The economy today

The European defense industry, the big winner of the war against Ukraine

Audio 03:49

The Tiger ARH combat helicopter manufactured by the European manufacturer Eurocopter.

(Drawing).

© Andrew Mercer/Wikimedia.org

By: Dominique Baillard Follow

3 mins

The war led by Russia at the gates of Europe has already made a big winner on the stock market: the defense industry, boosted by orders and declarations of intent from governments.

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It was spectacular yesterday Monday at the Stock Exchange: all the major European companies in the defense industry saw their ratings soar while the equity markets were globally bearish.

Plus 12% for the French Thales, +8% for Dassault Aviation.

Plus 15% for the Italian Leonardo, +18% for the Swedish Saab.

On the Frankfurt stock exchange it was even more delirious: the Hensoldt company specializing in electronics incorporated into Airbuses gained 42% in one session with peaks at 89%.

Rheinmetall, the tank and armor manufacturer for NATO jumped 25%.

It was the announcements made the day before by Chancellor Scholz that made them euphoric

Berlin is emerging from its

and plans to spend a lot of money to modernize its army.

The Chancellor announced the release of an immediate fund of 100 billion euros, and an increase in the defense budget which will be increased to 2% of GDP as required by NATO membership.

It must be said that the German army really needs it: a German general recently denounced the negligence of the

;

at the moment its soldiers deployed in the Baltic countries do not even have clothes adapted to the extreme cold.

This sudden conversion to the military cause propelled the course of German champions.

The trend was on the rise since Moscow increased the pressure by massing its troops on Ukraine's borders.

This awakening of Germany and the rearmament of other European countries will result in new industrial orders

There too, it is a movement that has been noticeable for several months already, as evidenced by the recent orders from Finland and Poland;

As for the German announcements, it will take some time before they materialize.

In this industry it often takes years of negotiations, and tight political discussions before an order is effective.

Germany has so far dragged its feet on major European industrial projects, such as the anti-aircraft defense system or the next generation of the Franco-German tank, but on Sunday the Chancellor changed course and clearly committed his country to accelerate the implementation of these programs which amount to tens or even hundreds of billions of euros.

Do deliveries to Ukraine also fuel the effervescence of this market?

Because the announcements are multiplying.

After the European Union, France or the United Kingdom, Italy in turn announced the sending of military equipment, as well as Finland, a country that is not a member of NATO.

Just like Sweden, which will send rocket launchers and equipment for Ukrainian soldiers.

This of course benefits Saab, which also explains its stock market upturn.

Note that Oslo will therefore break its commitment not to export military equipment.

Ditto for Germany, which until then prohibited the sale of arms in regions at war.

Rheinmetal will increase its annual production of ammunition for tanks sixfold.

The European groups are therefore on a war footing, their competitors too, the first five are American and they weigh more than half of the

►in brief

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• Defense

• Ukraine

• European Union

• NATO