On the first trading day of the Year of the Horse (February 24), China's A-share military sector initially dipped but quickly recovered, maintaining gains throughout the session. The popular Huabao Military ETF (512810) rose as much as 1.98% intraday, closing up 1.16% for its third consecutive positive day. The fund frequently traded at a premium, with a closing premium rate of 0.29%, indicating active buying interest.
Among its constituents, 57 stocks advanced while 23 declined. AVIC Heavy Machinery and Feilihua Quartz led gains, rising over 8%. China Dynamics surged 6.17%. Heavyweight components China State Shipbuilding, AECC Aero-Engine Corporation, and Guangqi Technology all rose more than 2%. However, several popular commercial aerospace stocks, including Zhenratech and Aerospace Hi-tech Development, fell against the market trend.
Recent catalysts have emerged across military domains around the Spring Festival period. Domestically, during the holiday travel season, 14 homegrown C919 commercial aircraft operated nearly 50 flights daily on average, representing a 52.6% year-over-year increase, with accelerated localization progress expected by 2026. In commercial aerospace, industry insiders indicate that intensive testing of reusable rockets is anticipated between March and June.
Internationally, heightened tensions between the U.S. and Iran have drawn attention. Recently, U.S. defense giant Raytheon Technologies announced that the U.S. Navy approved its "StormBreaker" smart weapon for use on the Super Hornet fleet. As global geopolitical risks intensify, the urgency for China's national defense modernization increases.
A recent research report from Orient Securities recommends "increasing allocation to the military sector, with a primary focus on commercial aircraft and arms trade." The institution believes that accelerated progress in key areas of large aircraft development exceeds expectations, and the potential for increased arms trade market share in regions like the Middle East may strengthen due to recent geopolitical events. Investors should prioritize these two areas while watching for opportunities in commercial aerospace and domestic demand.
The Huabao Military ETF (512810), which covers themes such as "large aircraft, commercial aerospace, low-altitude economy, satellite navigation, military informatization, and controlled nuclear fusion," serves as an efficient tool for investing in core military assets. It is also eligible for margin trading and Stock Connect programs.
Data sources include the Shanghai and Shenzhen stock exchanges and public information.
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Risk Disclosure: The Huabao Military ETF passively tracks the CSI Military Index, which has a base date of December 31, 2004, and was launched on December 26, 2013. Constituent stocks mentioned are for illustrative purposes only; individual stock descriptions do not constitute investment advice nor represent holdings or trading activities of the fund manager. Index constituents are adjusted according to the index methodology. The fund manager assesses the risk level of the Huabao Military ETF as R3-Medium Risk, suitable for balanced (C3) and higher risk-profile investors. Any information presented is for reference only, and investors are responsible for their independent investment decisions. Views, analysis, and forecasts do not constitute investment advice, and no liability is accepted for direct or indirect losses resulting from the use of this content. Fund investments carry risks; past performance does not guarantee future results, and the performance of other funds managed by the fund manager does not guarantee this fund's performance. Invest with caution.