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Volatile defence sector in an uncertain geopolitical environment
As of April 9, when this monthly letter is distributed, we find ourselves in the midst of a fragile ceasefire with unclear terms, while the Strait of Hormuz has yet to reopen. The Trump administration was under pressure to secure a ceasefire to reduce risks to the global economy. The United States and Israel entered the conflict with unclear plans and objectives, without clear alignment with allies. The Trump administration has since criticized European countries for their lack of participation, without fully acknowledging that countries across both Europe and the Indo-Pacific have been negatively impacted by rising energy prices and constrained access to raw materials.
International relations are likely to be affected over the long term, with NATO’s structure and role potentially coming under increased scrutiny and more countries reassessing their dependence on the United States, both in defence materiel and digital infrastructure. We continue to see a trend toward a more fragmented Western security structure, alongside a clear long-term increase in global defence spending.
This type of geopolitical uncertainty has historically supported defence sector performance, but during March other factors were more dominant. Finserve Global Security Fund delivered a return of -5.74%, compared to OMXS30 (-6.40%) and Nasdaq Composite (-4.80%). The decline was primarily driven by rising energy and commodity prices (oil, natural gas, aluminium), which increased inflation concerns and pressured corporate margins. At the same time, production disruptions linked to the conflict and limited access to raw materials contributed to increased uncertainty around global growth. Communication from the Trump administration also contributed to heightened market volatility.
The fragile ceasefire, its scope, and the future military developments remain uncertain. In addition, hybrid warfare may continue to increase uncertainty and complicate global trade and transportation.
| March 2026 – Top Performers | March 2026 – Bottom Performers | ||
| BITIUM | 37% | CSG | -27% |
| PLANET LABS | 16% | HYUNDAI ROTEM | -26% |
| ST ENGINEERING | 8% | INDRA SYSTEMS | -25% |
| KONGSBERG GROUP | 7% | KAWASAKI HEAVY IND. | -20% |
| AST SPACEMOBILE | 5% | CEOTRONICS | -19% |
Company-specific news
Leonardo updated its industrial plan for 2026–2030 and reaffirmed its financial guidance, indicating continued high visibility. The company guides for cumulative orders of approximately EUR 142 billion and revenues of approximately EUR 126 billion over the period, corresponding to annual growth of around 6% and 9%, respectively. The acquisition of Iveco’s defence business for approximately EUR 1.6 billion strengthens exposure to land-based systems and broadens its presence in European defence programs.
The share price was, in early April, affected by uncertainty regarding whether the CEO’s contract would be extended. At the same time, the company remains well-positioned, with its strategy to evolve into a more integrated defence player with increased scale across multiple domains supporting long-term growth.
Within the space segment, NASA’s Artemis II mission was one of the most important events of the month. The successful launch of the Orion spacecraft marks a significant step in the U.S. ambition to establish a long-term presence on the Moon and confirms that the space economy continues to develop at a rapid pace. The combination of increased government demand and technological advancements—particularly driven by private sector players—continues to reduce costs and accelerate investment in the sector.
Many space and defence companies are suppliers to these large programmes, and the market reaction was clear, with several space-related companies recording broad share price gains in connection with the launch. This reflects growing investor appetite for companies with exposure to space infrastructure, satellite communications, and advanced space systems.
Several portfolio companies benefited from this development. Rocket Lab continued to strengthen its position in launch services and national security-related space infrastructure. Planet Labs and AST SpaceMobile recorded positive share price performance in line with the sector, driven by increased focus on satellite-based data and communication.
Overall, developments within the space segment illustrate how this part of the defence and security sector is increasingly establishing itself as a structural growth driver, where both government programmes and commercial initiatives are working together to expand the market.
Read the article about the current situation here: https://finserve.se/en-osaker-vapenvila-i-ett-fortsatt-riskfyllt-globalt-ekonomiskt-lage/
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