jwesth @jwesth: "𝘿𝙚𝙛𝙚𝙣𝙘𝙚 𝙗𝙪𝙙𝙜𝙚𝙩𝙨 𝙤𝙣 𝙩𝙝𝙚 𝙧𝙞𝙨𝙚:..."

United Kingdom

𝘿𝙚𝙛𝙚𝙣𝙘𝙚 𝙗𝙪𝙙𝙜𝙚𝙩𝙨 𝙤𝙣 𝙩𝙝𝙚 𝙧𝙞𝙨𝙚: 𝙀𝙪𝙧𝙤𝙥𝙚𝙖𝙣 𝙚𝙦𝙪𝙞𝙩𝙞𝙚𝙨 𝙞𝙣 𝙛𝙤𝙘𝙪𝙨 🛡️ Defence spending is set to increase structurally worldwide amid a 'new normal' of heightened geopolitical tensions. The war in Ukraine and the prospect of a new Trump presidency have prompted European countries to increase their defence capability targets. 🪖 It also means increased revenue for companies that manufacture ammunition, F-35 fighter jets or air defence systems like Patriots. While this is a sector many investors have been reluctant to invest in the past, the greater focus on defence budgets might turn investors' attention back to this previously unpopular part of the market. 🌎 The largest and most defence stocks are in the US. US aerospace and defence conglomerate $RTX (Raytheon-Technologies) leads the way with a market value of $140 billion, followed by $HON (Honeywell International Inc) and $LMT (Lockheed Martin Corporation) . 🌍 However, the smaller European defence stocks have seen the most significant price increases. The US aerospace and defence ETF $ITA has underperformed the S&P500 over the past year. Meanwhile, Europe's smaller and more concentrated defence stocks have been on a roll. Italian $LDO.MI (Leonardo SpA) and German RHM.DE have risen by almost 100% over the past year. Norwegian Kongsberg (75%) and Swedish SAABB.ST (50%) have also seen sharp price increases. 💸 Europe is also set to see the biggest growth in defence budgets. The US spends 3.4% of GDP on defence, and at $900 billion, it is by far the largest budget in the world. While EU countries only spend 1.5% of GDP on average, the region is catching up. Large economies like the UK will lead the way by increasing spending to 2.5% of GDP by 2030, while smaller but more vulnerable countries like Poland have announced plans to increase their defence spending to as much as 4.0%. According to McKinsey, European NATO countries together have announced additional spending of between €700 and €800 billion by 2028. 💡 Meanwhile, the European Commission has recently presented a strategy for Europe's defence sector, including a target to spend at least half of national defence spending within the EU by 2030, increasing to 60% by 2035. This could make smaller European defence stocks outperform the US defence giants, where the extra defence spending goes disproportionately further. $DRS (Leonardo Drs Inc) $SAF.PA (SAFRAN) $HO.PA (Thales Group) $GD (General Dynamics Corp) $NOC (Northrop Grumman Corp) $BA.L (BAE Systems plc ) $LHX (L3Harris) $AM.PA (Dassault Aviation SA) $HII (Huntington Ingalls Industries Inc)