Defense Stocks Surge 51% Since 2025 Amid Geopolitical Tensions

In response to the shift in the position of the regarding Ukraine, defense stocks in Europe and Asia experienced a significant surge. The 's statements, which included advocating for NATO countries to shoot down Russian aircraft violating their airspace and expressing stronger support for Ukraine's potential victory in the conflict, have sparked a wave of optimism among investors in the defense sector.

In Europe, the defense sector saw notable gains. Major players such as Rheinmetall AG and BAE Systems Plc both saw their stock prices rise, with Rheinmetall AG increasing by 1.4% and BAE Systems Plc by 1.6%. Saab AB, a Swedish defense company, led the gains with a 5.8% increase, reaching an all-time high.

In Asia, Korean defense stocks were particularly strong. Hanwha Aerospace Co., the largest defense contractor in Korea, saw its stock price surge by 5.9%, setting a new record. The company is in discussions with several Western European nations to assist in expanding their weapon production capabilities. Korea Aerospace Industries Ltd. and Hyundai Rotem Ltd. also saw their stock prices rise by at least 4%.

Japanese defense stocks also performed well, with IHI Corp. seeing a near 10% increase in its stock price, placing it among the top performers on the Topix index. Mitsubishi Heavy Industries Ltd. saw a rise of over 5%, and DroneShield Ltd. in Australia experienced a stock price increase of over 7%.

The heightened geopolitical tensions globally, coupled with expectations of increased military budgets, have driven investor interest in the defense sector. This sector has become a hot investment area in global stock markets. The MSCI Global Aerospace & Defense Index has risen by 51% since 2025, significantly outperforming the global benchmark index, which has risen by nearly 17% over the same period.

The 's remarks have refocused attention on geopolitical risks, driving the rise in defense stocks. Given the lack of signs of easing tensions, the market anticipates that defense companies will continue to receive substantial orders in the coming years. This outlook has further bolstered investor confidence in the defense sector, making it a key area of focus for global investors.