This is how to profit from the global defense boom that has spread outside of Europe

The Future of Defence Indo-Pac ex-China UCITS ETF's head of research, Tom Bailey, selects three defense stocks to invest in

While investors have been concentrating on Europe's rearmament, the Indo-Pacific region is beginning to experience a military transition that is just as important. While South Korea, India, and other nations are increasing their budgets, Japan has started its biggest increase in defense spending since 1945.

Australia, a crucial US ally and logistical hub for its Indo-Pacific strategy, is at the center of this regional build-up. In addition to having one of the few pure-play defense drone companies in the world, the nation is making significant investments in patrol boats, submarines, and base infrastructure to bolster its own defenses and support allied operations. As regional governments rearm and modernize, the following three Australian businesses demonstrate the growing investment case for Indo-Pacific defense stocks.

Consider adding these three defense stocks to your portfolio.

Australian shipbuilder Austal (Sydney: ASB) produces support ships, coastal craft, and swift patrol boats. These lighter, more nimble vessels are crucial for surveillance and maritime deterrence because the Indo-Pacific region is known for its long distances and disputed coastal waters. Austal recently delivered its ninth Evolved Cape-class Patrol Boat to the Royal Australian Navy, demonstrating the high level of domestic demand.

By producing the patrol boats that Canberra supplies to Pacific Island countries like Fiji and Samoa as part of the Pacific Maritime Security Program, Austal also supports Australia's broader security strategy. Revenue increased by 24% in the year ending June 30, 2025, while earnings before interest and taxes doubled.

Australia's defence capabilities depend on the infrastructure and base-support services provided by Ventia Services Group (Sydney: VNT). Maintaining bases and training facilities across the nation is part of this. In the face of escalating regional tensions, this service has grown in significance as the nation fortifies its military position in northern Australia and expands its collaboration with the United States.

The Australian Department of Defence granted Ventia two Base Services Transformation packages totaling A£2.7 billion (1.3 billion) in September 2025. These contracts guarantee that "bases and training areas are safe and secure, and support people as they live, train, and work on the Defence estate," according to the department. Profits are increasing consistently. Net income increased by 11.9% in the first half of 2025, while earnings per share increased by 16.5% annually. Ventia provides exposure to the infrastructure aspect of the Indo-Pacific defense build-up through established, government-backed contracts.

Many nations are building up their own drone forces because drones have become a grim feature of the ongoing conflict in Ukraine. The significance of counter-drone technology, or defense gear that can thwart or repel drone attacks, is the other lesson that many have learned. The EU is building a "drone wall," while the US has designated counter-drone capabilities as one of its 17 primary priority-spend areas.

Due to its expertise in counter-drone technologies, DroneShield (Sydney: DRO) is in a strong position to profit. The Australian company creates and produces systems that use radar, radio-frequency, and AI-enabled software to identify, track, and neutralize hostile drones. The Indo-Pacific area is a key segment of the group's worldwide clientele. Europe accounts for 36% of its revenue, making up the largest portion of its sales. Asia ex-China accounts for 29% of total sales. DroneShield recorded record revenue of A£62.3 million in the first half of 2025, up almost 210 percent year over year, and made its first-ever profit.