The impact of war on financial markets is multifaceted, influencing various sectors and investment strategies. During conflicts, companies known as "war babies" often see a rise in stock prices, deviating from the usual market decline.
Scorched Earth
In order to scare off a hostile firm, the target firm will liquidate all its desirable assets and acquire liabilities.
liabilities
assets
Dawn Raid
Stock broker
Firm (or investor) purchases a large portion of shares in a target firm at the opening of the market.
rebel
War Chest and War Bonds
A war chest refers to the funds a company uses to initiate or defend itself against takeovers.
military bonds
Tax is money that people have to pay to the government.
Blitzkrieg Tender Offer
As the Russian army retreated, they burned every shelter, animal and plant that would catch fire, effectively leaving the French army without any “found” supplies to sustain them through a Russian winter.
attractiveness
corporate takeovers
front
lightning war
Capitulation
Panic selling
In the stock market, capitulation refers to the surrendering of any previous gains in stock price by selling equities in an effort to get out of the market and into less risky investments, it involves extremely high volume and sharp declines, which are indicative of panic selling.
share rate
War Babies
The companies that enjoy a jump in stock prices during or before a war (traditionally a time of decline for the market).