Production bottlenecks and uncertainty over the US’s military budget have led investors to sell global defence stocks despite ongoing conflicts in the Middle East.
Share prices of leading American defence primes Lockheed Martin, Northrop Grumman, RTX, L3Harris and General Dynamics have all fallen since the US bombed Iran at the end of February, despite the military’s massive expenditure of ordnance over the past two months drawing attention to mounting production backlogs.
“[The US has] burned through munitions much faster than we can produce them. Defence companies may get some money up front, but they don’t typically profit until they deliver,” said Steven Grey, chief investment officer at Grey Value Management, which has positions in several global defence stocks.