China Aerospace, Avic Aviation to Aerospace CH UAV: Chinese defence stocks extend fall; slip up to 2%

Chinese defence stocks traded lower on Wednesday, with several counters falling over 2%, as geopolitical tensions between India and Pakistan showed signs of easing. The Hang Seng China A Aerospace & Defence Index declined for the second consecutive session, slipping nearly 1%. The index has closed lower in six of the past seven sessions, recording a cumulative decline of 5.55% over this period.

Key constituents of the index—including Aerospace CH UAV Co, Inner Mongolia First Machinery Group, Beijing Cisri Gaona Materials Technology, China Aerospace, and AVIC Aviation High Technology—registered losses ranging from 0.5% to 2.5%.

Meanwhile, AVIC Chengdu Aircraft share price rose over 1% on Wednesday. The company manufactures the J-10 fighter jets, which, according to Pakistan’s Deputy Prime Minister Ishaq Dar, were recently deployed by the country’s air force. Despite Wednesday’s gains, the stock has declined 7.5% over the past five trading sessions. However, it remains up 39% over the past month.

India-Pakistan Tensions

The recent correction in Chinese defence stocks follows a sharp rally fueled by expectations of increased arms exports to Pakistan. However, investor sentiment has turned cautious amid easing geopolitical tensions and firm diplomatic messaging from India.

The market responded to statements by Indian Prime Minister Narendra Modi, who addressed the nation following the successful completion of Operation Sindoor — a military initiative launched in retaliation to recent cross-border aggression. Modi hailed the operation as a testament to India’s enhanced defence preparedness and technological self-reliance.

Both the Indian Army and the Prime Minister have highlighted the performance of indigenous defence systems, including the Akash Surface-to-Air Missile (SAM) and advanced electronic warfare capabilities. These systems reportedly operated effectively against Chinese-origin defence equipment deployed by Pakistan during the conflict.

Meanwhile, Indian defence stocks have shown a stellar rally recently.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.