On September 9, the defense sector saw a strong intraday rally, with the China Securities Defense Industry Index climbing over 2% and more than 70 constituent stocks trading in positive territory. Anhui Yingliu Electromechanical Co.,Ltd. (603308) hit the daily limit up, while Inner Mongolia First Machinery surged over 9% to reach a fresh three-month high. The broader AVIC group rallied collectively, with Hongdu Aviation advancing more than 6% and AVIC Chengdu Aircraft rising over 5%.
The defense-themed ETF, Huabao Defense Industry ETF (512810), which passively tracks the China Securities Defense Industry Index, broke through its 60-day moving average during trading. Market activity was notably robust, with turnover by 10:50 AM already exceeding the full-day volume from the previous session.
What's driving the defense sector's sudden strength? Analysts point to rising expectations for the upcoming "15th Five-Year Plan" policy framework, coupled with ongoing geopolitical catalysts from the escalating US-Iran conflict. The sharp gains in AVIC-related stocks reflect growing market conviction that aircraft manufacturers and key component suppliers are poised for new order announcements, with the worst phase of earnings performance now behind them.
Looking ahead, the approaching Zhuhai Airshow and prospects for military export contracts provide additional upside potential for the sector. As the market continues to navigate a zero-sum trading environment with frequent sector rotation, the defense sector's relatively low valuation levels are drawing increasing capital attention. Current conditions may represent an attractive entry point for left-side positioning ahead of a potential sustained rally.
For investors seeking exposure to defense, the Huabao Defense Industry ETF (512810) offers comprehensive coverage of high-growth themes including commercial aerospace, low-altitude economy, large aircraft manufacturing, MLCC components, military AI applications, and gas turbine technology. The fund is also eligible for margin trading and Stock Connect programs, making it an efficient tool for one-click investment in core defense assets.
The ETF passively tracks the China Securities Defense Industry Index, which has a base date of December 31, 2004, and was officially launched on December 26, 2013. Its annual returns and volatility from 2021 to 2025 were 14.28%/33.05%, -25.74%/23.44%, -11.02%/18.34%, 8.20%/34.39%, and 31.55%/21.43%, respectively. Constituent stocks are adjusted periodically according to the index methodology, and past performance does not guarantee future results.
Investors should note that the risk rating for this ETF is R3-moderate risk, suitable for investors with a balanced risk profile (C3) or above. The fund manager charges a commission of up to 0.5% for subscription and redemption services through authorized agencies, which includes fees levied by securities exchanges and registration institutions. The information presented herein serves as reference only, and investors are solely responsible for their independent investment decisions.