China’s defence stocks jump up to 10% led by AVIC Shenyang as Pakistan announces arms purchase

Shares of Chinese defense companies rallied on Monday after Pakistan said that it intends to buy one of the Asian power’s most-advanced fighter jets as a part of major arms purchase. Among the top gainers was AVIC Shenyang Aircraft Company, whose stock surged over 10% following Pakistan’s announcement that it plans to buy J-35 stealth fighter jet from the Chinese company.

Touted as one of the country’s most-advanced fighter jets, the deal is seen as a part of major arms purchase by India’s western neighbour.

On Friday, the government of Pakistan in a social media post said that it would acquire 40 J-35 fifth-generation fighter jets, KJ-500 airborne early warning and control aircraft, as well as HQ-19 ballistic missile defense systems.

Shares of AVIC Shenyang Aircraft have remained unbeaten for the past three trading sessions, Today’s rally has extended stocks gains to 13% in the past five sessions. While it is a month since the ceasefire between India and Pakistan was implemented, AVIC Shenyang Aircraft shares have jumped 18% in this period.

An armed escalation broke out between India and Pakistan between May 7 and May 10 as India hit several targets in Pak Occupied Kashmir (PoK) to avenge the killings in Pahalgam where 26 innocent tourists were killed.

AVIC Shenyang Aircraft has been in the thick of action owing to its J-35 stealth fighter jetMeanwhile, other Chinese defence stocks also saw a positive rub-off impact as Aerospace Nanhu Electronic Information Technology Co., whose shares jumped as much as 15% on the intraday basis. This counter has rallied 10% in the past five trading sessions.Aerospace CH UAV Co shares were up by over 1% while Inner Mongolia First Machinery Grp Co was 4% higher.

The J-35 sale to Pakistan would mark China’s first export of the fifth-generation jet, which has advanced stealth capabilities for penetrating the airspace of an adversary, a Bloomberg report said. The fighter was developed by Shenyang Aircraft Corporation and publicly unveiled at the 2024 Zhuhai Airshow, it added.

The KJ-500 aircraft would improve Pakistan’s radar coverage and its smaller size allows for nimbler use in regional clashes. The HQ-19 surface-to-air missile systems would enhance the country’s ability to intercept ballistic missiles.

The deal comes amid persisting tensions between Pakistan and India. The nuclear-armed neighbors clashed several weeks ago, with both sides trading air, drone and missile strikes, as well as artillery and small arms fire along their shared border in early May.

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