Report of assassination attempt brings Europe's thriving defense stocks into focus

By Steve Goldstein

CNN said Germany foiled attempt on Rheinmetall CEO

That's one way to get attention.

A CNN report that Germany, with the help of U.S. intelligence, foiled an assassination attempt on the chief executive of an arms manufacturer helps bring the surging stock-market gains of the European defense sector into focus.

The report said that Russia planned to assassinate Armin Papperger, the chief executive of Rheinmetall, which has been producing artillery shells and military vehicles for Ukraine. German government officials have expressed their outrage over the reported attempt.

Rheinmetall shares (XE:RHM) dipped on Friday, but the stock has surged 78% this year.

And that's hardly the only defense stock that's thrived, as European countries boost defense spending the wake of Russia's war against Ukraine. Polish helmet maker Lubawa (PL:LBW) has gained 75%. Sweden's Saab (SE:SAAB.B) has surged 73%. Italy's Leonardo (IT:LDO) has soared 54%, QinetiQ (UK:QQ) has gained 52% and Avon Protection (UK:AVON) has soared 50%.

Shares of Kongsberg Gruppen (NO:KOG) rallied on Wednesday, and its stock has doubled this year, as the Norwegian maker of defense systems and marine equipment said it benefited both from increased defense spending and the green energy transition.

The defense-sector gains are much higher than that of the broader Stoxx Europe 600 XX:SXXP, which is up 9%.

Analysts at Stifel said Rheinmetall on Thursday said it's more optimistic on orders, and expects a backlog at the end of the fiscal year of more than EUR60 billion. "We believe the better prospects mainly reflect higher demand for air defence systems and trucks," they said.

-Steve Goldstein

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07-12-24 0610ET

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