The broader market continued its adjustment on June 8th, with the Shanghai Composite Index briefly falling below the 4000-point mark. The military industry sector followed the market lower, with the core military asset, the Huabao Military Industry ETF (512810), declining over 2%. Its on-exchange price fell below all moving averages, and frequent premiums were observed in the secondary market, indicating that buying interest remains active.
Previously popular concept stocks such as MLCC and commercial space led the declines. Hongyuan Electronics plunged over 8%, while BLT, Zhenhua Technology fell more than 7%, and Aerospace Electric, Huafeng Technology dropped over 5%.
Where to Start
Fangzheng Strategy pointed out that this round of overall market correction began in mid-May. A-shares led the correction ahead of major overseas indices, with the core reason being profit-taking sentiment following a specific high-profile visit. Referring to the duration and magnitude of corrections following similar events, the All-Share Index has already completed a significant portion of its adjustment. Overall, the outlook for Q3 remains relatively optimistic, and the current adjustment may present a favorable opportunity for positioning.
Focusing on the military industry sector, a latest research report from Guosheng Securities expressed continued optimism for the commercial space, passive electronic components, and gas turbine/internal combustion engine sectors.
1) Commercial Space: China has entered a high-density launch mode. SpaceX plans to list on the Nasdaq on June 12th local time. The commercial space sector has undergone a relatively long adjustment period, with some core stocks having given back gains from the previous rally. In the long term, its strategic importance and market potential remain unchanged. In the short term, with multiple catalysts and low valuations, the commercial space sector is poised for a potential new uptrend.
2) Passive Electronic Components: Taking MLCCs as an example, AI servers use 10 to 15 times the number of MLCCs compared to general-purpose servers. Leading manufacturers, starting with Murata, significantly raised prices for AI server and high-end automotive-grade products from Q1 2026, prompting TDK, Taiyo Yuden, and other Japanese, Taiwanese, and domestic manufacturers to follow suit. This industry-wide price increase event continues to serve as a catalyst.
3) Gas Turbines/Internal Combustion Engines: Domestic gas turbine sales are growing rapidly, with related companies actively expanding production capacity, indicating sustained high industry prosperity.
Investment Vehicle for the Sector
For investing in the military industry, consider the "八一"-coded Huabao Military Industry ETF (512810) (formerly the National Defense Military Industry ETF). It aggregates cutting-edge military technologies across "land, sea, air, and space," comprehensively covering hot themes such as commercial space, MLCC, gas turbines, military AI, and large aircraft. It is also a margin trading and Stock Connect eligible security, serving as an efficient tool for one-click investment in core military assets.
Data sources include the Shanghai and Shenzhen Stock Exchanges and public information. Institutional views are sourced from: Guosheng Securities 20260607 "National Defense Military Industry Weekly Report: Focus on the MLCC, Commercial Space, and Gas Turbine Sectors."
Note: When subscribing for or redeeming fund units, subscription/redemption agents may charge a commission of up to 0.5%, which includes relevant fees charged by stock exchanges and registration institutions.
Risk Disclosure: The Huabao Military Industry ETF passively tracks the CSI Military Industry Index. The base date for this index is December 31, 2004, and it was published on December 26, 2013. The index constituents mentioned herein are for illustrative purposes only. Descriptions of individual stocks do not constitute any form of investment advice nor represent the holdings information or trading动向 of any fund managed by the manager. The composition of the underlying index constituents is adjusted according to its compilation rules. The fund manager assesses the risk rating of the Huabao Military Industry ETF as R3-Medium Risk, suitable for Balanced (C3) and above investors. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, any form of expression, etc.) is for reference only. Investors must be responsible for any independent investment decisions. Furthermore, any views, analysis, or forecasts in this article do not constitute investment advice of any kind to readers, nor shall they bear any responsibility for direct or indirect losses arising from the use of this content. Fund investment carries risks. The past performance of a fund does not represent its future performance. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Fund investment requires caution.
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