The switch of Rheinmetall to replace Kering in the EuroStoxx 50 marks a significant turning point for the European benchmark index and reflects current economic and geopolitical trends.
Background of the Index Switch
Rheinmetall, a leading German arms manufacturer, will officially be included in the EuroStoxx 50 starting June 23, 2025, while the French luxury goods manufacturer Kering is exiting the index. The decision is based on so-called “Fast-Entry” and “Fast-Exit” rules that allow for rapid adjustments of the index to changing market capitalizations. The changes will take effect after market close on June 20 and will be valid from the market opening on June 23.
Reasons for the Switch
- Share Price Gains of Rheinmetall: Since the beginning of the Russian invasion of Ukraine in February 2022, Rheinmetall has strongly benefited – in 2025 alone, the company recorded share price gains of around 200 percent.
- Increased Defense Spending: Western countries, especially Germany, are massively investing in defense technologies, resulting in increased demand for products and services from Rheinmetall.
- Market Capitalization: Due to the enormous price increases, Rheinmetall’s market value has risen significantly, while Kering has fallen behind due to weaker performance.
Significance for Investors
The entry of a defense company like Rheinmetall into one of the most important European indices is a signal for structural changes:
- Sectoral Shift: The EuroStoxx 50 now increasingly reflects sectors that are currently politically and economically relevant – particularly defense.
- Index-Tracking Funds: Many institutional investors align their portfolios with large indices like the EuroStoxx 50. The entry of new stocks leads to capital inflows into these shares.
- Psychological Impact: The inclusion signals market confidence in the growth potential of the company.
Impact on Other Indices
Numerous changes have also been made in the Stoxx Europe 600: Companies like Bilfinger are being newly added; others like Comet Holdings or Elekta are exiting. These developments reflect a dynamic landscape within European stock markets.
Summary
The replacement of Kering by Rheinmetall in the EuroStoxx 50 is more than just a technical index adjustment: it reflects current geopolitical tensions as well as rising investments in security and defense. For investors, this means new opportunities – but also a stronger weighting of defensive sectors within their portfolios.