Military spending in Europe surges, leading to a rise in defense stocks.

Global Defense Stocks Attract Investment Surge

Recently, global defense stocks have performed spectacularly, with defense companies in European and Asian markets seeing significant price increases. As the Trump administration explicitly calls for Europe to strengthen its self-defense, the market's expectations of a substantial increase in European defense spending are rising, causing the stock prices of major defense firms to reach new highs.

In the European market, defense stocks have become the focus of investors, with defense company shares from Germany, France, Italy, Sweden, and other countries posting double-digit gains. Some companies have seen their value increase by over 140% since last year's low. Meanwhile, Asian defense companies are also on the rise, with shares of defense-related firms in South Korea and Japan climbing significantly, some even surpassing historical highs.

Europe Significantly Increases Defense Budget, Benefitting Defense Stocks

European countries are accelerating the expansion of their defense budgets to address the ever-changing global security landscape. The European Commission recently announced a proposal to provide loans amounting to €150 billion to support the growth of defense spending. Germany also plans to establish a €500 billion fund to advance the modernization of its defense assets.

Against this backdrop, European defense stocks have surged. Defense companies from Germany, France, and Sweden saw their stock prices soar by over 11% early this week. Although there was a slight pullback on Tuesday, the overall gains remain substantial. Some companies have seen their stock prices rise over 80% this year, setting new record highs.

It is noteworthy that before the outbreak of the Russia-Ukraine conflict in 2022, the stock prices of some European defense companies were still at low levels, but they have now risen dramatically, becoming standout sectors in both European and global markets.

Asian Defense Market Heats Up Simultaneously

Not just in Europe, defense companies in Asia also see an influx of capital. As the U.S. adjusts its policy on aid to Ukraine, there is an increased expectation for Asian countries to boost their defense investments, with Japanese and South Korean defense stocks climbing rapidly.

A leading Japanese heavy machinery manufacturer's stock reached its highest level since 1990 on Tuesday, while a South Korean main battle tank manufacturer saw its stock surge by 11% in a single day. Furthermore, some South Korean defense companies now have a P/E ratio of 52, indicating strong market optimism toward the industry.

Investment Outlook: Defense Spending Growth Drives Industry Development

With the changing global security situation, the growth prospects for the defense industry remain optimistic. The market anticipates that European countries will further increase their defense budgets in response to security challenges. Meanwhile, in Asia, particularly in South Korea and Japan, defense investments are also expected to see long-term growth.

Additionally, the United States is considering expanding its defense production capacity through overseas shipyards, with Korean companies likely to secure related orders. Looking ahead, as global defense budgets continue to rise, the investment boom in the defense industry is expected to further intensify.

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