Rheinmetall is promoted to the Dax – Economy

Anyone who wants to pinpoint exactly where the boundaries between business and geopolitics, between war and prices are blurring, only has to keep an eye on the shares of the Rheinmetall armaments group. Before the war, the value of the paper hovered around somewhere between 60 and 90 euros for a few years. Then Russia attacked the Ukraine, Chancellor Olaf Scholz (SPD) proclaimed a turning point, put up a 100 billion euro special fund for the Bundeswehr, and Rheinmetall boss Armin Papperger immediately presented an offer list for equipment worth more than 40 billion euros on the table. “Germany still has a really great security industry, even if we’ve had a really hard life in the past few decades,” Papperger told the SZ last year. So now it should be easier, life as an armaments manager.

Analysts expect rising share prices – the environment is right

The price of Rheinmetall shares, well, shot up sharply overnight after the attack on Ukraine and is now around 250 euros. Investment banks and analysts continue to recommend buying the share, some expect a price of around 300 euros. They are, to use analyst language, “bullish”. Because the “fundamental environment” speaks for further price increases.

The environment has to be right for companies and their shares, otherwise nobody will buy anything. In the case of an armaments company, the “fundamental environment” is one thing. Because it means nothing else here than: There is war in Europe, the West needs more weapons and ammunition, demand from other NATO and EU countries is increasing – and the people in Düsseldorf can deliver. Main battle tanks, anti-aircraft tanks, ammunition. Finally, this weekend, the Rheinmetall boss pushed ahead and reported on negotiations about the construction of a tank factory on Ukrainian soil. A, to put it mildly, not entirely unexplosive business plan.

It’s usually the really good news that pulls share prices higher. Optimistic economic outlook, people consuming, economic security. At Rheinmetall it’s the other way around. “We have years of strong growth ahead of us,” says Düsseldorf. Which, on the one hand, does not bode well for the next few years and, on the other hand, is changing the German stock market landscape. It’s becoming more and more military.

Tank construction in the Dax, armaments electronics in the M-Dax

Rheinmetall is now worth almost eleven billion euros on the stock exchange, too big for the M-Dax. And so the tank builder will be promoted to the leading index Dax on March 20th and take the place of the dialysis group Fresenius Medical Care there: After 23 years, the healthcare company will slide into the M-Dax and then have to make room for a company that is currently one has a pretty good run. The largest German armaments company with 25,000 employees.

Open detailed view

And an armaments company is also striving to get further down: The sensor and radar supplier Hensoldt from Taufkirchen near Munich is rising to the M-Dax and replacing the biofuel manufacturer Verbio there. Before the war, the Hensoldt share was quoted at eleven, twelve and 14 euros for a long time. Last Friday, the paper cost just under 33 euros. “Our sales are growing because the world is not as peaceful and beautiful as we imagined it to be,” said Hensoldt boss Thomas Müller a few days ago in an SZ interview.

Now Rheinmetall wants to build its tanks in Ukraine

So out dialysis, health and biofuels, in ammunition, tanks, anti-aircraft radars and friend-or-foe detection systems. Rarely have shifts in stock market indices reflected the state of the world as accurately as they do these days, and seldom have they been so highly political. Highly political, like Papperger’s idea of ​​having tanks built in the Ukraine. “A Rheinmetall plant can be built in the Ukraine for around 200 million euros,” he said the Rheinische Post. The talks with the government in Kiev are “promising”, he hopes for a decision “in the next two months”. The new main battle tank is called Panther, Panther like the Panzerkampfwagen V, which MAN developed in the Second World War.

Rheinmetall presented the new Panther last summer and advertised it as the strongest main battle tank in the world. 130 mm cannon, 59 tons, range over 500 kilometers, completely digitized. Papperger estimates that Ukraine will need 600 to 800 such tanks to defeat Russia, and a Ukrainian tank production facility could produce up to 400 Panther-type main battle tanks a year. So far, the vehicle is not yet in service, the Ukraine would probably be the first customer of the Düsseldorf group.

A Dax company that is directly involved in the war?

These are the moments when the manager, whose group will join the ranks of the 40 big Dax companies in two weeks, no longer sounds quite like a manager. More like a Federal Minister of Defense or one of those military analysts who have also been booming for a year. He doesn’t see that the leadership “around Putin is cutting back on its aggressive course towards Ukraine.” He therefore expects that the war in Ukraine will “probably last for years”. “While the western allies are sending enough weapons there for Ukraine to defend itself, the Ukrainians don’t have enough equipment today to fully retake their territory.”

And so, at the weekend, there was a rather unusual exchange of blows between a Russian politician and a German CEO. “But if the Fritzen decide to actually build there (although they are actually pragmatic people), then we’ll be waiting eagerly,” wrote former Russian President Dmitry Medvedev on his Telegram channel. The “event” will be “committed with a proper salute from ‘Kalibr’ and other pyrotechnic devices,” he threatened. Kalibr are cruise missiles that are usually fired from ships. Most recently, they were used primarily for attacks by the Russian Black Sea Fleet on Ukrainian energy infrastructure.

A Dax company that at some point in the near future will not only be a supplier in a war, but maybe also a direct participant? A target of Russian missiles? “Air defense would not be difficult,” says Papperger.