When tensions between india and pakistan increased and the situation became like war, china benefited the most from it. As long as the situation of tension between the two countries remained, China's stock market, especially defense stocks, saw a big rise. But, now that both the countries have announced a ceasefire, China's defense stocks are once again witnessing a decline.
There was a boom in Chinese stocks due to the fear of war
After the recent conflict between india and pakistan, investors felt that china would supply more weapons to Pakistan. This hope helped in taking the shares of Chinese defense companies up. On May 8, the shares of AVIC Chengdu Aircraft (which supplies J-10C fighter jets to Pakistan) had climbed up to 16 percent. At the same time, the shares of AVIC Aerospace (manufactures military planes and helicopters) also rose by more than 6 percent. Even the shares of china State Shipbuilding Corporation (which supplies naval ships to Pakistan) were up.
Ceasefire and share crash
On May 10, India-Pakistan announced a ceasefire. The US also played an important role in this and since then Chinese defense stocks have seen a huge decline. Shares of AVIC Chengdu Aircraft fell by 7.4 percent. Shares of china State Shipbuilding also fell by more than 4 percent. Shares of Zhuzhou Hongda Electronics (manufactures military electronics) also fell by 6.34 percent.
How strong is the military relationship between china and Pakistan?
Pakistan has been buying weapons from china for a long time. According to SIPRI data, between 2019-2023, pakistan bought weapons worth $5.28 billion from China. 81 percent of Pakistan's total imports come from China. Even pakistan gets JF-17 Thunder jets, SH-15 artillery guns and naval ships from China.
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