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Ukraine war: Shares in armaments companies are increasing significantly

2022-02-25T11:48:00.510Z


Stock markets have recovered somewhat from the slump caused by the Russian attack on Ukraine - even in Moscow. Because of the prospect of higher military spending, armaments values ​​in particular increased significantly.


Enlarge image

Lynx armored personnel carriers from Rheinmetall at a trade fair in the Czech Republic in autumn

Photo:

Vaclav Salek / CTK Photo / IMAGO

The Russian invasion of Ukraine caused stock market prices to collapse worldwide on Thursday.

A day later, the markets have recovered somewhat: the German and European leading indices Dax and EuroStoxx each rose by around one percent to 14,183 and 3871 points, respectively.

Because of the start of the war the day before, they had slipped by about four percent each.

Moscow's leading index RTS even posted a record price increase of 30 percent at times, making up for most of its recent losses after the stock market prices in the Russian capital collapsed by almost half on Thursday.

Shares in armaments companies were particularly in demand among investors on the stock exchanges on Friday.

The prospect of higher defense spending sent Rheinmetall, Thales and BAE Systems up significantly, up 5.6 percent and each to a two-year high.

The armaments division of the German Rheinmetall Group builds tanks and anti-aircraft systems, the British armaments group BAE Systems submarines and aircraft, and the French Thales Group is also broadly positioned - from military technology to space travel.

Habeck wants to increase the operational capability of the Bundeswehr

Shares in the German armaments group Hensoldt, on the other hand, rose by a further six and a half percent after gaining almost ten percent the day before in pre-market Tradegate trading on Friday.

A reconsideration of the industry is conceivable, said analyst David Perry from JPMorgan Cazenove.

Most recently, the sector had fallen into disrepute for years for ethical reasons.

Due to the escalation of violence in Eastern Europe, however, higher defense budgets are now being discussed politically again.

In the view of Vice Chancellor and Economics Minister Robert Habeck, as a consequence of the Russian attack on Ukraine, more investments must be made in the Bundeswehr's operational capability.

Germany is now more or less the neighbor of an aggressively warring country, said the Green politician on Thursday evening in the ZDF program "Markus Lanz".

This will certainly have the consequence that the operational capability of the Bundeswehr will have to be checked again "and - I don't think I'm going to reveal any secrets - have to be increased".

According to analysts, the recovery on the stock exchanges is also due to the fact that the economic sanctions against Russia have so far not been as severe as they could be.

"The waiver of sanctions on Russian oil and gas supplies and the country's suspension from the Swift payments network has given markets a sigh of relief," said Neil Wilson, chief analyst at online brokerage Markets.com.

Investors expected the sanctions that had been passed to have a relatively minor impact on the global economy.

At the same time, raw materials and metals such as gold, known as the crisis currency, remained in demand.

It rose 0.3 percent to $1,910 a troy ounce.

Brent crude oil from the North Sea, on the other hand, hovered around the $100 per barrel (159 liters) mark, which it surpassed on Thursday for the first time in seven and a half years.

Apr/AFX/Reuters

Source: spiegel

All business articles on 2022-02-25

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