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We anticipate that the rising pattern in European defense stocks will persist for now.

Rady Williams, who leads thematic and strategic index product management at Stoxx, examined the reasons behind the rising stock values of European defense companies in a recent WEEKLY BIZ interview. Stoxx is a firm that calculates and oversees representative European stock indices, including the Stoxx Europe 600 Index. In March, Stoxx introduced the ‘Stoxx Europe Total Market Defense Capt Index’ in collaboration with Amundi, Europe’s top asset management company, which features major European defense firms such as Rheinmetall, Leonardo, and BAE Systems.

**- What is causing the increase in European defense stocks?**

Following Russia’s invasion of Ukraine in 2022, European defense stocks have seen a steady increase. Nevertheless, in 2025, with President Donald Trump starting his second term, his continued assertion that ‘Europe should not depend on U.S. defense assistance that has been in place since 1945,’ led to a more rapid rise in stock prices. The European Commission (EC) also introduced a financial package in March, enabling member states to allocate over 800 billion euros toward enhancing defense capabilities and military research.

**- In what ways are these changes affecting the prices of defense stocks?**

In the face of quickly evolving security situations, the move toward higher defense expenditures has significantly aided European defense firms. Investors focusing on European stocks are demonstrating strong interest in defense-related areas, driven by hopes for future expansion. This is resulting in greater demand for associated financial instruments and substantial capital entering the market.

**- Defense stocks in Europe have already seen a substantial increase since 2022. Is this upward movement likely to persist?**

The stock of German defense firm Rheinmetall rose sufficiently to be added to the Stoxx 50 Index, a major European indicator. In addition to the EC’s financial package, NATO countries have also committed to increasing annual defense spending to 5% of GDP by 2035. The positive movement in European defense stocks is very sustainable, fueled by long-term government investment plans. This increase in capital spending will fuel growth within the defense industry for many years ahead.

**- What additional investment opportunities does the defense industry present?**

A network of defense firms creates a wide-ranging environment, enabling investors to create approaches from various angles. Although some investors choose to concentrate on conventional defense and military areas, others seek wider variety, covering aerospace and space technology as well.

**- Can innovations in technology also increase the attractiveness of investments in the defense industry?**

Recently, space-based systems have been integrated into essential domains such as military communications, monitoring, and positioning, expanding the reach of the defense industry. Advances in these areas will be crucial in fostering innovation throughout the entire defense sector.