No matter when the conflict in the Ukraine comes to an end, analysts are convinced we have entered into a period of increased defense spending.
The STOXX Europe Total Market Aerospace and Defense Index has risen 5% this year. Meanwhile, the S&P 500 aerospace and defense sub-sector is up 11% for 2022.
Although there has recently been a political movement against increased defense spending, especially in Europe, Russia’s attack on Ukraine is sure to have given politicians around the world much to think about.
In a poll of market analysts by FactSet, defense stocks across the board are projected to climb handsomely by the end of the year.
Well-known aircraft manufacturers Airbus and Boeing are projected to see their stocks grow 35% and 31%, respectively. The UK’s Avon Protection is slated to grow 28%, while Kratos Defense and Security in the US is slated to grow by 19%.
What does this mean for me?
It is unsurprising that defense stocks are projected to respond to the Ukraine crisis in this way. While we do not ignore the humanitarian cost and the human suffering brought about by Russia’s attack on Ukraine, from an investment perspective, the conflict presents many opportunities, with defense stocks being just one of them.
For stock investors, there are surely other types of shares that will react positively and negatively to events in Eastern Europe. It pays to watch these events closely and act accordingly.
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