LIVE MARKETS-Taxing excess defence profits?
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TAXING EXCESS DEFENCE PROFITS?
The record-breaking surge in Rheinmetall
For those who didn't notice, on that day, Rheinmetall fell by 7.5% at one point, briefly on course for its biggest daily drop since 2022, while a broader aerospace and defence gauge .SXPARO also felt pain, declining as much as 2%.
The article mentions three suggestions provided by the European Parliament Research Service at the request of Hannah Neumann of Germany's Green Party: an excess profit tax, the state taking a stake in defence companies, and contract models that prevent excessive profits.
But how material is this risk?
Jefferies has looked into it to conclude that investors should not be overly worried.
Analyst Chloe Lemarie at the U.S. bank downplays the risk of significant changes, arguing that the surge in revenue and profit for European defence firms stems from chronic underfunding and the crucial need to reinvest in the continent's industrial base. She also dismisses the idea of state ownership as "flawed", suggesting it would have hampered Rheinmetall's strategic agility and its capacity to consolidate the sector.
"Overall, we don’t believe the majority of the SPD party shares the views given in the article. This should greatly limit the risk than any one of those measures is implemented".
(Danilo Masoni)
FOR WEDNESDAY'S OTHER LIVE MARKETS POSTS
HEALTHCARE "STAND OUT" SECTOR AMONG CHEAP-LOOKING EUROPEAN DEFENSIVES - RBC BLUEBAY AM CLICK HERE
TIME TO LOOK AT REDUCING RISK? CLICK HERE
STOXX 600 UP AS MINERS LEND SUPPORT, AUTOS DRAG CLICK HERE
EUROPE BEFORE THE BELL: MOOD BUOYANT EVEN AS TRADE TENSIONS BUBBLE CLICK HERE
NO 'BEST OFFERS' YET AS TARIFF DEADLINE LOOMS CLICK HERE
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