Global defense and aerospace firms posted strong performance in the first nine months of the year, boosting investor confidence. Increased defense spending following the Russia-Ukraine War and the EU's decision to expand its defense capacity contributed to the rise in defense stocks.
Increased industry purchases and positive third-quarter balance sheets particularly benefited Asian contractors.
Japan’s National Diet approved a joint fighter jet development project between the UK and Italy, involving Mitsubishi Heavy, UK-based BAE Systems, and Leonardo S.p.A. Reports that Mitsubishi Heavy completed the design of its next-generation nuclear reactor, with plans to begin constructing a production plant, led to a 156.9% rise in its stock over the period.
South Korea's Hanwha Aerospace gained prominence amid the war in Ukraine, recording a 114.8% increase in stock value.
Germany’s Rheinmetall AG saw a 65.9% rise, buoyed by $9.3 billion in orders from Germany and a potential $21.9 billion order from Italy. Leonardo S.p.A’s stocks also rose 34%, driven by the joint venture with Rheinmetall.
US-based RTX Corporation’s stocks climbed 44%, reflecting strong financial performance. Lockheed Martin’s shares rose 29% following a deal to purchase rocket launch vehicles and an agreement with Saudi Arabia to localize parts production. The firm also partnered with General Dynamics for solid-fuel rocket engine production and announced a $450 million acquisition of satellite firm Terran Orbital.
L3 Harris Technologies’ shares rose 12.9% due to $120 million in new orders from the US Marine Corps. UK-based BAE Systems’ stocks increased 11.4%, supported by construction of the Royal Australian Navy’s first Hunter-class frigate and delivery of a new combat vehicle to the US Marine Corps.
French defense contractor Thales saw a 6.4% rise, driven by a contract with Ukraine to supply air defense systems.
Aviation firms disappoint
Boeing faced sanctions from the US National Transportation Safety Board for sharing undisclosed investigation information after a Boeing 737 incident. The company also agreed to pay $243.6 million to settle litigation over two Boeing 737 crashes. Additionally, poor balance sheets and a strike by workers rejecting wage offers further impacted Boeing’s stock, which dropped 41.7%.
European aviation firm Airbus reduced its targets for commercial aircraft deliveries and earnings, postponing production of a new craft, leading to a 6.1% drop in its shares. German airline Lufthansa’s venture into the defense industry resulted in an 18.3% decline in its stock.
Source: AA
