On June 4th, the broader market experienced a significant correction, yet the defense sector managed to hold firm in positive territory. The core defense asset, the Huabao Defense ETF (512810), surged nearly 1% during the session before consolidating above the waterline in the afternoon.
Constituent stocks showed localized strength, with MLCC and gas turbine concepts being particularly robust. Zhuzhou Hongda Electronics Corp.,Ltd. (SHE: 300726) hit a 20% limit-up, while Zhenhua Technology, China Shipbuilding Industry Group Power Co., Ltd., and Xuguang Electronics all rose by the 10% daily limit. Declines in stocks like AVIC UAV Systems Co., Ltd., AVIC Chengfei Integration Technology Co., Ltd., and AVIC XAC Commercial Aircraft Co., Ltd. weighed on the sector's overall performance.
On the news front, industry data revealed that leading Japanese manufacturers have raised prices for AI server-grade MLCCs by 15% to 35%, with some suppliers increasing prices by 6% to 13%. Delivery times for high-end products have significantly extended to over 20 weeks.
Regarding gas turbines, a research report from CICC indicated that the projected supply gap for gas turbines required by data centers is expected to widen from 4.3GW in 2025 to 15.1GW by 2030, suggesting a persistent long-term capacity shortage.
It is noteworthy that since mid-May, the defense sector has been undergoing a correction to digest valuation froth, and its current positioning now offers relatively attractive investment value. The underlying index for the Huabao Defense ETF (512810) currently has a trailing P/E ratio of 70.61, which is lower than its level for more than half of the period over the past three years.
Investing in Defense with the "81" Code
The Huabao Defense ETF (512810), whose code contains "81" (formerly the National Defense ETF), aggregates cutting-edge military technologies across "land, sea, air, and space," providing comprehensive exposure to hot themes like commercial aerospace, defense AI, large aircraft, and the low-altitude economy. It is also eligible for margin trading and Stock Connect schemes, serving as an efficient tool for one-click investment in core defense assets.
Data is sourced from the Shanghai and Shenzhen stock exchanges and public information.
Note: When subscribing for or redeeming fund shares, subscription and redemption agents may charge a commission of up to 0.5%, which includes relevant fees levied by stock exchanges and registration institutions.
Risk Disclosure
The Huabao Defense ETF passively tracks the CSI Defense Index, which has a base date of December 31, 2004, and was launched on December 26, 2013. The index constituents mentioned in this article are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings or trading activities of any funds managed by the fund manager. The composition of the underlying index's constituents is adjusted according to its compilation rules. The fund manager assesses the risk rating of the Huabao Defense ETF as R3 - Medium Risk, suitable for investors with a Balanced (C3) or higher risk profile. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are solely responsible for any independent investment decisions they make. Furthermore, any views, analyses, or predictions herein do not constitute investment advice of any kind to the reader, and no liability is accepted for any direct or indirect losses arising from the use of this content. Fund investment carries risks. The past performance of a fund is not indicative of its future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Invest with caution in funds.
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