Reference News Network August 13 report: The Spanish website "El Economista" published an article on August 11, titled "The 'Summer Storm' is shaking the European defense industry: Uncertainty and unmet expectations are putting pressure on the industry," by Julio de Miguel Esquiva, as follows:

With increasing uncertainty in European armaments, the defense industry is suffering major setbacks. A series of "perfect storm" events are hitting European defense companies, casting doubt on their stock market potential.

The stock price of Rheinmetall AG, Germany's largest defense company and a favorite in this year's stock market, fell by 4% at the opening on the 11th. Other European countries' companies also followed suit: Leonardo of Italy fell 2%, Indra of Spain fell 1.5% (slightly rebounding later), BAE Systems of the UK fell 1%, Thales of France fell 1.5%, and Saab Group of Sweden fell 2%.

The reasons for the decline include Germany's arms embargo on Israel, the expected meeting between Russian President Putin and US President Trump in Alaska on the issue of Ukraine, and some companies failing to meet exaggerated profit expectations.

In simpler terms: Investors had hoped to make more profits in an increasingly belligerent era, but so far, the defense companies have not made that much money.

Germany is the second-largest arms supplier to Israel, and this country is also an important source of income for German industry.

According to the Stockholm International Peace Research Institute, 13% of Germany's arms exports between 2022 and 2024 went to Israel, making Israel a strategic partner for the German defense industry.

Due to the Netanyahu government's plan to fully occupy Gaza, the German government has decided to suspend arms exports to Israel until further notice. This humanitarian crisis, which has already caused over 61,000 deaths, severe destruction of various facilities, and the worst famine in the Middle East, is shaking public opinion in Europe.

However, this plan, aimed at stopping the conflict and alleviating the human tragedy, turns out to be a "bad deal" for contracts between German weapon manufacturers and Israel.

Another blow to the military industry comes from across the Atlantic. Putin and Trump are scheduled to hold a summit in Alaska on the 15th, marking the first meeting between the two leaders since Trump's return to the White House. There is high anticipation for a ceasefire agreement between Russia and Ukraine.

But investors are worried about the worst-case scenario. Abandoning the agreements reached by Europe could harm the European Commission's ambitions in armaments, causing the largest customer of European defense companies to "de-militarize," and even leading to increased procurement of weapons from American companies at a time when European companies hope to lead the re-armament process in Europe.

High income and profit expectations for the second quarter remain a fantasy. Several companies, including Rheinmetall, failed to meet market expectations, and it is expected that the defense industry will need more time than anticipated to generate significant revenue from Europe's re-armament plans.

This does not mean that countries will stop buying weapons. Most European intelligence agencies estimate that even if Russia and Ukraine sign a peace agreement, the Baltic region faces risks in the coming years. All NATO member states have committed to increasing military spending through their own strength, trying to reduce dependence on the United States. A recent example includes Germany's plan to produce 3,500 "Leopard"-2 main battle tanks and "Boxer" infantry fighting vehicles, hoping to deter Russia.

Profit for the European defense industry seems to be secured in the coming quarters. However, the stock market movement on the 11th has forced caution. Market forecasts suggest that the industry's market value doubled within less than six months, but profits may fall below expectations in the near future. (Translated by Wang Meng)

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