Biggest rise in the Cac 40, Thales rose by more than 5% this Wednesday on the Paris Stock Exchange, to 119.45 euros, a gain of 60%, now, since the start of the year, the biggest rise in the flagship index, ahead of TotalEnergies (+10.5%) and Orange (+3.7%).
On a European scale, Rheinmetall took first place on the Stoxx 600 podium with a gain of more than 10%. The stock has jumped 130% since December 31. Like the French, this conglomerate listed on the Frankfurt Stock Exchange operates in the defense sector, with the manufacture of military equipment (land and air drones, electronic ship simulators, anti-mine systems, tanks, weapons, radars, ammunition, etc.) for more than half of its turnover. The other branch specializes in the production of automotive equipment (engine parts, pistons, cylinders, etc.).
“Moral Duty”
The sector is boosted this Wednesday by a new surge of tension between Russia and Ukraine, while Vladimir Putin announced this morning that he had signed a partial mobilization decree concerning some 300,000 reservists, in order to be able to fulfill the objectives of his ” special military operation in Ukraine, which he assured had not changed. In his address to the nation, the Russian president also declared his support for the annexation referendums that will be organized in the Ukrainian territories occupied by Moscow, in particular in the separatist regions of Donbass, saying that it is his ” moral duty to protect their inhabitants from neo-nazis in power in kyiv.
This new escalation seems to eliminate, at least in the very short term, any hypothesis of a ceasefire in Ukraine, which investors had considered a “risk” for the good performance of the values of defense actors on the stock market, indicates Alexander Wahl, analyst at Stifel. Across the Rhine, Rheinmetall had been even more particularly supported by Germany’s decision to set up a special fund of 100 billion euros for the modernization of the Bundeswehr, the country’s army, in addition to the objective of devote 2% of GDP each year to defence.
A recent excessive decline in the stock market
The announcement was made by German Chancellor Olaf Scholz in February and the funds were supposed to be available for use as early as this year, but faced with some delays in formalizing budget increases, thus damaging companies’ order books. related to the sector, the actions of the groups concerned had undergone releases, recalls Alexander Wahl. For Chloe Lemarie, analyst at Jefferies, the recent stock market correction has been more related to macroeconomic considerations. An excess revealed by the rebound of the day.
In addition to Thales and Rheinmetall, the manufacturer of the Rafale, Dassault Aviation, the British arms manufacturer BAE Systems, the Italian Leonardo (the only European subcontractor to operate a final assembly line for Lockheed Martin’s F-35) and the Swedish Saab, which develops fighter planes (“gripen”) and drones, also figured in the strongest progress of this Wednesday’s session in Europe.