Run on stocks of gun manufacturers

Arms exhibition in Las Vegas

The prices of the manufacturing companies are rising – the markets are betting on buying hamsters if Joe Biden wins.

(Photo: AP)

New York The lead of the Democrat Joe Biden in the polls for the presidential election in three weeks is growing – and the prices of weapons manufacturers in the USA are rising. Many stockbrokers assume that if there is a change in power in the White House, more rifles, revolvers and pistols will be sold and the shares of companies like Smith & Wesson or Sturm Ruger go even further up.

Investments in weapons companies have already paid off in recent months. While the S&P 500 has increased 3.6 percent since the beginning of the month, Smith & Wesson has increased by 8.1 percent, and Sturm Ruger even increased by 9.5 percent. It looks even more impressive if you look at the time since the beginning of the year: In 2020, the S&P will increase by 7.8 percent – Smith & Wesson to 135.4 percent, Sturm Ruger to 51.1 percent.

Many Americans have stocked up on guns in recent months for fear of the coronavirus pandemic, social unrest following the violent death of African American George Floyd in police custody, and fears that a close presidential election on November 3 could end in chaos . Just last month, the head of Smith & Wesson said his industry was barely keeping up with demand.

Joe Biden and his vice president candidate, Kamala Harris, are advocating tougher gun laws – and in the short term, that should only increase demand. “Should we get a government of Biden and Harris, I would expect an increase in sales of modern sporting rifles, large magazines and ammunition,” said Aegis Capital analyst Rommel Dionisio, referring to an industry term for automatic rifles, the military Similar to weapons and promise particularly high profit margins.

Analysts are looking at the experiences in the era of Democrat Barack Obama – who also advocated stronger arms regulation. From Obama’s election as president in 2008 to the election of Donald Trump in 2016, the shares of Sturm Ruger rose by almost 900 percent, the S&P plus of 113 percent looks puny in comparison. Biden, Vice President under Obama, proposes a ban on the sale of automatic weapons and their magazines, similar to the regulations that were in place until 2004. Anyone who already has such a rifle should either hand it over to the government or at least register it.

The years under President Trump, however, have hardly paid off for the arms shareholders. The Sturm Ruger titles, for example, have only managed an increase of 16.5 percent since 2016, much less than the 66 percent at S&P. Republicans have traditionally been close to the powerful US gun lobby, and gun enthusiasts under their administration are no longer afraid of losing access to rifles and pistols.

More: America after four years of Donald Trump – the descent of a superpower.


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