Modern Defense

Recent geopolitical events have sharply focused the investment spotlight on traditional defence stocks and cybersecurity, driven by several key factors:

• Increased Demand for Traditional Defence: Companies involved in producing military hardware, vehicles, and weaponry are seeing heightened demand due to global security concerns. This surge is directly linked to geopolitical tensions, necessitating robust defence capabilities.
• NATO’s Spending Commitment: NATO countries have committed to increasing their defence budgets to at least 2% of their GDP. This commitment is a clear response to the need for stronger military readiness amid evolving global threats, underscoring the potential growth in traditional defence investments.
• Surge in Cybersecurity Investments: The digital aspect of national security has taken centre stage, with cyber threats growing in sophistication and frequency. This is expected to lead to a significant increase in spending on cybersecurity solutions, aiming to protect national security, critical infrastructure, and private sector data from cyberattacks.
• Proactive Measures Against Digital Vulnerabilities: The investment in cybersecurity is not only reactive but also a proactive strategy to future-proof against emerging digital threats. 

Whilst none of the points above is new, we are just at the beginning of an investment cycle, driven by the imperative to enhance both traditional military capabilities and digital defences. 

The commitment of NATO countries to bolster defence spending, combined with the urgent need for advanced cybersecurity measures, presents this theme as a compelling opportunity for investors, in particular in the context of current geopolitical challenges.