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European defense stocks lose momentum amid overvaluation and uncertainty in earnings revisions.
Gelonghui, November 13th | The unfavorable combination of inflated valuations and lagging earnings delivery has caught up with defense stocks, undermining the market's previous enthusiasm for buying on dips. Although the index measuring European defense stocks has surged by 80% this year, most of the gains were concentrated in the first half. Recently, stock price movements have been characterized by sideways or volatile trends. Even regional leader Rheinmetall AG has remained flat since mid-June, while its peer Hensoldt AG has plummeted 25% from its October peak. Government pledges to increase military spending no longer trigger buying interest among investors.
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