Defense stocks surge as global tensions drive military spending higher

Global defense stocks have experienced a significant rally from January to September, propelled by heightened military spending and major international arms agreements. This surge reflects a worldwide reassessment of security needs, with European nations in particular accelerating defense investments in response to the ongoing conflict in Ukraine and evolving US foreign policy under the Trump administration.

Turkish Defense Firms Shine in Global Rankings

Leading the impressive performance, Turkish defense giant Aselsan delivered a remarkable 196.6% return to its investors, solidifying its position as a top-tier global player. The company also achieved a historic milestone by becoming the first firm on Türkiye's BIST 100 index to surpass a market valuation of 1 trillion Turkish Lira. This performance is attributed to its focus on high-value technologies like AESA radar, electronic warfare systems, and AI-powered solutions, which are increasingly in demand.

Major Deals and Strategic Shifts

The period was marked by several landmark contracts that boosted investor confidence. Lockheed Martin secured a historic $9.8 billion contract from the US Army for Patriot missiles. Internationally, a major joint venture was formed between Italy's Leonardo and Türkiye's Baykar, establishing "LBA Systems." These developments, coupled with NATO's commitment to raise defense spending to 5% of GDP by 2035, have created a fertile environment for the entire defense sector's growth.

A Sector-Wide Bullish Trend

The stock market boom was not isolated. South Korea’s Hanwha Aerospace saw a 239% return, while Germany’s Rheinmetall followed with 221.9%. Other major players like Sweden’s Saab, the UK’s BAE Systems, and Rolls-Royce also posted substantial gains. This trend underscores a strategic pivot by global investors towards defense technology developers, moving beyond traditional manufacturers to firms that produce transformative, high value-added products.