Chinese Defense Stocks Soar Amid India-Pakistan Conflict
The surge in Chinese defense stocks has significant implications for the global arms industry, with China's reputation as a manufacturer and seller of weapons being boosted. The successful combat use of Chinese J-10C jets and PL-15 missiles has also raised questions about the military balance of power in potential conflicts, including a possible Taiwan contingency.
The ongoing conflict between India and Pakistan has led to a significant surge in Chinese defense stocks, with Chengdu Aircraft Corporation's shares rising by 20% on May 12, while Dassault Aviation's stock plummeted 7% after reports of India using Rafale jets in Operation Sindoor against Pakistan.
The rise in Chinese defense stocks is attributed to the successful combat use of Chinese J-10C jets and PL-15 missiles by Pakistan, marking the first time these weapons have been used in a real-world conflict. This has given military analysts a rare glimpse into the capabilities of Chinese weaponry, with some believing that China's military capabilities may be approaching or surpassing US air power deployments in east Asia.
The incident has also highlighted the close partnership between China and Pakistan, with China providing over 80% of Pakistan's military equipment. The use of the J-10C and PL-15 missiles has raised questions about the military balance of power in potential conflicts, including a possible Taiwan contingency. China's reputation as a manufacturer and seller of weapons has also been boosted, with the share price of Chengdu Aircraft Corporation soaring.
In contrast, Dassault Aviation, the manufacturer of the Rafale jets, has seen its stock fall over 10% in the past five trading sessions, with analysts attributing the volatility to India-Pakistan news. A deal between India and France to procure 26 naval variants of Rafale fighter jets for the Indian Navy has also been signed, but the company's stock has yet to recover from the recent decline.
As the conflict between India and Pakistan continues to unfold, the impact on Chinese defense stocks is likely to be closely watched by investors and military analysts alike. The successful use of Chinese weaponry in combat has raised the profile of Chinese defense manufacturers, and it remains to be seen how this will affect the global balance of power in the long term.