Chinese defence stocks fall up to 8% on India-Pakistan ceasefire

Chinese defence stocks fall up to 7% on India-Pakistan ceasefire.

Chinese defence stocks traded under heavy selling pressure on Tuesday after India-Pakistan ceasefire. Both the countries on May 10 reached an understanding to immediately halt all firing and military actions on land, air, and sea, following four days of intense cross-border drone and missile strikes.

After India launched Operation Sindoor that targeted terror camps in Pakistan and Pakistan-occupied Kashmir, Islamabad responded with a barrage of drone attacks towards India.

India's advanced air defense systems intercepted strikes launched by Pakistan, which relied heavily on Chinese weaponry, including China-made drones and missiles.

However, after the cessation of hostilities between India and Pakistan, shares of major defence firms in China took a sharp downturn. The Hang Seng China A Aerospace & Defence Index was on May 13 trading 3 percent lower. Its constituents AVIC Chengdu and Zhuzhou Hongda were trading 8.6 percent and 6.3 percent lower, respectively.

The AVIC Chengdu Aircraft is the manufacturer of J-10C fighter jets. Pakistan's Foreign Minister Ishaq Dar had said in their Parliament that Chinese-made J-10C fighter jets were used in the engagement with Indian fighter jets.

Zhuzhou Hongda Electronics Corp Ltd is the maker of PL-15 missiles, which were used by the Pakistan army.

China was the largest seller of weapons to Pakistan in 2020-24, accounting for 81 percent of its imports, a Moneycontrol analysis of SIPRI data found. The Netherlands was at 5.5 percent and Turkey, whose drones Pakistan has used liberally during the conflict with India, accounted for 3.8 percent of Pakistan weapon purchases.

Pakistan’s reliance on China for weapons deepens, while Turkey climbs to No. 3 spot

Another subsidiary, AVIC Aerospace, which produces military aircraft and helicopters, saw its Hong Kong-listed shares declined over 2 percent.

Aviation Industry Corporation of China (AVIC) is a massive state-owned aerospace and defense conglomerate that encompasses many of the design bureaus and manufacturing plants responsible for China's aircraft and airborne weaponry.

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