事实上，自大选结果出炉以来，国防股的表现一直落后于市场。① Wall Street Investment Bank analyst Bernstein said that Trump's return to the White House or bucked the trend; ② Analyst Douglas Harned believes that Trump's claims on nuclear deterrence, missile defense, and improving space capabilities will benefit defense contractors; ③ Although new government departments may cut expenses, Harned believes this is still unknown, and the increase in export demand is a positive factor.
Financial Services Association, November 26 (Editor Zhou Ziyi) Analysts at Wall Street investment bank Bernstein (Bernstein) said in a report on Monday (November 25) that with President-elect Trump's return to the White House, US defense stocks may rise against the trend, and investors have reason to be optimistic about US defense contractors' stocks.
Bernstein analyst Douglas Harned believes that Trump will maintain a strong military posture like he did during his first term while avoiding global confrontation. Harned also pointed out that Trump has also emphasized nuclear deterrence, missile defense, and improving space capabilities many times.
In fact, defense stocks have lagged behind the market since the election results came out.
Because of previous reports, Trump's newly established government efficiency department, led by Tesla CEO and SpaceX founder Elon Musk, may wave the “first blow” to cut spending on military giants.
However, Harned believes that until now Elon Musk has not issued a statement saying that large military companies are facing any major problems, so he is skeptical about whether Musk will drastically reduce the costs of military companies, and that Musk's goals should be related to simplifying contracts and encouraging more commercial competition.
Recently, Trump announced the nomination of Russ Vought (Russ Vought) as Director of the Office of Administration and Budget, which may also indicate spending cuts. Walter is one of the co-authors of Trump's campaign manifesto “Project 2025 (Project 2025)” for his second term. He served as Director of the Office of Administration and Budget during Trump's first term.
Despite expectations that cuts will begin, Harned still believes that defense stocks will rise against the trend. He pointed out that looking back at Trump's first year as president, defense stocks had a round of gains in 2017, partly because corporate tax cuts during Trump's previous term boosted the stock market.
Harned also said that although corporate taxes have not been cut this time, export demand is unique this time around, which is a positive factor. Even if the tension in Ukraine abates, US military manufacturers can benefit from increased demand in Europe.
