UK investors are piling into defence stocks as the UK government commits £5 billion to drone transformation, says IG.
Earlier this week, the prime minister announced the largest ever drone investment in UK Armed Forces – more than £5 billion over the next four years – to be included in the Defence Investment Plan.
IG’s own client data suggests investors have already been positioning for this trend, with holdings increasing across a range of defence companies exposed to drones, military electronics, AI and counter-drone technologies.
Red Cat has seen client holdings soar by 197% year-on-year, while Northrop Grumman has seen a 113% jump in client holdings.
Angeline Ong, senior investment analyst at IG, said: “The direction of travel has been clear for some time. The growth story isn’t sitting with any one manufacturer – it’s in the convergence of drones, autonomous systems, AI, digital warfare and the technologies designed to detect and defeat unmanned threats. That’s where defence budgets are increasingly being directed.
“Our client positioning data suggests investors have already been recognising that shift. Over the past year we’ve seen growing exposure across a broad range of defence and drone-related companies, suggesting investors are looking beyond today’s headlines and positioning for what they see as a long-term structural trend.
“Rather than simply buying drone manufacturers, they’re increasingly investing across the technologies that make autonomous warfare possible.”
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