Defense stocks shield Europe against market malaise
The gap between the US and European stock markets has rarely been so wide. This week, the escalation in Ukraine has driven the markets even further apart. One sector, ironically enough, is bravely holding its ground: defense. For investors looking to invest in this sector, there still seems to be ample opportunity, though many grapple with ethical dilemmas.
Top-5 defence sector: leaders exposed to moral risk
Investing in weapons and the military industry is controversial for many investors. For example, since 2011, investing in companies that produce, sell or distribute cluster munitions or crucial components thereof has been prohibited by law in 110 countries, including the Benelux.
It is important to note however that the legal prohibition does not apply to participation in investment institutions and indices in which the producers of cluster munitions or companies involved represent less than 5 percent of the value of that investment institution or index.
Defence: how an unwanted child becomes wanted
German Chancellor Scholz’s announcement that he is making 100 billion euro available from the federal budget to strengthen national and European defence has not missed the mark. German Rheinmetall shares extended gains on Tuesday, adding another 18 percent after to close at an alltime high of 157,20 euros, down from its 52-week average of 76.28 euros. ETFs focused on defence and aerospace have also gained since the war in Ukraine.