Hamas-Israel War Boosts Defense Stocks
Il Sole 24 Ore, Italy's most authoritative political, economic, and financial newspaper, analyzed the latest performance of the global defense industry and came to the logical conclusion that “the war between Israel and Hamas has sunk the stock markets, but the securities of arms companies are also benefiting from new increase, as already happened during the war between Russia and Ukraine in 2022.”
This is how it always happens: there are those who die in the war, and there are those who benefit from the war. Things could not have turned out any better for the military-industrial complexes around the world. For the Russia-Ukraine war, which so far only on the Kiev’s side absorbs Western “aid,” meaning old and new weapons and ammunition amounting to more than $110 billion, the word “end” is becoming an increasingly distant dream. At the same time, a bloody armed conflict has erupted between Hamas and Israel, and now no one can predict what turn it might take. The only “forecast” in monetary terms was just made by US President Joe Biden, according to whom new aid to Kiev, Tel Aviv, and Taiwan will cost American taxpayers another $100 billion.
The authoritative Italian economic and financial newspaper Il Sole 24 Ore dotted all the i’s by publishing a detailed analysis of the dynamics of the military-industrial complex companies’ shares and came to a not all that surprising conclusion: “The war between Israel and Hamas has sunk stock markets, but weapons stocks are benefiting from new gains, as has already happened with the war between Russia and Ukraine in 2022.”
According to research by Gianni Dragoni, editor of the newspaper Il Sole 24 Ore, since October 7, the day the Hamas attack killed 1,300 people in southern Israel, followed by Israel’s war against the Gaza Strip, which killed 3,785 Palestinians, “the stocks of defense industry companies have regained momentum around the world.”
Obviously, the US military industry is doing better than all of its competitors. According to Dragoni, “Northrop Grumman, the third major American company in the sector, showed the greatest gains: +15.8% from October 6 to October 20.” Good results were also produced by General Dynamics (+8.2%), which primarily manufactures ground-based weapons, including M1 Abrams tanks, and Rtx, formerly Raytheon (+5.9%), the world’s number one missile maker that produces Stingers and Javelins, the first two types of missiles that were delivered by the USA to Ukraine in 2022. According to some experts, the deliveries of Javelins to Ukraine started before 2020, while Donald Trump was US President.
Lockheed Martin is the Pentagon’s prime contractor, building the F-16 and F-35 fighter-bombers, as well as the long-range ATACMS missiles that were just transferred to Ukraine to prevent a Russian counteroffensive, and the Javelin (a joint venture with the former Raytheon); the shares of the company grew by 12.1%.
In Europe, the boom in the military-industrial sector has affected the Italian group Leonardo, formerly Finmeccanica, which has a subsidiary in America, Leonardo DRS, and which coincidentally merged with the Israeli Rada last year. Since October 6, Leonardo DRS shares have risen 13.2 percent. Another German electronics company, Hensoldt (which also supplies the Eurofighter), 25.1% of which are also owned by Leonardo, added 9.4%.
“But the arms company that had the highest stock market growth in the world,” writes the Italian newspaper, “was the German Rheinmetall, which produces ammunition, ground armored vehicles, tanks, including Leopards, which are fighting in Ukraine. Starting October 6, the day before the Hamas attack, until October 20, the German group’s shares rose 11.5%, the highest among European companies.
