China defense stocks surge as India-Pakistan tensions escalate

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China defense stocks surge as India-Pakistan tensions escalate

A J-10C fighter jet of the ******** air force’s Ba Yi’s aerobatics team conducting adaptive training.

Vcg | Visual China Group | Getty Images

Tensions between India and Pakistan are rising, with ******** defense stocks surging after Pakistan’s apparent use of China-made weapons to down Indian jets.

Pakistan’s Foreign Minister Ishaq Dar claimed on Wednesday that Pakistan deployed

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in a clash with India’s air force, according to

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AVIC, through its subsidiary AVIC Chengdu Aircraft,

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reportedly used by Pakistan in the recent conflict. Another subsidiary, AVIC Aerospace, which produces military aircraft and helicopters, saw its Hong Kong-listed shares rising over 6%.

And Shenzhen-listed stocks of AVIC Chengdu Aircraft surged as much as over 16%. It last traded 8.31% higher at 11.40 a.m. local time. On Wednesday, its stocks rose 17.05%, marking the most significant gain since last October.

Shares of China State Shipbuilding Corporation, which builds military and civilian vessels, inched up 0.4%.

“Pakistan is the largest buyer of ******** arms, including fighter jets, air defense systems, naval vessels, and UAVs,” said Yang Zi, associate research fellow at the S. Rajaratnam School of International Studies.

More than 60% of ******** arms exports went to Pakistan between 2020 and 2024, according to data from the

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“It’s certainly likely that Pakistan used ******** aircraft,” said Seth Jones, president of the defense and security department at the Center for Strategic and International Studies (CSIS).

Yang told CNBC that “the conflict serves as a positive testament to the quality of ********-made arms, given the performance of Pakistan’s fighter jets and air defense systems against India’s French- and Soviet-made aircraft.”

The rise in China defence stocks probably [reflects] the view that if the India-Pakistan war escalates, China will arm Pakistan and replace any losses.

David Roche

Quantum Strategy

He added that although it’s unclear whether those involved air-to-air combat or ground-based surface-to-air missile strikes, it still indicates that Pakistan has “some successful capabilities, with ******** support.”

According to Pakistan’s Information Minister Attaullah Tarar, five Indian Air Force jets were shot down while approaching Pakistani territory.

India, however, denied the reports of its jets

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, dismissing them as “dis-information.”

India announced early Wednesday that its armed forces had carried out strikes in Pakistan and the region it refers to as Pakistan-occupied Jammu and Kashmir. India’s Ministry of Defense stated that the strikes targeted nine locations believed to be where “terrorist attacks” are planned and directed against India. 

That follows last month’s militant attack in Pahalgam, Jammu and Kashmir, which left 26 people dead.

‘Temporary blip?’

“The rise in China defence stocks probably [reflects] the view that if the India-Pakistan war escalates, China will arm Pakistan and replace any losses,” said David Roche, strategist at Quantum Strategy.

Pakistan and China established diplomatic relations in 1951. China has also been Pakistan’s most important defense partner

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, according to the U.S. Institute of Peace.

“China and Pakistan have long standing political ties. They’ve had long standing economic ties, and in particular, over the last several years, they’ve had deepening military ties,” said CSIS’ Jones.

Jones noted, however, that the stock rally could just be a “temporary blip.” 

India and Pakistan would ideally like to de-escalate, but the ball is now in Pakistan’s court, he added.

“[It’s up to Pakistan] whether it wants to respond more to the Indian strikes, or whether the potential shooting down of Indian aircraft was a good enough victory,” he added.

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#China #defense #stocks #surge #IndiaPakistan #tensions #escalate

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