ISTANBUL
Global defense and aerospace companies’ stocks surged as countries ramped up their defense spending, particularly in Europe amid the ongoing war in Ukraine.
The rising defense budgets of European countries have rapidly pushed up the shares of defense and aerospace firms, especially after US President Donald Trump took office in January, prompting Europe to revise its defense and security policies.
Amid Trump-induced divisions between the US and Europe in economic and defense policies, Trump signed investment and arms deals worth over $3 trillion during his visits to Saudi Arabia, Qatar, and the United Arab Emirates (UAE) in May.
The US and Saudi Arabia’s $142 billion arms deal — regarded as the largest arms sale in history — also contributed to the strong stock performance of defense firms.
Meanwhile, NATO leaders agreed to increase their defense spending to 5% of gross domestic product (GDP) by 2035, while 32 NATO member leaders reaffirmed their commitment to Article 5, which provides for collective defense.
Earlier this year, Asian defense firms also saw strong stock performance amid rising tensions between India and Pakistan.
Between January and September, South Korea’s Hanwha Aerospace delivered a 239% return to investors, while Germany’s Rheinmetall returned 221.9%, Türkiye’s Aselsan 196.6%, Sweden’s Saab 145.8%, UK-based Rolls-Royce 109.3%, Italy’s Leonardo 108.3%, and Britain’s BAE Systems 79.3%.
Japan’s Mitsubishi Heavy gained 74.5%, France-based Dassault Aviation 45.7%, American firms L3Harris Technologies and RTX Corporation 45.2% and 44.6%, respectively. French firm Safran’s stocks also increased 43.4%, and US-based Northrop Grumman and General Dynamics surged 29.8% and 29.4%, respectively.
European aircraft maker Airbus gained 27.5%, Turkish Papilion Defense 26.2%, US-based Boeing 21.9%, German firm Lufthansa 16.3%, and American defense firm Lockheed Martin 2.7%.
Türkiye’s SDT Space and Defense firm’s stocks fell 3.1% and Altinay Defense 11.8%, while Onur Yuksek Teknoloji stocks remained flat.
Defense deals in January-September
Rheinmetall announced an agreement to acquire the warship manufacturing division of the Bremen-based Lurssen Group, while also planning to expand its capacity by establishing a new ammunition plant in Latvia.
Italian Leonardo and Turkish Baykar firms established “LBA Systems” in Italy with a 50-50 partnership this year.
The US Defense Department announced that the State Department approved the possible sale of military equipment and services to Ukraine worth a total of $203.5 million. The main contractor for the equipment, maintenance, and logistical support services will be the British firm BAE Systems.
Australia announced it awarded a tender to Japanese Mitsubishi Heavy Industries worth around $6.5 billion to build new warships for its navy.
Lockheed Martin received a $9.8 billion contract from the US Army to produce 1,970 Patriot missiles — the deal is hailed as the largest contract in the firm’s history.
Türkiye’s Aselsan, meanwhile, became the first company on Türkiye’s BIST 100 index to exceed a market value of 1 trillion Turkish lira ($23.8 billion).
Global investor interest has shifted from traditional manufacturers to companies developing technologies that transform them into high value-added products. While the highest-growth firms are typically in the tech sector, a similar trend is emerging in defense.
Defense technology developers have gained more attention in recent years than traditional weapons manufacturers or firms offering conventional defense products — and Aselsan is among the strongest examples of this shift.
Türkiye’s Aselsan is one of the few companies worldwide that produce multiple high-tech products, including AESA radar systems, electro-optical systems, electronic warfare systems, and systems powered by artificial intelligence (AI).