AVIC Chengdu Aircraft Shares Plunge 9% Following PM Modi’s Address
Shares of AVIC Chengdu Aircraft Co., the Chinese manufacturer of J-10C fighter jets, experienced a significant decline of up to 9.31% on May 13, 2025, following Indian Prime Minister Narendra Modi’s assertive address concerning Operation Sindoor. The stock, which had previously surged over 60% amid escalating India-Pakistan tensions, dropped to an intraday low of 86.93 yuan before stabilizing at 88.66 yuan.
Market Reaction to Ceasefire and PM Modi’s Statement
The sharp decline in AVIC Chengdu’s share price coincided with the announcement of a ceasefire between India and Pakistan on May 10, which alleviated fears of prolonged conflict. Prime Minister Modi’s speech emphasized India’s robust air defense capabilities and a firm stance against terrorism, stating, “The world saw how Pakistan’s drones and missiles fell like straws in front of India. India’s strong air defense system destroyed them in the sky itself.”
This development led to a broader sell-off in Chinese defense stocks, with the Hang Seng China A Aerospace & Defence Index falling by 2.9%. Other companies, such as Zhuzhou Hongda Electronics Corp, also saw significant declines, reflecting a market reassessment of the geopolitical risk premium previously factored into these stocks.
Strategic Implications and Future Outlook
The recent volatility in AVIC Chengdu’s stock underscores the sensitivity of defense equities to geopolitical developments. Analysts suggest that while the initial surge was driven by expectations of increased military engagements, the subsequent de-escalation and India’s demonstrated defense capabilities have prompted investors to reevaluate the prospects of Chinese defense exports, particularly to nations like Pakistan.
Going forward, market participants are advised to monitor geopolitical developments closely, as defense sector stocks remain highly susceptible to shifts in international relations and defense policies.
