Vantage | Every day of war and their stock goes up, pockets bulge

We talked about the players, we talked about the stakeholders, we talked about the politics. Now, let’s talk about the benefits. We know it sounds like a paradox. This is, after all, a war so who can possibly benefit? The defence industry. Wars can lead to an increase in defence spending. The more prolonged and intense the conflict, the greater the demand. A government that is fighting a war will obviously spend more money. So, nations invest heavily in technology, in weaponry, and in infrastructure. Watch:

This heightened demand helps defence companies across the globe, and that causes stocks to rally. Take U.S. defence stocks for example. They have added $23 billion in market value since the war began. On Monday, Northrop Grumman soared by 12%, General Dynamics jumped 9%, Lockheed Martin gained 8% and RTX rallied 4%, and this is only expected to grow in the days ahead. Take Lockheed Martin, for example. This company makes the F-35 fighter jets being used by the Israel military. They also make Black Hawk helicopters. Northrop Grumman makes combat vehicles. Israel uses all these weapons and will need more in the future. The U.S. will be sending more weapons to Israel in the coming days, so the stocks of these companies are expected to rally. And this won’t be the first time this happens. Last year too, defence stocks got a huge boost when Russia invaded Ukraine. As of today, the US has spent over $40 billion in military aid to Ukraine, so the biggest beneficiary is the American defence sector and that is likely to be the case with this war too. This is one of the harshest realities of war. For some people, wars cost lives and for others, they drive value. For defence companies wars act as economic stimulus, they bolster sales, they fuel job creation and sometimes they also boost local economies. Now, of course, this does raise moral and ethical questions like: is this profiting from human suffering? More importantly: is this motivation to prolong a conflict? Plus, there is the investor dilemma: defence stocks are often called sin stocks, or warmonger investments. But the label here doesn’t matter, these stocks surge massively during war and that makes them very attractive for investors. Currently, the world is dealing with two wars - the Ukraine war, and now, the Israel-Hamas war. Defence spending was already on the rise this year. Europe has ramped up military sending, the highest since the cold war. Asian nations have also bumped spending. Defence budgets of Japan and South Korea grew by 7% in 2022, India’s defence budget was $81.4 billion in 2022, a rise of 6% from 2021. Currently, global military spending is at $2.24 trillion, which is 2.2% of the world’s GDP. Chances are it will only rise further in the coming days. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost_’s views._ Read all the  Latest News,  Trending News,  Cricket News,  Bollywood News, India News and  Entertainment News here. Follow us on  Facebook,  Twitter and  Instagram.