY.

• Highest annual increase since the Cold War era.

• US, China, Russia, Germany, and India contributed 60% of global military expenditure.

International Defence Stocks Surge on Investor Optimism and War-Readiness Buildup

The surge in global defence budgets has directly translated into bullish momentum across publicly listed defence firms in multiple countries. Germany’s RENK Group AG, renowned for its advanced transmission systems used in armored military vehicles, led gains with a 1-week return of 8.34% and a 1-month return of 36.88%. In Israel, ARYT Industries Ltd—specializing in armored protection systems—posted staggering returns of 16.79% for the week and 20.80% for the month, with YTD and 1-year gains standing at 201.9% and 512.51%, respectively.

In China, Beijing Highlander Digital-A recorded an 11.52% weekly gain and 37.59% monthly return, benefiting from its naval electronics segment. Meanwhile, South Korea’s Hanwha Aerospace Co Ltd stood out with a remarkable 1-year return of 298.07% and a YTD gain of 172.59%, underpinned by strong global demand for its engines and missile systems.

Germany’s Rheinmetall AG, a long-time industry leader, saw its shares rise 168.47% YTD and 211.25% over one year. The company continues to benefit from heightened European defence initiatives and modernization efforts.

Highlights:

• RENK Group AG (Germany): +36.88% (1M), +8.34% (1W).

• ARYT Industries (Israel): +201.9% (YTD), +512.51% (1Y).

• Hanwha Aerospace (South Korea): +172.59% (YTD), +298.07% (1Y).

• Beijing Highlander Digital-A (China): +11.52% (1W), +37.59% (1M).

• Rheinmetall AG (Germany): +168.47% (YTD), +211.25% (1Y).

European and Middle Eastern Defence Firms Also See Upward Trajectories

European defence firms are also experiencing a resurgence in market confidence. Sweden’s SAAB AB-B gained 1.66% over the past month, with a 1-year return of 95.31%. Italy’s Leonardo S.p.A. added 4.35% in a month and 84.30% over the year. French defence technology giant Thales SA returned 79.37% over the past year. Although its 1-month gain was modest at 1.55%, the broader trend reflects strong institutional confidence.

Other notable performers include Israel’s Imco Industries and Greece’s Theon International PLC, which surged over 142% in the past year. However, Theon’s 1-month return was 26%, while Imco registered a monthly rise of 40%. In contrast, BAE Systems PLC (UK) reported a 1-year gain of 52.35%, but declined 0.75% in the past month amid temporary rotation out of UK defence equities.

Highlights:

• SAAB AB-B (Sweden): +95.31% (1Y), +1.66% (1M).

• Leonardo S.p.A. (Italy): +84.30% (1Y), +4.35% (1M).

• Thales SA (France): +79.37% (1Y), +1.55% (1M).

• Imco Industries (Israel): +142% (1Y), +40% (1M).

• Theon International PLC (Greece): +142% (1Y), +26% (1M).

• BAE Systems PLC (UK): +52.35% (1Y), -0.75% (1M).