A study by the consultancy Accuracy reveals that the stock market capitalization of the primary military equipment manufacturers in the U.S. and Europe surged by 59.7% since the onset of the Ukraine invasion on February 24, 2022. This rise outpaces the broader market indices, with the S&P 500 and Eurostoxx 50 only climbing slightly over 13% and 7% respectively. The analysis focuses on key companies heavily tied to defense, indicating a robust shift in the market driven by ongoing geopolitical tensions.
Ignacio Lliso, a partner at Accuracy, highlights that while the study spans from January 2021 to March 2024, the most significant gains occurred between the third quarter of 2023 and the first quarter of 2024. This period coincided with heightened military operations in Gaza, and the analysis indicates that the military industry's global capitalization jumped by 20%. This specific surge reflects investors' responses to intensified conflicts and growing defense expenditures.
In the wake of the October 7 Hamas attack, military firms experienced a substantial stock market boost; the average share value in this sector rose by approximately 9% within a week, contrasting against a stable overall stock market. The findings suggest a direct correlation between geopolitical destabilization events and defense sector financial performance, emphasizing the volatility and strength of military stock values amid international crises.
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