WASHINGTON — Defense contractors are watching stock prices rise as terrorism roils the Middle East.
A new report said several defense-related stocks were expected to increase
sharply as ongoing tenison and violence roils the Middle East. Prices would be fueled
by demand for both conventional and anti-terrorist military hardware and
technology.
"Even while broad market averages have fallen, the share prices of
defense-industry heavy hitters have soared," a report by MoneyandMarkets
said.
Authored by John Burke, the report cited such threats as Al Qaida's plot
against Western airliners, the Israeli-Hizbullah war, Iran's nuclear weapons
program and North Korea as factors in the rise in defense stocks. The report
said these threats would continue to bolster U.S. defense spending, Middle East Newsline reported.
"While spreading geopolitical strife does not bode well for the broad
market, it is greatly boosting demand for both conventional and
anti-terrorist military hardware and technology," Burke, a former marine
intelligence analyst, said.
Entitled "The Rising Tide of War: Five Defense Stocks Set to Soar," the
report said U.S. defense spending has risen by 82 percent since 2000. Over
the last month, Saudi Arabia and other Arab militaries have ordered more
than $11 billion in weapons from the United States.
The biggest winner in the U.S. defense industry has been Lockheed
Martin, which has seen a stock price increase of 28 percent. General
Dynamics and Rockwell Collins reported price increases of 19 percent and
13 gpercent, respectively.
The report said Iran would ignore an Aug. 22 United Nations deadline for
Iran to suspend its uranium enrichment program. Teheran could also fulfill
its threat to block the Strait of Hormuz, which coult halt up to one-third
of the world's energy supply.
"This threat is already boosting demand for weapons systems both in the
region and in the U.S.," the report said.
Burke said the Israel-Hizbullah war could erupt despite a UN-arranged
ceasefire. He said such a conflict could draw Iran, Syria and other Arab oil
producers.
"Demand for military supplies, already rising, could skyrocket," the
report said. "The spreading Shiite-Sunni conflict in the Muslim world is
boosting weapon build-ups by Sunni-dominated governments fearful of Shiite
rebellions."
The report said Iraq has been wracked by civil war. Burke said this
would increase the U.S. military presence in the country.
"The Iraqi civil war is unlikely to result in a U.S. pullout," the
report said. "Instead, due to the West's heavy reliance on Persian Gulf oil,
the U.S. and its allies are expected to make even deeper military
commitments to the region."
