Defense shares climb in China following Pakistan-India escalated tensions, according to Bloomberg's report.
Defense Shares Surge as India-Pakistan Tensions Heat Up
Yellow-hot shares of Chinese defense companies skyrocketed this week, thanks to the mounting tension between Pakistan and India. According to Bloomberg, this escalation has given a substantial boost to the prospects of mainland exporters.
Pakistan, relying heavily on Chinese military equipment, reportedly shot down five Indian warplanes, including three French Rafale jets. This situation prompted speculation that Chinese defense platforms may have been part of the conflict due to Pakistan's dependence on such arms imports.
Following the news, an index of Chinese defense companies in mainland China surged 1.6%, reaching a two-week high. Avic Chengdu Aircraft Co., a maker of the J-10C fighter jet, was among the top gainers, witnessing its highest stock increase since October 14.
Most Chinese defense platforms have yet to prove their mettle in actual combat areas. Eric Zhu, a defense analyst at Bloomberg Intelligence, highlighted that battle experience plays a crucial role in enhancing their export potential.
In recent years, Pakistan has increasingly relied on China for its armaments, with imports from the country accounting for 82% of Pakistan's stock between 2019-2023, in contrast to 51% from 2009-2012.
Tensions between the two nations spiked after an attack in Indian Illegally Occupied Jammu and Kashmir (IIOJK) that left 26 people dead, with India accusing Pakistan of involvement. However, Pakistan denied the allegations and called for an independent investigation of the incident.
Wednesday saw Pakistan downing five Indian warplanes, including three Rafale, in response to Indian missile attacks. The loss of life was significant, with at least 26 Pakistanis reportedly killed and 45 injured in Indian missile attacks at six different locations.
The six-day standoff has intensified since the deadly April 22 attack in Pahalgam, Occupied Kashmir, causing the loss of 26 lives, mostly tourists. As diplomatic efforts stalled, tensions between the two nations remained high.
The current conflict offers valuable insights into the battle-readiness of Chinese defense platforms, as the J-10C fleet played a significant role in Pakistan's counterattack. With a proven track record, these platforms could potentially solidify China's position as a key player in the global arms market.
Sport analysts are discussing the potential impact of the current conflict on the Chinese sports index, as China is a major supplier of military equipment to Pakistan. The rise of Chinese defense shares might also reflect an increased interest in Chinese sports, given the country's significant role in the global arms market.
