This year, European defense stocks with soaring stock prices will receive a major boost! The German Finance Minister expects defense spending to increase sharply.

Joerg Kukies, who was appointed as the Minister of Finance in Germany by Scholz last November, stated that lawmakers in the country may push for a significant increase in Germany's defense spending before the new parliament is sworn in next month. This news is a major boost for defense stocks that have skyrocketed in price this year, even driving the European stock market benchmark - the Stoxx 600 index to record highs, acting as a major driving force for European defense companies such as Rheinmetall, Leonardo, and Thales. Kukies emphasized during a media interview in Cape Town, South Africa on Wednesday local time, "Strengthening European defense spending in the coming years is extremely important, as we urgently need to consolidate the European defense pillar of NATO. Parliament still has the authority to decide on the specific details of potential agreements during the remaining term." He also warned that the as yet unresolved German federal budget still has "billions of euros" in significant gaps that will be a key topic of negotiation between the conservative alliance led by the next German Chancellor Friedrich Merz and the current Social Democratic Party led by Olaf Scholz. "The Finance Minister must always have a clear understanding of budget constraints, especially severe ones that Germany faces this year." Kukies stated in the latest interview. Sources revealed on Monday that Merz, who won the German Chancellor election, has discussed raising defense budget spending by up to 200 billion euros (about 210 billion US dollars) through traditional debt financing methods. Merz confirmed the discussions regarding the defense budget plan on Tuesday and said he "neither confirms nor denies" whether such large-scale additional investments are involved. As Merz will become the new German Chancellor after a collective vote by the German people, some analysts consider Kukies' role as Finance Minister to be an "interim acting Finance Minister." Some political figures have questioned the democratic legitimacy of using the old parliament to approve controversial legislation after the German voters elected a new federal parliament. This proposal has been particularly condemned by the Alternative for Germany party - the far-right political party that doubled its vote share in the election to nearly 21%, becoming the largest opposition force in the new German parliament. The co-chair of the Social Democratic Party, Saskia Esken, expressed doubts during an interview with RTL/n-tv on Wednesday, stating, "It is difficult to explain to the voters. We should ensure a majority consensus for the overall interests of our country." Merz recently stated that he hopes to complete coalition negotiations with the Social Democratic Party before Easter, which means that both sides need to reach an agreement on the so-called "grand coalition" deal within less than two months. Kukies took over as the German Finance Minister in November last year, after Scholz dismissed the long-standing fiscal hawk position of the Free Democratic Party member Christian Lindner due to a government borrowing dispute. This move resulted in the ruling coalition losing a majority in the federal parliament, leading Scholz to prematurely initiate a national election seven months early. According to the constitution, Scholz and his cabinet (including Finance Minister Kukies) will continue to serve in an interim government capacity until the new cabinet is in place. Will European defense stocks continue to rise? Statistics show that as one of the leaders behind the continuous surge of European stocks in this round of bullish market, the stock price of the defense giant Rheinmetall has doubled in the past three months. After the opening of European stocks on Wednesday, the Stoxx 600 index rose by nearly 1%, reaching a new historical high. Since Trump took office, the Stoxx 600 index has risen by over 6%, while the S&P 500 index has risen by less than 1% during the same period. The continued bull market of the Stoxx 600 index, the so-called "long-term bull market" prospects - this index is heading towards the strongest first quarter performance compared to the S&P 500 index in a decade. After the intentions of the US government to "withdraw from NATO" were revealed, the urgent need for European defense autonomy has forced European officials to develop new defense strategies to strengthen the defense system. Facing geopolitical changes, the European Defense Industry Strategy released by the European Commission last year shows that European defense autonomy has transformed from a political slogan into a specific action plan. Data shows that the localization rate of EU defense orders in 2022-2023 is only 22%, while the new strategy aims to achieve a 50% self-supply target by 2030. This means that in the next six years, there needs to be a 23 percentage point acceleration phase in defense industry development. In the short term, additional defense spending may focus on urgent defense needs such as ammunition and long-range missiles, but the EU also needs to gradually coordinate different governments' development and procurement plans in aircraft, ships, and tanks, and promote integration and cooperation among companies. Therefore, the significant expansion of defense spending in Europe is undoubtedly a major positive news for leading European defense companies such as Rheinmetall, Leonardo, and Thales. Rheinmetall AG is an international technology group headquartered in Dusseldorf, Germany, founded in 1889. The company mainly focuses on security technology and mobility technology, with businesses covering the defense and automotive industries. In the defense sector, Rheinmetall is one of the largest defense companies in Germany, providing a variety of military equipment and systems, such as the L44 and L55 main guns of the Leopard 2 main battle tank and the L52 main gun of the PzH2000 self-propelled howitzer.