What is the IAEA and why is Iran's cooperation important?

The International Atomic Energy Agency (IAEA) is a United Nations organization that monitors nuclear activities worldwide to ensure they're used for peaceful purposes. Iran's cooperation with the IAEA allows international inspectors to verify that its nuclear program isn't being used to develop weapons. When this cooperation is suspended, as mentioned in this theme, it creates uncertainty about Iran's nuclear activities, which can heighten tensions and impact defense-related investments.

What are defense contractors and how do they make money?

Defense contractors are companies that provide products and services to military and intelligence agencies. They develop and manufacture weapons systems, aircraft, ships, vehicles, cybersecurity solutions, and other defense technologies. These companies make money primarily through government contracts, which tend to increase during times of conflict or heightened tensions. Many stocks in this theme, like Lockheed Martin (LMT) and Raytheon (RTX), are major defense contractors that could benefit from increased military spending.

What is cybersecurity and why is it included in a defense-focused theme?

Cybersecurity involves protecting computer systems, networks, and data from digital attacks or unauthorized access. It's included in this defense-focused theme because modern warfare includes cyber warfare—where countries target each other's digital infrastructure. During military conflicts, the risk of cyber attacks often increases, making companies that provide cybersecurity solutions (like CYBR and HUBC in this theme) potentially valuable investments alongside traditional defense companies.

What are ETFs and how do they work in this investment theme?

ETFs (Exchange-Traded Funds) are investment funds traded on stock exchanges that hold assets like stocks, bonds, or commodities. They give investors exposure to a basket of securities rather than just one company. This theme includes several ETFs (ITA, PPA, IHAK, and EIS) that provide broader exposure to defense, aerospace, cybersecurity, and Israeli markets. These ETFs can offer a more diversified way to invest in the theme of Middle East escalation without picking individual stocks.

How do geopolitical events affect stock markets and these specific companies?

Geopolitical events like military conflicts or international tensions can significantly impact stock markets, often creating volatility. Defense and security companies typically see increased investor interest during these periods as governments may boost their military spending. The companies in this theme could potentially benefit from new contracts and increased orders for their products and services as the U.S., Israel, and their allies respond to escalating tensions with Iran. However, these stocks can also be volatile and sensitive to diplomatic developments and changes in political leadership.

15 handpicked stocks

Mideast Escalation: Defense & Security

A carefully curated group of defense, aerospace, and cybersecurity companies positioned to benefit from increased military spending. These stocks were selected by professional analysts in response to rising Middle East tensions following Iran's suspension of IAEA cooperation.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 27