Geopolitics have always affected the financial sector and this has clearly been demonstrated by the impact of headlines on the defence industry. President Trump has been pressuring Nato to increase defence spending, and at this year’s summit in June, member nations pledged to raise defence and security expenditure to 5 per cent of GDP annually by 2035, more than double the previous 2 per cent benchmark.
As a result, billions of euros have flowed into European defence exchange traded funds this year, and on August 28 Groupe BPCE, the French co-operative banking group and insurer, became the first financial institution in the region to issue a bond dedicated to the defence sector.