As the three-year mark since the invasion of Ukraine approaches, the end of the war that has besieged the country seems closer than ever. The decision of the President of the United States, Donald Trump, to intervene fully to support his Russian counterpart, Vladimir Putin, while silencing the voice of the invaded country and the opinion of Europe, is shaping the negotiations. In these conditions of uncertainty, peace remains a possibility, and its consequences are still unknown.
Meanwhile, investors, always eager to anticipate political developments, are already trying to identify the first winners and losers (economically) of the conflict to improve their bets. However, experts recommend extreme caution when making decisions in a scenario where a ceasefire has not been signed, and there is no clarity on its conditions. While some conclusions can already be drawn from the Russian invasion in terms of investment and some hints about the stock market trajectory in Europe.
"In Europe, no one has benefited except for the arms manufacturing companies," says Josep Prats, manager of the Abante European Quality fund at the Abante Asesores management company. Just by looking at the evolution of these three years in the benchmark indices in Europe, such as the Stoxx Europe 600, a high presence of the defense sector can be found. Among the top ten companies in this list, which includes the 600 largest quoted groups in Europe, there are several defense giants and even an outlier, the British group Rolls-Royce, famous for its luxury vehicles and somewhat less known for also producing defense equipment. Its value has grown by 447.49%.
Leading the Stoxx Europe 600 during the conflict in Ukraine is Rheinmetall AG, whose market capitalization has skyrocketed by 904.92% since 2022. Prats from Abante values the "good tone" of the German company following the war in Ukraine, which is expected to continue with its production of tanks. "Beyond the end of the war in Ukraine, the underlying demand for arms will continue for a while," the expert assures.
In third place on the European list is the Italian Leonardo SPA, with a stock market appreciation of 468.97% in just three years, and in fourth place is the Swedish Saab AB-B, which includes technological solutions applicable in defense and civil areas: the company experienced a value increase of 456.36% in the years following the invasion of Ukraine. The military presence in the European index concludes with the fifth and sixth positions, occupied by Rolls-Royce Holdings and Konsberg Gruppen ASA; the latter with a revaluation of 447.49% over the three-year period.
Regarding the rise of companies specialized in arms and military equipment, Prats argues that, although "they are not very significant in the stock market, as they are small or medium-sized, they will continue to maintain the good performance they have shown during the war due to the increased defense investment by Europe."
Contrary to the widespread hypothesis that defense companies would deflate with the end of the war, experts take a different stance: bets on the defense sector remain as high, or even higher, than at the beginning of the war in Ukraine. This is explained by Beltrán de la Lastra, President and Chief Investment Officer of Panza Capital, who states that there is now "social and political acceptance that defense spending needs to increase, something that has not existed in the last 40 years." This is the investment thesis that the firm maintains in the face of prevailing uncertainty: defense spending will grow "regardless of whether there is peace or not."
If the Munich Security Conference has left any certainty, it is the joint increase in military spending by the countries gathered. Investment experts at Bankinter have already taken note of this in their forecasts. "Defense companies will continue to benefit, and we maintain a positive view on the sector," states a recent report from the entity, emphasizing both the defense spending threshold that NATO demands from member countries (2% of GDP) and the intentions of the Donald Trump administration to raise this threshold to 5%.
"Currently, none of the NATO countries would meet that target; in fact, many of them do not even meet the current 2% target, including Spain and Italy," Bankinter points out. They also justify that the performance of certain companies (including Rheinmetall, Leonardo, Thales, and Indra) positions them among their favorite values in the sector and integrates them into portfolios with defense assets. "We believe that the change occurring in the sector is structural and, therefore, significant growth is likely to continue in the coming years. Additionally, the sector is still trading at reasonable multiples considering the significant growth expected in the future," they detail in their January bulletin.
This outlook is also shared by S&P Global in their report European Defense Funding: What Are The Options?, where they highlight the efforts of European countries to increase their military spending and align with the U.S. "European governments are exploring joint financing options for defense, such as EU-backed bonds and other supranational issuances," they point out, estimating that individual country contributions will constitute 99.7% of NATO's military funding. All indications lead to the same conclusion: military spending in each country must increase. "Peace, which will be welcomed by all, should not be confused with a reduction in defense spending; they are two different things," Beltrán de la Lastra insists along these lines. Therefore, the defense sector remains a secure investment bet for the expert, who moves away from the major players and cites examples such as Babcock, Dassault Aviation, and again, Thales.
In the case of the first, the performance of this British company specializing in aircraft has been "phenomenal," according to the President of Panza Capital, who explains that in the last two years, until 2024, the share price doubled, and in the current year of 2025, it has accumulated another growth of 29%. Dassault and Thales also show strong returns, both involved in the production of combat aircraft. The figures indicate that Dassault's appreciation during the war in Ukraine was 105%, and Thales' was 121%.
Another useful piece of information is that after the Munich Security Conference, the Stoxx 600 Aerospace and Defense index, composed of the most important European companies in the military and aerospace sectors, saw its value surge by 4.2% to reach historic highs, supported by increases in some of its main companies, such as Rheinmetall. Within the European group, Spain is represented by Indra, which despite its governance fluctuations, has achieved a revaluation of 128.77% since the start of the Russian invasion of Ukraine, ranking as the sixth highest value in the Ibex 35 with the greatest increase in the past three years.
Having assessed the most direct economic effects, it remains to take note of another lesson from the conflict: self-sufficiency. Despite the continued need for gas and oil in Europe in the short and medium term, the Ukrainian conflict has made it clear that "Europe objectively needs to have energy self-sufficiency, and therefore, it must invest in clean energies" to avoid excessive dependence on Russia, as pointed out by Prats. Therefore, among the assessments, in a hypothetical case of peace, the expert indicates that "clean energies will continue to be a significant investment source if we want to remain less dependent."
And in the context of a situation of controlled inflation after a possible peace agreement, Abante raises its recommendations towards financial institutions: "Banks are the ones that best reflect the improvement in the risk profile of the economy," which is highly likely with the end of the conflict, highlighting the potential of European retail banking.