Why Trump’s election will not tank European defence stocks

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Europe still has decades of under-investment in security to address

The election of Donald Trump should, on the face of it, mean a direct hit for the European defence sector. The president-elect has never been a fan of Nato, grumbling that the US pays too much, and he wants to broker a speedy end to the war in Ukraine. But investors appear unfazed. Share prices of big European defence groups continue to climb following last week’s US election. That is less counterintuitive than it sounds.

Andrius Kubilius, the former Lithuanian prime minister, said in last week’s hearing that he wanted to create “a true single market for defence”. Nato’s European members are also increasing their spend. This year, 23 of 32 members are expected to meet or exceed the 2 per cent of GDP target; together, European allies and Canada will spend a combined 2.02 per cent of GDP, up from 1.43 per cent a decade ago. US defence spending will not entirely be out of reach, either.

 

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Belgique Dernières Nouvelles, Belgique Actualités