FRANKFURT/STOCKHOLM (dpa-AFX) - Rheinmetall shares, which have recently been sold off by investors, are attempting a recovery on Monday. After lately hitting a one-year low near the 1,100 euro threshold, they gained 1.7 percent in early Xetra trading. Citigroup seized the moment, with the stock having lost approximately 45 percent of its value from its record high, to reinstate a 'Buy' recommendation.
Meanwhile, the sector environment remained mixed: among German defense stocks, only Hensoldt followed in Rheinmetall's wake, rising by one percent. Renk and TKMS traded in negative territory, tracking the broader market weakness. Citigroup also upgraded Saab to 'Neutral', though its shares fell by one percent in Stockholm.
Citigroup expert Charles Armitage believes that the recent price declines across the sector were largely driven by hopes for a peace agreement in Ukraine, alongside concerns regarding the financing of increased defense spending in Europe. While he considers both arguments understandable, he views them as exaggerated.
The war is currently seen as being in a stalemate. Following the recent ceasefire, Russia and Ukraine have once again subjected each other to massive air strikes. According to Russian reports, Ukraine launched heavy attacks on the Moscow region on Saturday night. Russia responded to the massive Ukrainian drone attacks during the night with counter-strikes.
Armitage continues to view Russia as a threat to Europe even in the event of the war in Ukraine ending. Sweden and Germany would then be among the few countries in Europe capable of increasing their borrowing to finance additional defense spending. Other countries are more financially constrained and would be forced to take less popular measures, such as tax hikes or budget cuts./tih/ag/nas
