The global demand for armaments, particularly drones, has significantly increased in recent years. The background for this is mainly the escalating geopolitical conflicts – such as the Russian invasion of Ukraine – as well as a general rearmament of many states in response to changing security situations. This development has considerable effects on the arms industry and offers new opportunities for investors.
Causes of Rising Demand
- Geopolitical Conflicts: Wars and regional tensions lead to an increased need for modern weapon systems, including drones.
- Technological Advancement: Drones are becoming increasingly capable and versatile – from reconnaissance to targeted attacks.
- Militarization of Armed Forces: Many countries are massively investing in their defense capabilities to prepare for new threat scenarios.
Impact on the Arms Industry
The order books of major arms companies are filled to capacity. The 100 largest manufacturers worldwide increased their revenue from arms sales in 2023 by 6.7 percent to a total of 632 billion US dollars. Companies from the USA and China, as well as European firms such as Airbus and Leonardo, are particularly benefiting. German companies like Rheinmetall are also experiencing revenue increases; Rheinmetall was able to increase its arms revenue in 2023 by one fifth.
Importance for Investors
The topic is highly relevant for investors:
- Stock Prices: The stock prices of leading arms companies have developed strongly positively since the beginning of the Ukraine war.
- Growing Interest in Technology Stocks: In addition to traditional weapons manufacturers, companies in the fields of sensors, robotics, and cyber-security are also benefiting.
- Government Funding: In many countries, additional funds are provided to strengthen defense capabilities.
Overview: Biggest Beneficiaries
| Country/Region | Company/Industry | Special Features/Examples |
|---|---|---|
| USA | Lockheed Martin, Raytheon | World leaders in drones & missiles |
| China | CETC, Norinco | Fast-growing exporters |
| Europe | Airbus, Leonardo, Rheinmetall | Focus on modern systems & sensors |
Conclusion
The rising demand for armaments – especially drones – reflects current security policy challenges. For investors, these developments offer attractive opportunities through rapidly rising stock prices and a broader diversification within the sector through innovative technology companies alongside traditional weapons manufacturers.