The frenzy came ahead of the UK government’s Defence Investment Plan, unveiled on Tuesday (30 June) by departing Prime Minister Keir Starmer, who vowed to commit an extra £15bn a year in spending, including more than £5bn to autonomous and uncrewed systems, with £1.6bn specifically set aside for drones.
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In total, the plan is set to see the UK invest around £298bn in defence over the next four years.
Angeline Ong, senior investment analyst at IG, said: “The direction of travel has been clear for some time.
“The growth story is not sitting with any one manufacturer – it is in the convergence of drones, autonomous systems, AI, digital warfare and the technologies designed to detect and defeat unmanned threats.
“That is where defence budgets are increasingly being directed.”
The most popular drone stock so far in June was US-based Red Cat, which builds autonomous drones for both military an commercial use. Year-on-year, IG client holdings in the stock almost tripled – rising 197%.
The second and third most popular related companies were defence technology firms Northrop Grumman and RTX (formerly Raytheon), also based in the US. Holdings in those rose 113% and 55%, respectively, year on year.
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UK defence tech companies BAE systems and QinetiQ also made a showing, with client holdings in each rising 28% and 19%, respectively.
“Over the past year we have 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,” Ong added.
“Rather than simply buying drone manufacturers, they are increasingly investing across the technologies that make autonomous warfare possible.
“Increasingly, the winners will not simply be those building the drones, but those enabling, connecting, protecting and neutralising them.”
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