The Structural Repricing of Defence Across Global Capital Markets
The global defence sector is experiencing a fundamental revaluation across capital markets. In contrast to past cyclical upticks driven by transient conflicts or budget oscillations, today’s repricing of defence as an asset class appears structural and enduring. Investors and policymakers alike have shed long-held assumptions from the post-Cold War “peace dividend” era, recognizing that heightened security threats are not a short-term anomaly but a new normal. This realization has catalyzed a reallocation of capital on a strategic scale – defence equities, debt, and private investments are being bid up not in a speculative frenzy, but in reflection of a paradigm shift in expected long-term demand and government support. The war in Ukraine, Indo-Pacific tensions, and other geopolitical shocks have effectively reset risk perceptions, convincing markets that defence is no longer a peripheral or contrarian bet, but a core sector with secular growth drivers. As a result, shares of defence contractors have dramatically outperformed broader indices since 2022, and their valuations now embed expectations of sustained revenues rather than a mere cyclical rebound. The notion of defence as a strategic asset class – critical to national security and increasingly backed by public policy – is taking hold, anchoring a repricing that looks structural in nature.