Chinese defence stocks slide as India-Pakistan ceasefire cools war hopes – Investing Abroad News

China’s defence stocks are having a roller coaster ride. After the breakout of conflict between India and Pakistan, Chinese defence stocks rose significantly, driven by expectations of increased exports from Chinese defence manufacturing companies.

The belief that China will arm Pakistan and make up for any losses if the India-Pakistan conflict intensifies was likely reflected in the increase in Chinese defence stocks.

But, following the truce between India and Pakistan, Chinese defence stocks are seeing significant selling pressure on Tuesday. Hang Seng China A Aerospace & Defence Index is down over 2.89% on Tuesday.

After four days of fierce cross-border drone and missile attacks, the two nations agreed on May 10 to immediately cease all firing and military operations on land, in the air, and at sea.

The shares of most Chinese defence companies recently saw a significant increase after the war between India and Pakistan broke out. However, the announcement of a ceasefire between the two neighboring countries appears to have put a halt to the uprising.

On May 8, stocks of most Chinese defence firms were up by 6-8%. AVIC manufactures the J-10C fighter jets that are said to have been utilized by Pakistan, through its subsidiary AVIC Chengdu Aircraft. The Hong Kong-listed shares of AVIC Aerospace, another subsidiary that manufactures military planes and helicopters, increased by more than 6%. Shenzhen-listed stocks of AVIC Chengdu Aircraft surged as much as 16%.

However, the AVIC Chengdu Aircraft stock recorded a sharp decline on Tuesday, sliding around 7.4%.

The stock of China State Shipbuilding Corporation, a company that constructs both military and commercial ships, fell more than 4%. Zhuzhou Hongda Electronics Corp Ltd, a manufacturer of military electronic components, saw a decline of almost 6.34%.

The JF-17 Thunder fighter jet is a flagship project of China-Pakistan military cooperation. The JF-17 is currently a mainstay of the Pakistan Air Force after the US stopped supplying its F-16s. Pakistan has also got Chinese SH-15 155mm self-propelled artillery guns for deployment to the Indian border.

Pakistan has been getting defence hardware from China that ranges from fighter jets for the air force to submarines and frigates for the country’s navy and artillery guns for the Pakistan Army.

According to data compiled by the Stockholm International Peace Research Institute (SIPRI), China was the largest supplier of military hardware to Pakistan, accounting for as much as 81 per cent of the country’s total imports, followed by the Netherlands at 5.5 per cent and Turkey at 3.8 per cent.

The total arms imports from China between 2019 and 2023 alone were valued at $5.28 billion, which accounted for 63 per cent of Pakistan’s total arms imports, according to SIPRI data.

The China-Pakistan Economic Corridor (CPEC) is part of the Belt and Road Initiative through which Pakistan is receiving funding from China. Valued at around $60 billion, the project also involves protecting Chinese investments and personnel in the project areas.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}