Two weeks ago, the Bundeswehr’s self-propelled howitzers were transferred to the Baltic States.
(Photo: dpa)
Munich The announcement of massive investments in the German Armed Forces pushed up arms manufacturers’ share prices on Monday. After the stock exchanges opened, Rheinmetall and Hensoldt shares rose by up to 85 percent at times. In the course of the morning they gave way a bit, but remained clearly in the plus.
As a reaction to the Ukraine war, the Bundeswehr is to receive a special fund of 100 billion euros for investments and armament projects. The money will be provided with the 2022 federal budget, said Chancellor Olaf Scholz on Sunday at a special session of the Bundestag. In the years that follow, spending on defense is said to be more than two percent of gross domestic product.
Rheinmetall is one of the groups that can count on additional orders. For example, the company manufactures the Leopard battle tank and anti-aircraft systems. According to the Stockholm peace research institute Sipri, the group ranks 27th worldwide with sales of around six billion euros.
Rheinmetall share price rises by 50 percent because of the Ukraine war
Rheinmetall’s share price rose by more than 50 percent at times when the stock exchange opened on Monday and was still up 28 percent in the morning at around 137 euros. The analysis company Warburg increased the price target from 119 to 150 euros. Analyst Christian Cohrs wrote that the massive increase in defense spending gives the stock plenty of upside potential.
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In the morning, the Hensoldt share was still up 44 percent at a good 21 euros. The company ranks 78th among defense companies worldwide and is a specialist in sensor solutions for defense applications.
Sales rose more than expected last year by 22 percent to almost 1.5 billion euros. “With our portfolio of innovative key technologies, we want to grow in Germany and Europe in the coming years, but increasingly also outside of Europe,” said CEO Thomas Müller recently when the figures were presented.
Experts assume that the governments of other countries will also decide to increase arms spending in the coming days and weeks. The share price of Europe’s largest armaments company BAE Systems has risen by more than ten percent in the meantime. The investment bank JP Morgan had already upgraded the stock on Friday and raised the short-term target.
Great Britain is investing more in new weapons than at any time since the end of the East-West conflict over 30 years ago. The British group is one of the leading manufacturers of cyber weapons and drones, which are particularly in demand.
In Frankfurt, the US arms companies General Dynamics and Northrop Grumman were also able to increase sales by more than five percent. General Dynamics is one of the most important manufacturers of guided missiles. Star investor Mike Burry had already added the share to his portfolio last year.