Kering is about to drop out of the Top 50 European equities Its place, in the Euro Stoxx 50, will be taken by an arms manufacturer

Times are changing. In a world increasingly divided by war and conflict, the idea that a company producing ammunition and weaponry is worth more than a luxury conglomerate may be surprising, but it can no longer be shocking. Especially considering how the luxury sector is struggling worldwide. But what exactly happened? Today came the news that Rheinmetall AG, the German defense giant, will join the Euro Stoxx 50 on June 20, replacing Kering SA, the world’s second-largest luxury fashion conglomerate. To be clear, the Euro Stoxx 50 is essentially a ranking of the 50 most important and largest companies in the Eurozone — that is, the European countries using the euro — a sort of market barometer or nobility almanac where the top 50 European stocks are highlighted for investors to understand how the Eurozone economy is doing. The change, reported by JPMorgan Chase & Co. strategist Pankaj Gupta and confirmed by index provider Stoxx Ltd., is undoubtedly a sign of the times, as we said.

This replacement was determined not only by the crisis hitting the luxury sector, but also by Rheinmetall’s surprising momentum in the stock market. Since the beginning of 2024, the value of the German group’s shares has tripled, thanks largely to increased military spending in Europe. In May alone, Rheinmetall shares rose by 26%, bringing its market capitalization to nearly €87 billion — a result that projected the arms manufacturer into the top half of the Top 50 European stocks. Since Russia’s attack on Ukraine in 2022, the stock has grown by 1,800% — the number speaks for itself. But there’s no need to interpret this news as overly apocalyptic: the German company will in fact be the only defense-sector name in an index that already includes giants of aerospace, automotive, chemical production, energy, and tech, along with names like L’Oréal, Hermès, and LVMH, which recently fell out of the top five most important stocks in Europe.

Rheinmetall’s rise contrasts sharply with the decline of Kering. The French group’s shares have dropped 28% since the beginning of 2024 and have lost 47% compared to a year ago. The luxury giant has been hit particularly hard by a drop in spending by Chinese consumers — historically a crucial component of the sector’s growth — and by trade uncertainties linked to tariffs from the Trump administration. In April, the stock hit its lowest levels since 2016, marking a critical phase for a company that for years has represented European excellence in luxury. The change in the index’s composition, therefore, is not just a technical matter. It is a reflection of a Europe that is reassessing its economic priorities, now looking at security and defense with new eyes, while sectors that once led growth, like luxury, are taking a back seat after two decades of explosive expansion. At a time when the global geopolitical balance is increasingly unstable, markets appear to reward the ability to adapt to a world in which economic and military power are once again carrying the weight they had in less happy times of the past — even if not necessarily more fortunate ones.