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The Age
29-06-2025
- Business
- The Age
In a world of conflict, the spoils are rich from gold and guns
The Stockholm International Peace Research Institute (SIPRI) estimated that global military expenditure hit a record $US2.7 trillion ($4.1 trillion) in 2024, an increase of 9.4 per cent in real terms from the previous year, and the steepest annual jump since the Cold War ended. 'If 5 per cent [of GDP] becomes baseline, defence stocks stop being cyclical – they become structural. And that changes everything.' Stephen Innes, SPI Asset Management SIPRI highlighted the 'guns or butter' cost to social programs from the rising spending on weaponry. 'As governments increasingly prioritise military security, often at the expense of other budget areas, the economic and social trade-offs could have significant effects on societies for years to come,' warned SIPRI researcher Xiao Liang. The big beneficiaries from this war trade are traditionally US defence giants, such as Northrop Grumman – maker of the B-2 stealth bombers and intercontinental ballistic missiles – which is now trading near multi-year highs. Virginia-based RTX, which makes the Javelin and Stinger missiles that were used heavily in the Ukraine war, has also hit record highs. But the changing nature of warfare, where computer-guided drones and new technology such as AI are coming to the fire, has thrown up some new winners. Shares of US tech group Palantir have soared more than 400 per cent in a year as the company cements its place in the US industrial military complex. And investors are also noticing the impact in Europe, where Germany's new government signalled a seismic shift in March, with plans to lift strict spending controls to create a €500 billion ($896 billion) fund for defence and security. It has had a massive impact on European stocks. Italy-based aerospace, defence and security firm Leonardo, German sensor technology company Hensoldt, and British aerospace and defence company Babcock International have seen their share prices more than double over the last year. Korea's Hanwha Aerospace is another EU beneficiary, and its share price has soared 200 per cent over the same period. Even Australia benefits, as shown by Hanwha recently acquiring a 9.9 per cent stake in local shipbuilder Austal, with plans to double its investment. Austal shares have tripled since last September, thanks to its contracts with the US Navy. ASX-listed DroneShield – a maker of anti-drone technology – has tripled since February. And right on cue, it announced a $61 million European military order on Wednesday for handheld detection and counter-drone systems. This one deal exceeds its entire revenue for 2024. Three ASX-listed defence ETFs (exchange-traded funds, which invest in defence stocks globally) from VanEck, Betashares and Global X are all up 50 per cent this year. 'Global defence has been one of the few equity segments that have outperformed the market this year. Flows into ASX-listed global defence ETFs have shot up since March,' VanEck's Jamie Hannah said. The surge in the performance of defence stocks has posed a conundrum for some ethical funds and investment mandates, which have generally precluded any military assets. But investors appear to be coming to the conclusion that Citi reached in 2022: 'Defence is likely to be increasingly seen as a necessity that facilitates ESG as an enterprise as well as maintaining peace, stability and other social goods.' In April, UBS Asset Management – which oversees $US1.8 trillion in investments – scrapped prohibitions that prevented its sustainable funds from investing in conventional military weapons manufacturers. Exclusions still apply to more controversial weaponry such as cluster munitions. Hannah says VanEck already screens out these more controversial manufacturers from its ETF. 'It's very much an area where you need to consider what you're investing in,' Hannah said. Meanwhile, the only controversy over the ultimate defensive asset, gold, is whether it has peaked after a spectacular run over the past year to a record high of $US3500 an ounce in April. This month, a European Central Bank report confirmed that its soaring price, along with bullion buying by central banks, means gold is currently the second-biggest reserve holding by central banks behind the US dollar. Citi highlighted the extraordinary rush to gold with a report saying 0.5 per cent of global GDP was being spent on gold – the most in 50 years of data. And central banks have not been the only buyers. This month, VanEck noted that Australia's most recent export figures included $11 billion in 'non-monetary' gold exports to the US – which is gold acquired by private buyers, not reserve banks, for their foreign exchange reserves. 'This volume of gold exports for the quarter is more than the total non-monetary gold we have shipped to the USA in the last four years, and we think this could reflect a massive increase in demand from investors due to a loss of faith in [the US dollar] and US Treasuries,' VanEck's Cameron McCormack said. While some are getting squeamish after this year's 27 per cent gain for the precious metal, others are expecting its golden run to continue. Wall Street giant Goldman Sachs predicts gold will climb to $US3700 a troy ounce by the end of the year, from about $US3330 currently, as central banks keep buying tonnes of it every month. It could rise even further if investors use bullion as a safe space ahead of interest rate cuts and amid rising recession concerns. 'In the event of a recession, Goldman Sachs Research forecasts that gold could rise to as much as $US3880 a troy ounce,' the investment bank says.
Sydney Morning Herald
29-06-2025
- Business
- Sydney Morning Herald
In a world of conflict, the spoils are rich from gold and guns
The Stockholm International Peace Research Institute (SIPRI) estimated that global military expenditure hit a record $US2.7 trillion ($4.1 trillion) in 2024, an increase of 9.4 per cent in real terms from the previous year, and the steepest annual jump since the Cold War ended. 'If 5 per cent [of GDP] becomes baseline, defence stocks stop being cyclical – they become structural. And that changes everything.' Stephen Innes, SPI Asset Management SIPRI highlighted the 'guns or butter' cost to social programs from the rising spending on weaponry. 'As governments increasingly prioritise military security, often at the expense of other budget areas, the economic and social trade-offs could have significant effects on societies for years to come,' warned SIPRI researcher Xiao Liang. The big beneficiaries from this war trade are traditionally US defence giants, such as Northrop Grumman – maker of the B-2 stealth bombers and intercontinental ballistic missiles – which is now trading near multi-year highs. Virginia-based RTX, which makes the Javelin and Stinger missiles that were used heavily in the Ukraine war, has also hit record highs. But the changing nature of warfare, where computer-guided drones and new technology such as AI are coming to the fire, has thrown up some new winners. Shares of US tech group Palantir have soared more than 400 per cent in a year as the company cements its place in the US industrial military complex. And investors are also noticing the impact in Europe, where Germany's new government signalled a seismic shift in March, with plans to lift strict spending controls to create a €500 billion ($896 billion) fund for defence and security. It has had a massive impact on European stocks. Italy-based aerospace, defence and security firm Leonardo, German sensor technology company Hensoldt, and British aerospace and defence company Babcock International have seen their share prices more than double over the last year. Korea's Hanwha Aerospace is another EU beneficiary, and its share price has soared 200 per cent over the same period. Even Australia benefits, as shown by Hanwha recently acquiring a 9.9 per cent stake in local shipbuilder Austal, with plans to double its investment. Austal shares have tripled since last September, thanks to its contracts with the US Navy. ASX-listed DroneShield – a maker of anti-drone technology – has tripled since February. And right on cue, it announced a $61 million European military order on Wednesday for handheld detection and counter-drone systems. This one deal exceeds its entire revenue for 2024. Three ASX-listed defence ETFs (exchange-traded funds, which invest in defence stocks globally) from VanEck, Betashares and Global X are all up 50 per cent this year. 'Global defence has been one of the few equity segments that have outperformed the market this year. Flows into ASX-listed global defence ETFs have shot up since March,' VanEck's Jamie Hannah said. The surge in the performance of defence stocks has posed a conundrum for some ethical funds and investment mandates, which have generally precluded any military assets. But investors appear to be coming to the conclusion that Citi reached in 2022: 'Defence is likely to be increasingly seen as a necessity that facilitates ESG as an enterprise as well as maintaining peace, stability and other social goods.' In April, UBS Asset Management – which oversees $US1.8 trillion in investments – scrapped prohibitions that prevented its sustainable funds from investing in conventional military weapons manufacturers. Exclusions still apply to more controversial weaponry such as cluster munitions. Hannah says VanEck already screens out these more controversial manufacturers from its ETF. 'It's very much an area where you need to consider what you're investing in,' Hannah said. Meanwhile, the only controversy over the ultimate defensive asset, gold, is whether it has peaked after a spectacular run over the past year to a record high of $US3500 an ounce in April. This month, a European Central Bank report confirmed that its soaring price, along with bullion buying by central banks, means gold is currently the second-biggest reserve holding by central banks behind the US dollar. Citi highlighted the extraordinary rush to gold with a report saying 0.5 per cent of global GDP was being spent on gold – the most in 50 years of data. And central banks have not been the only buyers. This month, VanEck noted that Australia's most recent export figures included $11 billion in 'non-monetary' gold exports to the US – which is gold acquired by private buyers, not reserve banks, for their foreign exchange reserves. 'This volume of gold exports for the quarter is more than the total non-monetary gold we have shipped to the USA in the last four years, and we think this could reflect a massive increase in demand from investors due to a loss of faith in [the US dollar] and US Treasuries,' VanEck's Cameron McCormack said. While some are getting squeamish after this year's 27 per cent gain for the precious metal, others are expecting its golden run to continue. Wall Street giant Goldman Sachs predicts gold will climb to $US3700 a troy ounce by the end of the year, from about $US3330 currently, as central banks keep buying tonnes of it every month. It could rise even further if investors use bullion as a safe space ahead of interest rate cuts and amid rising recession concerns. 'In the event of a recession, Goldman Sachs Research forecasts that gold could rise to as much as $US3880 a troy ounce,' the investment bank says.
Kyodo News
05-05-2025
- Business
- Kyodo News
Military spending in 2024 rises unprecedented 9.4% to $2.72 trillion
KYODO NEWS - Apr 28, 2025 - 12:22 | All, World Global military expenditures in 2024 rose 9.4 percent from the year before to a record $2.72 trillion, an international security think tank said Monday, logging the steepest hike since it began compiling the data in 1988. The figure climbed for the 10th consecutive year, with recent increases reflecting Russia's full-scale war on Ukraine that began in February 2022 and heightened tensions in the Middle East, the Stockholm International Peace Research Institute said. "Over 100 countries around the world raised their military spending in 2024. As governments increasingly prioritize military security, often at the expense of other budget areas, the economic and social trade-offs could have significant effects on societies for years to come," said Xiao Liang, researcher at the institute's Military Expenditure and Arms Production Program, in a statement. By country, the United States topped the list with outlays of $997 billion, up 5.7 percent, while China raised its spending by 7.0 percent to an estimated $314 billion, with the two countries accounting for nearly half of the global total. Russia, Germany and India followed behind the two superpowers. Russia boosted spending by 38 percent to an estimated $149 billion, double the level in 2015 but the actual amount is likely to be higher as part of its expenditure was marked as classified in 2024. Outlays by Ukraine, ranking eighth, grew 2.9 percent to $64.7 billion. The figure represents 34 percent of its gross domestic product, the largest share among all countries in 2024, it said. In Asia, China's spending rose for the 30th straight year, accounting for 50 percent of all military spending in Asia and Oceania. Japan's military spending rose 21 percent to $55.3 billion, the largest annual increase since 1952, and comprised 1.4 percent of the country's GDP, the highest ratio since 1958. The country placed 10th in the world ranking, the same as the previous year. "Major military spenders in the Asia-Pacific region are investing increasing resources into advanced military capabilities," said Nan Tian, another SIPRI researcher. "With several unresolved disputes and mounting tensions, these investments risk sending the regions into a dangerous arms-race spiral." Israel's military expenditure surged by 65 percent to $46.5 billion, climbing to 12th from 14th the previous year, as it continued to attack Gaza and was engaged in conflict with the Hezbollah militant group in southern Lebanon. Related coverage: North Korea confirms troop deployment to Russia under bilateral pact Japan defense vessels stop at China-funded naval base in Cambodia Japan to spend 1.8% of GDP on defense in 2025, 2% target in sight
American Military News
30-04-2025
- Business
- American Military News
Global military spending increases at highest rate since Cold War: Report
A new report shows that global military spending increased by 9.4% from 2023 to 2024, representing the highest increase in military spending since the Cold War as the war between Russia and Ukraine and the war between Israel and Hamas continues amid rising tension across the globe. According to the Stockholm International Peace Research Institute's new study, world military spending increased by roughly 9.4% in 2024 to $2718 billion, marking the '10th year of consecutive rises' and the highest increase in spending since 1988. 'Military spending increased in all world regions, with particularly rapid growth in both Europe and the Middle East,' the Stockholm International Peace Research Institute said. 'The top five military spenders—the United States, China, Russia, Germany and India—accounted for 60 per cent of the global total, with combined spending of $1635 billion.' According to the study, each of the world's top 15 spenders in 2024 increased their military spending, while the 'global military burden' increased to 2.5% of global gross domestic product in 2024. 'Over 100 countries around the world raised their military spending in 2024,' Xiao Liang, a Stockholm International Peace Research Institute researcher, said. 'As governments increasingly prioritize military security, often at the expense of other budget areas, the economic and social trade-offs could have significant effects on societies for years to come.' READ MORE: Video: Pentagon cuts $5.1 billion in 'wasteful spending' in new wave of DOGE cuts The report indicated that in addition to the increased global military spending in 2024, many nations have 'committed to raising military spending,' which is expected to 'lead to further global increases in the coming years.' According to the report, the United States was the biggest military spender in 2024, with nearly $1 trillion in military spending, while China was the second highest military spender, with roughly $314 billion in military spending. The Stockholm International Peace Research Institute noted that China increased military spending by 7% in 2024, marking the country's 30th consecutive increase in military spending and maintaining 'the largest unbroken streak recorded' in the research institute's database. The Stockholm International Peace Research Institute's study showed that Russia's military spending increased by at least 38% in 2024; however, the research institute estimated that Russia's military spending was likely higher since it supplements military spending from other sources. The study also showed that Germany's military spending increased by 28%, Romania's spending increased by 43%, the Netherlands' spending increased by 35%, Sweden's spending increased by 34%, the Czech Republic's spending increased by 32%, Poland's spending increased by 31%, and Denmark's spending increased by 20%. Additionally, Norway increased military spending by 17%, Finland increased spending by 16%, Turkey increased spending by 12%, and Greece increased spending by 11%.
Newsweek
30-04-2025
- Business
- Newsweek
Map Shows Nations Raising Military Spending As Global Tensions Escalate
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Newsweek has created a map to show how much money countries around the world spent on defense, as global military expenditure surged to an all-time high of reaching $2.718 trillion. This marks a 9.4 percent increase from 2023—the steepest annual rise since the end of the Cold War, according to new data released by the Stockholm International Peace Research Institute (SIPRI). The sharpest rises occurred in Europe, the Middle East, and Asia, driven largely by ongoing wars in Ukraine and Gaza, as well as escalating tensions in East Asia. Why It Matters SIPRI's findings illustrate how military investments are being reprioritized globally amid security crises. The increase marks the tenth consecutive year of growth and comes amid record inflation and stagnant humanitarian funding in many regions. The increases raise questions about long-term economic trade-offs and the future stability of international relations, considering that more resources are being funneled toward defense at the expense of other public spending areas. What to Know The United States remained the dominant military power with spending of $997 billion—accounting for 37 percent of the global total and 66 percent of NATO's collective $1.506 trillion expenditure. China spent $314 billion, up seven percent from the previous year, while Russia increased its defense budget by 38 percent to $149 billion. Germany became Europe's top military spender for the first time since reunification, reaching $88.5 billion—a 28 percent jump. Poland increased its budget by 31 percent to $38 billion. Ukraine's spending grew to $64.7 billion, 34 percent of its GDP, the highest burden globally. Israel posted the largest proportional increase worldwide, with its military expenditure rising 65 percent to $46.5 billion in response to war in Gaza and clashes with Hezbollah. Its defense budget amounted to 8.8 percent of GDP, second only to Ukraine. Saudi Arabia remained the top Middle Eastern spender at $80.3 billion, with modest year-on-year growth of 1.5 percent. Iran, however, saw a 10 percent decrease to $7.9 billion, constrained by international sanctions. Among Asian nations, Japan's defense budget rose 21 percent to $55.3 billion—the largest increase since 1952. India's spending reached $86.1 billion, while Taiwan increased its defense budget to $16.5 billion. What People Are Saying Xiao Liang, a researcher at SIPRI said: "As governments increasingly prioritize military security, often at the expense of other budget areas, the economic and social trade-offs could have significant effects on societies for years to come." What Happens Next With 18 of NATO's 32 members now meeting the alliance's 2 percent GDP defense target—up from 11 in 2023—the bloc is expected to continue ramping up military investment amid strategic uncertainties and political shifts. European NATO members alone spent $454 billion last year, spurred by concerns over Russia and potential U.S. disengagement. Meanwhile, countries like Japan, Germany, and Sweden, which joined NATO in 2024, are signaling long-term increases in military budgets. SIPRI analysts warn that unless there is a political shift toward diplomacy and peacebuilding, the global trend of rising military spending is likely to continue into 2025 and beyond.
