Investors should now follow the development of the defense sector, says Evlin the leader of systematic investments Peter Lindahl.
The European defense sector has been one of the toughest rises on the stock exchange in the early part of the year.
“The increase in the value of the market tells of a directed reaction to the changed geopolitical situation. Investments in defense can be expected to continue despite possible ceasefire contracts, as long -term safety concerns require a continuous investment,” Lindahl says
According to Lindahl, this supports the growth of European defense companies, which is likely to exceed US competitors in the next few years.
“Despite the stronger growth prospects, European defense stocks are cheaper than their US competitors. This may be due to the fact that European defense growth is only expected to begin and many investors often react gradually to such structural change,” Lindahl writes.
The EU has significantly increased defense expenditure. The European Union’s “Rearm Europe” program aims to accelerate the defense sector’s investments by up to EUR 800 billion. The aim of the program is to become a credible, independent player in the defense by 2030.
Finland also intends to increase its defense expenditure to at least 3 % of GDP by 2029.
“The growth of defense investments and the development of the sector can be a significant engine of economic growth for Europe. It increases demand for manufacturing, research and development and technological innovation. Defense companies benefit from long-term state agreements, which also promotes production growth and job growth,” Lindahl estimates.
One of the goals of the Rearm Europe program is to target more defense purchases within the EU. The aim is for Member States to make at least half of the acquisitions of their defense budgets from within the EU by 2030. Currently, the majority of purchases are made from outside the EU. According to Lindahl, an internal defense market in the EU would support European production in addition to self -sufficiency.
“Europe is now working to strengthen its defense technology self -sufficiency and reduce its dependence on the United States. By investing in European defense production, countries reduce their dependence on American defense technology and equipment that has been the basis of their safety infrastructure.