The defense sector's decline persists. On May 20th, the defense sector traded in negative territory throughout the day. The core defense asset, the Huabao Defense Industry ETF (512810), closed down 0.62%, marking its fifth consecutive daily decline. It fell below its 200-day moving average for the first time in over a month and a half. Notably, funds had been accumulating positions in the ETF over the preceding four trading days, with a cumulative net inflow exceeding 16 million yuan.
Constituent stocks mostly declined. The heavyweight leader, China State Shipbuilding Corporation, rebounded 3.23% to support the index, while AVIC Jonhon Optronic Technology surged nearly 4%. Concepts related to commercial aerospace and defense informatization saw larger declines. Kuang-Chi Technologies fell 3.24%, while Aerospace Hi-Tech Holding Group and China Satellite Communications fell over 1%.
Analysts at Orient Securities noted that recent adjustments in the commercial aerospace sector were influenced by rumors of postponed domestic reusable launch tests and shifts in market risk appetite. However, they believe the next two months could see positive catalysts both domestically and internationally, potentially driving a rebound in commercial aerospace.
In recent news, Elon Musk's SpaceX is reportedly set to list on the Nasdaq Stock Market on June 12th, with an estimated valuation of $1.75 trillion. This record-breaking IPO is expected to have a significant global market impact, potentially boosting investor enthusiasm for the aerospace sector.
Domestically, the next two months are expected to see a series of intensive tests for reusable rockets, including the Xingyun-1, Zhuque-3 Yao-2, Long March 10B, and Long March 12B, with potential breakthroughs in reusable technology. For satellites, key next-generation core technologies are expected to undergo accelerated verification.
Looking ahead to the second half of 2026, analysts at Kaiyuan Securities believe that breakthroughs in reusable rocket technology could provide sustained catalysts for the commercial aerospace industry. Conflicts such as those between the US and Iran, which have depleted missile inventories, and the India-Pakistan conflict, which has validated the combat capabilities of Chinese equipment, highlight strategic opportunities for defense exports. With major defense export orders gradually materializing, they are optimistic about the resulting performance growth. The start of the "15th Five-Year Plan" period and the approaching centennial goal of the People's Liberation Army are expected to significantly enhance the certainty of defense procurement orders. Continued global geopolitical tensions also provide room for increased defense spending.
[For Defense Investment, Choose "81"] The Huabao Defense Industry ETF (512810), whose code contains "81", aggregates cutting-edge defense technologies across "land, sea, air, and space," comprehensively covering popular themes such as commercial aerospace, defense AI, large aircraft, and the low-altitude economy. It is also a margin trading and Stock Connect eligible security, serving as an efficient tool for one-click investment in core defense assets.
Data sources: Shanghai and Shenzhen Stock Exchanges, public information. Institutional views sourced from: Orient Securities report dated May 18, 2026, "Weekly Report on the Defense Industry"; Kaiyuan Securities report dated May 19, 2026, "Mid-Year 2026 Investment Strategy for the Defense Industry."
Note: When subscribing for or redeeming fund shares, subscription/redemption agents may charge a commission of up to 0.5%, which includes related fees charged by stock exchanges and registration institutions.
Risk Disclaimer: The Huabao Defense Industry ETF passively tracks the CSI Defense Industry Index. The index's base date is December 31, 2004, and its release date is December 26, 2013. Constituent stocks mentioned 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动向 of any fund 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 level of the Huabao Defense Industry 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 stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are responsible for their own investment decisions. Furthermore, any views, analysis, or forecasts 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 in funds with caution.
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