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Japan Times
19-05-2025
- Business
- Japan Times
China's defense industry is getting a DeepSeek moment
In investing, narratives can matter a lot more than earnings or cash flow analysis. Pakistan is certainly spinning a good story about China's defense industry. Its army said it used Chinese J-10C planes to shoot down five Indian jets, including three Rafales, a MIG-29 and an Su-30. Rafales are made by France's Dassault Aviation, while the other two were imported from Russia. India's government has not confirmed or denied Islamabad's claim and evidence remains inconclusive. Nonetheless, investors got excited. It was the first real combat between modern Chinese warplanes and advanced Western jets — and surprisingly, China seems to have come out on top. On Monday, Avic Chengdu Aircraft, which made the J-10C jets, soared 20.6%, while Dassault tumbled 6.2%. Some are hailing it as another DeepSeek moment for China. In late January, a little-known Hangzhou-based startup released an AI reasoning model that performed almost as well as OpenAI at a fraction of the cost, thereby propelling a bull run in Chinese tech names. Are we witnessing a repeat, in defense this time? I see parallels. While the jury is still out on how disruptive DeepSeek is to U.S. big tech, its arrival has pointed to a new way forward for China and shows that growth is still possible despite U.S. President Donald Trump's tariffs. More than manufacturing electronics and apparel, Chinese companies can be good at making software, too, the thinking goes. Over time, they might just be able to gain market share in services exports, which the U.S. dominates. Similarly, Chinese defense companies might one day be able to sell more weapons overseas. Between 2020 and 2024, China accounted for only 5.9% of global arms exports, well behind America's 43%, according to the Stockholm International Peace Research Institute. In addition, there's little geographical diversity; Almost two-thirds of China's weapons exports went to Pakistan. So imagine China selling more warplanes and missiles to the Global South. Already, it's the biggest supplier in West Africa, accounting for 26% of total arms imports there. This is lucrative business: Dassault Aviation notched 17% net income margin last year. To be sure, investors will have to wait for months, if not years, to see if developing nations friendly with Beijing will place more military equipment orders. But positioning well ahead of positive earnings is nothing new. German and French defense names are on fire this year, triggered by the White House's isolationist foreign policies and NATO countries' vows to ramp up spending. Whether the Europeans can get their act together is another matter. But that has not stopped Dassault from rallying more than 50% for the year despite Monday's drop. Meanwhile, Germany's Rheinmetall and Hensoldt more than doubled in market value. There is also the lack of availability. One reason European military stocks are doing so well is because there are only a handful of publicly listed names that asset managers can get exposure to. After all, for decades Europe relied on the U.S. for national security, so the continent's defense industry is fragmented and in need of an overhaul. A similar picture emerged in China. Military modernization is new and the country only weaned itself off imported Russian weapons in the mid-2010s. For arms exporters, there's no better advertisement success in a real confrontation. In a way, China's long-held friendship with Pakistan is already paying off. Islamabad is doing a great job marketing Beijing's military might. Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She is a CFA charterholder.
Times
18-05-2025
- Business
- Times
Xi's war machines: combat ‘kill' gives Beijing a boost in arms export race
The recent hostilities between India and Pakistan left both claiming victory, without much evidence on display for either. One country that could give factual grounds for a sense of triumph, however, was China — and in particular its arms industry. A company based in the country's southwest, Avic Chengdu Aircraft, saw its share price rise 40 per cent in five days alone in the aftermath of the fighting. In a rare semi-confirmed detail of the conflict, whose participants kept their losses secret, a French Rafale jet flown by the Indian air force was shot down by a much cheaper Chinese-made J-10C fighter flown by the Pakistani side. The J-10C is manufactured by Avic Chengdu, and its 'score' against the Rafale was met with a
CNA
15-05-2025
- Business
- CNA
Commentary: China's defence industry is getting a DeepSeek moment with India-Pakistan clash
HONG KONG: In investing, narratives can matter a lot more than earnings or cash flow analysis. Pakistan is certainly spinning a good story about China's defence industry. Its army said it used Chinese J-10C planes to shoot down five Indian jets, including three Rafales, a MIG-29 and a Su-30. Rafales are made by France's Dassault Aviation, while the other two were imported from Russia. India's government has not confirmed or denied Islamabad's claim and evidence remains inconclusive. Nonetheless, investors got excited. It was the first real combat between modern Chinese warplanes and advanced Western jets – and surprisingly, China seems to have come out on top. On Monday (May 12), Avic Chengdu Aircraft, which made the J-10C jets, soared 20.6 per cent, while Dassault tumbled 6.2 per cent. Some are hailing it as another DeepSeek moment for China. In late January, a little-known Hangzhou-based startup released an AI reasoning model that performed almost as well as OpenAI at a fraction of the cost, thereby propelling a bull run in Chinese tech names. Are we witnessing a repeat, in defence this time? GLOBAL ARMS EXPORT I see parallels. While the jury is still out on how disruptive DeepSeek is to US big tech, its arrival has pointed to a new way forward for China, and shows that growth is still possible despite US President Donald Trump's tariffs. More than manufacturing electronics and apparel, Chinese companies can be good at making software, too, the thinking goes. Over time, they might just be able to gain market share in services exports, which the US dominates. Similarly, Chinese defence companies might one day be able to sell more weapons overseas. Between 2020 and 2024, China accounted for only 5.9 per cent of global arms exports, well behind America's 43 per cent, according to the Stockholm International Peace Research Institute. In addition, there's little geographical diversity; almost two-thirds of China's weapons exports went to Pakistan. So imagine China selling more warplanes and missiles to the Global South. Already, it's the biggest supplier in West Africa, accounting for 26 per cent of total arms imports there. This is lucrative business: Dassault Aviation notched 17 per cent net income margin last year. MARKETING MILITARY MIGHT To be sure, investors will have to wait for months, if not years, to see if developing nations friendly with Beijing will place more military equipment orders. But positioning well ahead of positive earnings is nothing new. German and French defence names are on fire this year, triggered by the White House's isolationist foreign policies and NATO countries' vows to ramp up spending. Whether the Europeans can get their act together is another matter. But that has not stopped Dassault from rallying more than 50 per cent for the year despite Monday's drop. Meanwhile, Germany's Rheinmetall and Hensoldt more than doubled in market value. There is also the lack of availability. One reason European military stocks are doing so well is because there are only a handful of publicly listed names that asset managers can get exposure to. After all, for decades Europe relied on the US for national security, so the continent's defence industry is fragmented and in need of an overhaul. A similar picture emerged in China. Military modernisation is new and the country only weaned itself off imported Russian weapons in the mid-2010s. For arms exporters, there's no better advertisement success in a real confrontation. In a way, China's long-held friendship with Pakistan is already paying off. Islamabad is doing a great job marketing Beijing's military might.
Mint
15-05-2025
- Business
- Mint
Why is China's J-10 jet maker Avic Chengdu Aircraft share price falling after Modi's strong message against terrorism?
Avic Chengdu Aircraft share price: The stock of Chinese defence company Avic Chengdu Aircraft, which manufactures the J-10 fighter jets used by Pakistan's air force against India, has come under selling pressure following the successful completion of India's Operation Sindoor and a strong-worded message by Prime Minister Narendra Modi regarding intolerance of any kind of terrorism. Against this backdrop, Avic Chengdu Aircraft share price has seen a volatile few days, falling in two of the last three trading sessions. On Thursday, the Chinese defence stock opened at 87.74 yuan, down 3% from its last closing price of 90.35 yuan. It later extended losses, falling 6.30% to the day's low of 84.65 yuan. In the three trading sessions, Avic Chengdu Aircraft share price has lost nearly 12% of its value. However, despite the recent selloff, China's J-10 fighter jet maker's stock has rallied 43.83% in May alone amid the deployment of the jets by Pakistan's air force following increased tensions with India. Barring the stellar rally in May, Avic Chengdu Aircraft share price has recorded back-to-back losses for four months, nosediving 19% during this period. Ganesh Dongre, Senior Manager — Technical Research at Anand Rathi, believes that the Chinese defence stock is trading in an overbought zone and is likely to see limited gains in the near term. 'Avic Chengdu Aircraft is trading in the overbought zone on the weekly chart, indicating limited upside potential in the near term. The stock has established stiff resistance in the 90–95 range, where it has repeatedly failed to break out decisively. This price behaviour has led to a double top pattern, a classic bearish reversal signal, suggesting increased caution for traders,' Dongre said. He sees immediate support for Avic Chengdu stock at the 76 mark. 'A closing below this level could trigger further correction, potentially dragging the stock down to the 60–65 range. Given the current technical setup, traders are advised to avoid fresh entries at the current levels and instead wait for a dip closer to the stronger support zone before considering long positions. Buying near the 60–65 range would offer a more favourable risk-reward opportunity,' advised Dongre. The fall in Avic Chengdu Aircraft's share price, along with other Chinese defence stocks, comes following PM Modi's address to the nation, wherein he said that terror and trade, terror and talks, cannot go together. PM Modi also warned Pakistan that India will not succumb to nuclear blackmail, adding that Operation Sindoor is India's new policy against terrorism and our unwavering pledge for justice. "It is the new normal. We have only kept in abeyance our operations against Pakistan and the future will depend on their behaviour," Modi said in his address. Operation Sindoor was India's response to the terror attack on civilians in Pahalgam, Kashmir, on April 22, which resulted in the death of 26 people. India carried out precision strikes on terror infrastructure early on May 7, following which Pakistan attempted to attack Indian military bases on May 8, 9 and 10. India's defence ministry on Wednesday said the Indian Air Force bypassed and jammed Pakistan's Chinese-supplied air defence systems, completing the mission in just 23 minutes and demonstrating India's technological edge. Disclaimer: This story is for educational purposes only. 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.
Mint
13-05-2025
- Business
- Mint
J-10 fighter jets maker Avic Chengdu Aircraft share price crashes 9% after PM Modi's address to nation
Avic Chengdu share price: The high-flying Chinese defence company, Avic Chengdu Aircraft, shares witnessed a heavy selloff on Tuesday, May 13, following a strong-worded message by Prime Minister Narendra Modi a day ago on the successful completion of Operation Sindoor. Following his message, shares of Chinese defence companies faced heavy selloff today, even as Indian defence stocks rallied. Avic Chengdu Aircraft, the maker of J-10 fighter jets which Pakistan Deputy Prime Minister Ishaq Dar said were used by its air force, also declined sharply. Avic Chengdu Aircraft share price crashed as much as 9.31% to 86.93 yuan in intraday trade today. As of 1.15 pm IST, China's Avic Chengdu Aircraft stock was down 7.51% at 88.66 yuan. PM Modi warned Pakistan that India will not succumb to nuclear blackmail and sent a clear message to the world: terror and trade, terror and talks cannot go together.
