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 Analysts at Wall Street investment bank Bernstein stated that Trump's return to the White House could lead to a counter trend increase in usa defense stocks; ② Analyst Douglas Harned believes that Trump's remarks on nuclear deterrence, missile defense, and enhancing space capabilities will be bullish for defense contractors; ③ Although new government departments may cut spending, Harned considers this still uncertain, and the increase in export demand is a positive factor.
According to a report on November 26 by Caixin Network (edited by Zhou Ziyi), analysts at Wall Street investment bank Bernstein stated on Monday (November 25) that with President-elect Trump's return to the White House, usa defense stocks may welcome a counter trend rise, providing investors reason to be optimistic about usa defense contractors' stocks.
Bernstein analyst Douglas Harned believes that Trump will maintain a strong military posture, similar to his first term, while avoiding global confrontation. Harned also pointed out that Trump has repeatedly emphasized nuclear deterrence, missile defense, and enhancing space capabilities.
In fact, since the election results were announced, the performance of defense stocks has lagged behind the market.
This is because earlier reports indicated that Trump's newly established government efficiency department, led by Tesla CEO and SpaceX founder Elon Musk, might make the "first cut" to defense giants' spending.
However, Harned believes that so far, Elon Musk has not made any statements suggesting that large military industry companies face any significant problems, thus he is skeptical about whether Musk would significantly reduce military companies' costs and stated that Musk's goals should be related to simplifying contracts and encouraging more business competition.
Recently, Trump announced the nomination of Russell Vought as the Director of the Office of Management and Budget, which may also indicate spending cuts. Vought is one of the co-authors of Trump's second term campaign declaration "Project 2025" and previously served as the Director of the Office of Management and Budget in Trump's first term.
Despite expectations for spending cuts to begin, Harned still believes that defense stocks will increase against the trend. He noted that looking back at the first year of Trump's presidency, defense stocks had a surge in 2017, partly because the corporate tax cuts during Trump’s previous term boosted the stock market.
Harned also stated that although the corporate tax has not been reduced this time, the export demand is unique, which is a positive factor. Even if the tensions in Ukraine have eased, usa's military manufacturers can benefit from increased demand in europe.
