Chinese defence stocks surged on Monday following reports that Pakistan plans to acquire some of China’s most advanced weaponry in a major arms deal. AVIC Shenyang Aircraft Company share price hit the 10% daily upper limit on the Shanghai Stock Exchange, marking gains for a third consecutive session.
According to a Bloomberg report, Pakistan intends to procure 40 J-35 fifth-generation fighter jets, along with KJ-500 airborne early warning and control aircraft and HQ-19 ballistic missile defence systems. The J-35, developed by AVIC Shenyang Aircraft and unveiled at the 2024 Zhuhai Airshow, is considered the centrepiece of the proposed deal. If finalised, this would mark the first international sale of the J-35 fighter jets.
AVIC Shenyang share price has rallied over 16% in the past seven trading sessions. The broader optimism also lifted other Chinese defence stocks. Shares of Aerospace Nanhu Electronic Information Technology surged as much as 15%, while Inner Mongolia First Machinery Group, Jiangxi Hongdu Aviation Industry, AVIC Heavy Machinery, and AVIC Chengdu Aircraft rose between 2% and 4%. The Hang Seng China A Aerospace & Defence Index gained nearly 2%.
The development comes against the backdrop of renewed geopolitical tensions between India and Pakistan. Pakistan’s announcement, made via a social media post on Friday, follows a series of confrontations that began in early May. Chinese defence stocks had earlier rallied when Pakistan claimed that Chinese-made J-10C fighter jets helped down six Indian aircraft.
However, that rally in Chinese defence stocks was short-lived after India downplayed those claims and launched ‘Operation Sindoor,’ a precision airstrike campaign deep into Pakistani territory.
Amid these escalations, Chinese defence stocks have seen heightened volatility, reacting to each turn in the India-Pakistan conflict.
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