Euronext, Europe’s biggest stock exchange, has rolled out plans to help defense companies get the money they need to grow. This move comes as European nations rush to beef up their military capabilities in response to growing global tensions and the ongoing conflict in Ukraine.
The exchange operator announced Tuesday it will create special indexes tracking defense companies and launch defense-focused investment products. These tools aim to connect defense firms with investors looking to put money into this expanding sector.
“The European defense industry needs substantial investment to meet the challenges of today’s geopolitical landscape,” said Stéphane Boujnah, CEO of Euronext. “Our initiative provides the necessary market infrastructure to support this critical sector.”
Defense spending across Europe has jumped significantly since Russia’s invasion of Ukraine in 2022. NATO members have pledged to spend at least 2% of their GDP on defense, but many still fall short of this target. The European Commission estimates the continent needs to invest an additional €500 billion over the next decade to address defense gaps.
Euronext’s plan includes several key elements set to launch in early 2025. The exchange will create specialized market segments for defense companies, making them more visible to potential investors. It will also develop new investment products targeting the defense industry and establish a dedicated team to help defense companies navigate capital markets.
Industry experts view this initiative as a response to changing attitudes toward defense investments. Historically, many European investors avoided defense stocks due to ethical concerns. But Russia’s actions in Ukraine have shifted perspectives, with defense now increasingly seen as essential for European security.
“We’re witnessing a fundamental change in how investors view defense companies,” said Pierre Moscovici, former European Commissioner for Economic Affairs. “What was once considered controversial is now recognized as necessary for protecting European values and sovereignty.”
The plan has received backing from several European governments, including France, Italy, and the Netherlands. These countries host major defense contractors who stand to benefit from increased investment flows.
European defense firms have traditionally relied heavily on government contracts, but many now seek private investment to fund research and development of advanced technologies. Areas such as cybersecurity, autonomous systems, and space-based defense need substantial capital to compete with American and Chinese rivals.
Small and medium-sized defense companies may benefit most from Euronext’s initiative. These firms often struggle to access funding despite offering innovative solutions. By creating dedicated investment channels, Euronext hopes to unlock capital for these smaller players.
“This is about more than just channeling money to large defense contractors,” explained Guillaume Faury, CEO of Airbus. “It’s about building a robust defense ecosystem that includes innovative startups and specialized suppliers.”
Market analysts predict Euronext’s move could trigger similar initiatives from other European exchanges. London Stock Exchange and Deutsche Börse have already expressed interest in expanding their services for defense companies.
The announcement comes amid broader efforts to strengthen European defense capabilities. The European Defense Fund, established in 2021, has allocated €8 billion for collaborative defense research and development projects. However, industry leaders argue that much more private investment is needed.
Some ethical investors remain cautious about defense stocks despite the changing political climate. Large European pension funds continue to debate whether defense investments align with their ESG (Environmental, Social, and Governance) criteria.
“We need to distinguish between defensive capabilities that protect democratic values and controversial weapons systems,” noted Margarita Tsoutsoura, Professor of Finance at Cornell University. “Investors are becoming more nuanced in their approach to defense investments.”
Euronext’s defense initiative reflects a broader trend of financial markets adapting to geopolitical realities. As Europe works to strengthen its strategic autonomy, the financial sector appears increasingly willing to support this shift.
The success of Euronext’s plan will ultimately depend on investor appetite for defense stocks. Early signs suggest growing interest, with European defense
