Chinese defense stocks skyrocketed Thursday amid escalating tensions between India and Pakistan, with investors betting on increased demand for military hardware from Beijing’s long-standing allies. The CSI Defense Index surged 15%, led by state-owned giants China North Industries Group (Norinco, +22%) and China Aerospace Science and Industry Corporation (CASIC, +18%), as regional instability drove speculation of record arms exports.

Key Developments:

• Border Skirmishes: India accused Pakistan of cross-border drone strikes in Kashmir, prompting retaliatory artillery exchanges.

• Chinese Arms Exports: Pakistan signed a $2 billion deal for Norinco’s VT-4 tanks and CASIC’s HQ-9 missile systems.

• Domestic Production: China’s defense sector is operating at 90% capacity to meet surging global orders.

Expert Insight:
“China is the primary beneficiary of South Asian tensions,” said Goldman Sachs defense analyst Li Wei. “Its cost-effective artillery and drones dominate emerging markets, and these clashes will accelerate procurement cycles.”