Investing in the Defence Industry?

NPO Radio 1
Erasmus School of Economics

The war in Ukraine has not only major consequences for our energy supply, but also for the entire economy. And that also means turbulent times for investors. Some stocks are under pressure, but others (such as those in the defence industry) are rising sharply. Is this a reason for investors to invest in defence again, while they previously did not do so as a matter of principle? Mary Pieterse-Bloem, Professor of Financial Markets at Erasmus School of Economics explains in NPO Radio 1 (3 May 2022).

Each crisis is different

The professor argues that the crisis we now face is different from the crisis we had during the COVID pandemic. During the previous crisis, investing in sustainable businesses was very profitable, as well as investing in big tech. Contrary, investing in energy led to lower returns. With the current crisis, however, we are seeing a reverse trend where investing in oil is highly profitable.

Ethical dilemma

Investing in weaponry is currently very profitable since many member states of NATO are investing more means in their armies due to the war in Ukraine. However, some investment firms, like Rabobank, are not investing in weaponry as a matter of principle. Pieterse-Bloem reasons that this has to do with the fact that one can never be sure that weaponry will be used for aggressive uses as well, even though producers state that the weapons only have defensive purposes.


The European Union announced new sanctions against Russia, including an oil boycott. Is an economic recession close? The professor notes that there is currently a lot of discussion among investors about this issue. First, there was fear about inflation, but this has already shifted to fear about growth deceleration and recession. And, perhaps the least desirable expectation, inflation paired with growth deceleration. If the latter were to come to pass, there would be few options to divert to with an equity portfolio, she warns.

More information

For the whole interview, 3 May 2022, click here.

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