Defense Sector Leads Market Rally on Policy Support and Earnings Recovery; Western Superconducting Surges 10%, ETF 512810 Breaks 60-Day Moving Average

On the morning of October 28, the defense sector defied broader market trends, emerging as the top performer.

The popular Defense Industry ETF (512810) surged over 1%, breaking through its 60-day moving average after reclaiming the 20-day line the previous day. Among its constituents, Western Superconducting Technologies Co.,Ltd. (688122) soared by 10%, while Tianhai Defense and Aerospace Development rose over 6%. Other stocks like Raytron Technology and Guoke Defense also posted significant gains.

The sector has seen a wave of catalysts recently. The newly released "15th Five-Year Plan" proposal elevated national security as a priority, aligning defense capabilities with economic, technological, and comprehensive national strength by 2035. The plan also emphasized fostering emerging industries, particularly in low-altitude economy, commercial aerospace, and deep-sea technology—sectors with strong technological and supply-chain overlaps with defense.

Analysts predict these initiatives could unlock trillion-dollar markets, creating opportunities for defense firms to expand into civilian applications.

Meanwhile, Q3 earnings reports confirm the sector's recovery. Of the 32 constituents in the Defense Industry ETF (512810) that have disclosed results, 27 were profitable, with half posting double-digit year-on-year growth. Notable performers include Chuancai New Materials (up 20-fold), GaoDe Infrared (up 10-fold), and Huafeng Technology (up 5-fold).

Dongxing Securities highlighted the sector's dual demand drivers under the new five-year plan, while Huafu Securities noted its attractive valuation given expected demand recovery in 2025–2026.

The Defense Industry ETF (512810), tradable via margin and Stock Connect, offers exposure to themes like commercial aerospace, AI in defense, and nuclear fusion.

Data sourced from SSE, SZSE, and public filings.

Risk Disclosure: The ETF tracks the CSI Defense Index (base date: 2004-12-31; launched: 2013-12-26). Past annual returns (2020–2024): 67.91%, 14.28%, -25.74%, -11.02%, 8.20%. Index composition may change; historical performance is not indicative of future results. Stock mentions are for illustrative purposes only and do not constitute recommendations. Fund risk rating: R3 (moderate), suitable for balanced (C3) or higher risk tolerance investors. Investment decisions carry inherent risks; past performance does not guarantee future returns.

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