The military sector experienced a rapid decline in early trading on June 2. The core military asset, the Huabao Military Industry ETF (512810), fell over 3% intraday to hit a near three-month low. As of the latest update, it was down 1.62%, having broken below its annual moving average. Despite the drop, the ETF saw frequent intraday premiums, with active buying interest persisting. Over the previous two trading sessions, more than 30 million yuan in net subscriptions flowed in on the dip.
Constituent stocks broadly declined, with Jiangxi Lian Chuang Optoelectronic Science And Technology Co.,Ltd. (SHSE: 600363) leading the losses, down 5%. The commercial aerospace concept continued its adjustment, with stocks like Aerospace Nanhu, Aerospace Development, and Aerospace Electronics experiencing significant collective declines.
Analyst Perspective from Recent Report
A military industry weekly report released by Orient Securities on June 1st noted that since the second quarter, risk appetite has been shifting from the middle towards both ends of the spectrum, which has significantly impacted the military sector. However, the firm maintains that the long-term trends for dual-engine industrialization resonance and commercial aerospace remain intact. They continue to be optimistic about these two segments and also suggest paying attention to investment opportunities in domestic demand-driven military stocks in the second half of the year.
Current Valuation Assessment
From a valuation perspective, the price-to-earnings ratio (TTM) of the index tracked by the Huabao Military Industry ETF (512810) has moderated to around the 50th percentile of its nearly three-year range, highlighting its improved investment value.
Key Features of the Featured ETF
The Huabao Military Industry ETF (512810), whose code includes the numbers "八一", aggregates cutting-edge military technologies across naval, land, air, and space domains. It provides comprehensive exposure to popular themes such as commercial aerospace, military AI, large aircraft, and the low-altitude economy. The ETF is also eligible for margin trading and is included in the Stock Connect programs, positioning it as an efficient tool for a one-stop investment in core military assets.
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