Sweden has ordered four naval warships from France in a $4 billion deal, tripling its air defense capabilities, the Nordic country announced Tuesday morning.
Prime Minister Ulf Kristersson said at a press conference in Stockholm that the investment would be Sweden’s biggest defense investment since the 1980s.
The purchase of the French Defense Intervention (FDI) frigate from Naval Group is worth approximately 40 billion Swedish crowns ($4.25 billion), with first deliveries scheduled for 2030.
“This is three times as much Swedish air defense capability as we have today, which says something about the scale of this decision and the importance of the Marine Corps,” Kristersson said.
“With this decision, we are confident that Sweden can contribute to significantly increasing the safety of the Baltic Sea in the future.”
Sweden joined NATO in March 2024, claiming that Russia’s invasion of Ukraine had completely changed its security environment and ended the country’s two centuries of military neutrality and non-alignment.
Defense stocks soar
European defense stocks rose across the board in Tuesday morning trading.
Swedish fighter jet maker Saab rose 5.3% by mid-morning, while Germany’s line metal, Lenkand Hensoldt The index rose 5-8%, pushing Germany’s DAX up 1.3%.
pan-european Stocks 600 The blue-chip index rose 0.8%.
Defense stocks have been on the rise since Russia’s invasion of Ukraine in 2022.
Analysts at Citi on Monday upgraded Saab stock to “neutral” and German military maker Rheinmetall’s stock to “buy,” citing the recent pullback across European defense.
Analysts say Saab’s projected 11% growth from 2030 to 2035 is largely priced in.
Citi said Rheinmetall should benefit from an increase in Germany’s defense budget, noting that Rheinmetall’s sales were only 38% of Rheinmetall’s last year and that the rest of Europe would continue to “grow at a significant pace.”
It is also well-positioned to benefit from exposure in rapidly growing sectors such as drones, space and land systems, they added.
European defense companies are expected to benefit from governments’ efforts to build up their military capabilities and NATO’s decision last year to increase defense spending from 2% to 5% of gross domestic product by 2035.
However, soaring stock prices in recent years have raised questions about the company’s high valuation.
