Three years have passed since Russia's war of invasion began against Ukraine. On the stock markets, it also marked the start of an extremely strong price surge for European defense stocks. There are examples such as Saab, whose share has risen 450 percent in three years, or for that matter German Rheinmetall, up over 700 percent.
During these three years, investors and asset managers have also approached the sector and in several cases chosen to change their previous stance based on the ESG sustainability metric.
Has changed stance
First out to change its policy was major bank SEB, which previously excluded companies with more than 5 percent of their business in the defense sector. Swedbank Robur Funds did not have a general ban on investing in, for example, Saab, but also chose in 2022 to invest in Saab and is now the company's third largest owner.
Even Handelsbanken did not have a general ban against the defense industry, but in January, shares in Saab were premiere-purchased in one of the bank's Sweden funds. Recently, pension giant AMF also opened up in an interview with Dagens industri to become a direct owner within the defense sector.
We see that more and more are now switching. I think this is happening throughout Europe and the sector is getting increased interest, regardless of what product or service, says Anders Bruzelius, fund manager at Tellus Fonder about the price surge.
The company has historically not had any restrictions against the defense industry and chose in connection with the Ukraine war to invest in a range of defense stocks.
Since then, we have discovered during the journey that it is a hugely interesting sector and we believe in this trend, but unfortunately. I would have liked to invest in schools and care instead, but it's not that way now.
The question is raised by several customers
Norwegian asset manager Storebrand has simultaneously chosen to exclude defense companies in some of its funds, but not entirely.
We have a range of different customers and invest in a multitude of different markets. Therefore, we are responsive to our customers' needs, says Bård Bringedal, equity chief for Storebrand Asset Management.
According to Bård Bringedal, the question has been raised by some Swedish customers to simply open up for such investments:
It is fully natural given the geopolitical situation, including Russia's invasion and Sweden's NATO membership, and we listen to our customers, he says, but emphasizes that no decision has been made.
