It is worth mentioning that, therefore, the proportion of pre allocation is small, and there is more room for funds to do long military stocks. The position proportion of public funds in military stocks is far lower than the historical average of 2.4%, which means that there is a large space for public funds to buy and sell military stocks. According to the Wells Fargo fund, the proportion of domestic military expenditure in GDP is still low, only 1.87%. Compared with the proportion of 2% - 4% in developed countries, Chinas military expenditure has much room for improvement.
Strong signal, the first year of the rise of military industry stocks?
In the context of the Sino US trade war, the news of a bulletproof vest has sent out a strong signal, which is the beginning of the rise of military industry. At the end of February 2020, the Chinese Army announced on the open equipment procurement information network that 930000 sets of universal bulletproof vest inserts would be purchased, with a unit price of nearly 8000 yuan. And 467000 sets of reinforced high-grade bulletproof vests with a unit price of more than 12000 yuan. A total of about 1.4 million sets will be delivered within two years.
Chinese reporters from securities companies have noticed that the share prices of A-share leading military industry stocks are closely related to the recent geopolitical situation. For example, on July 13, the US State Department issued the South China Sea statement, which was strongly worded to deny Chinas sovereignty over the South China Sea.
And on the same day of this statement, A-share military UAV leader Aerospace rainbow in late trading strong trading.
The most recent example is the closure of the Chinese Consulate in Houston by the United States, and Chinas announcement of diplomatic reciprocal measures to close the US consulate in Chengdu. Affected by the expected news, aerospace rainbow on July 24. On the same day, the Shanghai Composite Index fell more than 3.8%.
AVIC Shenfei, the first fighter, is almost the only company with a share price comparable to that of aerospace rainbow. In the military stock market in July, with its fighter business continuously attracting capital attention, it pulled out five limit boards in a row, and its share price doubled in a short month.
Obviously, the entire military industry sector has been significantly stimulated by the tense situation. In addition to the two leading players of AVIC Shenfei and aerospace rainbow, other stocks have also begun to outperform the market recently. In the market of the three major indexes falling sharply on July 24, Tianhai defense rose by more than 9%, including Guangqi technology, Leike defense, zhongbing Hongjian, China coastal defense, Great Wall military industry, Beidou Xingtong Military industry stocks such as triangular defense also performed well in the session.
The change of modern war pattern may lead to the division of military industry units
The tense geopolitical situation in July significantly stimulated the stock price performance of military stocks. In a short month, the stock prices of aerospace rainbow and AVIC Shenfei doubled. In July, the performance of leading military stocks has surpassed that of most industries in A-share market, showing that investors are cautious about the tense situation, and funds are gradually turning to military stocks.
However, Chinas securities companies have noticed that due to the particularity of the military industry, the share price of military shares is closely related to the strength of military companies. It is difficult for weak companies to obtain large-scale procurement, which makes it difficult for small companies to obtain capital favor. Although the military industry shares have benefited from the tense situation, the structure of the market is more obvious.
In addition, the changes in the form of modern war also make the stock prices of military industry stocks different. For example, UAV has become the main leader in the market, which highlights the need to avoid our own fighters going into dangerous situations in modern war, which is greatly increasing.
The inexplicable strength of A-share listed companies robots in the military industry stock market largely benefits from the fact that the United States has begun to seek the development of combat robots that can be used in actual combat. In this regard, the aerospace rainbow of the main military UAV has attracted the attention of funds. The strong trading limit and the almost trading limit of robots illustrate to a large extent the markets judgment on the direction and form of modern war.
In June this year, a report on Libyas civil war in 2020 will become the first unmanned aerial war in human history caused heated discussion among the public, which established a confidence foundation for aerospace rainbow to double its share price in July. Market participants judged that this military report may attract the attention of capital and institutional investors.
On July 1, according to a similar report published by the foreign military media defense world, it was pointed out that Libyas civil war has been known as the worlds largest UAV war. In the past six months, both sides of the war lost 25 UAVs, and pointed out that the UAVs used by the belligerents included Chinese military UAVs.
The organization believes that unmanned combat is the development direction of future war, and the actual combat training gives the army an opportunity to verify the combat methods and tactics of UAV from the perspective of actual combat. With the deepening of actual combat training and the definition of UAV combat methods, the scale of UAV assembly is expected to continue to rise.
On July 21, the announcement on social media that the 708 Institute of China shipbuilding industry group had invited tenders for new weapons and equipment, namely xx6 project, was interpreted by market participants as a possible UAV carrier or UAV amphibious assault ship.
It is worth mentioning that at present, there is no UAV carrier in the global Navy. If the market interpretation of 708 bidding announcement is verified in the future, it means that the war form of UAV will be further increased from army and air force equipment to navy equipment, which will directly stimulate the sales and performance of listed military UAV companies.
Related to this, the aerospace rainbow on July 21 was affected by the news, and the trading limit plate was once touched, indicating that the control panel mechanism of aerospace rainbow has paid close attention to the possibility of UAV aircraft carrier as a new type of weapon.
After UAV has become the main form of modern war, especially the civil war in Libya in 2020, the first UAV war broke out. UAVs were purchased and put into actual combat on a large scale, which significantly stimulated the listed companies of UAV leading stocks and industrial chain.
After the military market broke out in July this year, UAV listed companies have become the stock price leaders. Some listed companies have actively released news to show that their identities are close to UAVs.
On July 24, A-share listed company Beidou Xingtong said on the interactive platform that at present, the main domestic UAVs use the companys high-precision board cards, and the market share of Beidou Starcom is about 60% - 70%.
Considering that Chinas military UAVs use domestic Beidou navigation, market participants speculate that the military UAVs of aerospace rainbow may also adopt the products and services of Beidou satellite communication.
Fund allocation is small, and there is a large space for the promotion of military industry stocks
In addition to the A-share listed companies in the field of military UAVs, what other areas have attracted the attention of securities companies and fund managers, and how do institutions view the military industry stock market?
In the first seven months of 2020, mining company grand blastings share price rose 1.75 times. This is largely due to the secret weapon of the grand explosion.
In July 2019, the Director Secretary of grand blasting, A-share listed company, said that the listed company employed the retired former president of poly technology as the leader of the international sales team of HD-1 missile project. It is reported that the HD-1 supersonic cruise missile project is a complete weapon system, including three major series of onboard basic type, airborne type and shipborne type. The whole weapon system consists of missile, missile launching system, command and control system, target indication system and integrated support system. The project has high technology content, high added value and large output value, which is the first choice for strategic transformation of the company.
Anxin Securities believes that missiles are the most flexible subdivision of the military industry. Anxin securities clearly mentioned that the three quarter of 2020 has the allocation value of military industry, and the plate is still not bubble. Military market or enter the second stage, spread to basic and valuing bubbles. New materials still focus on carbon fiber and composite industry chain. National defense informatization construction or the development focus during the 14th Five Year Plan period. In the first stage, AVIC Shenfei will be the main one, and the second stage will focus on new materials and information technology.
A report from Anxin Securities pointed out that the HD-1 supersonic cruise missile has surpassed the Brahmos missile cooperated by India and Russia, and there is a large space for the military trade market. Compared with Brahmos, HD-1 has the characteristics of fast speed, large warhead, small volume and light weight. Its diameter is about 1 / 2 of that of bramos, the weight of warhead is 2 times of that of bramos, and its maximum flight speed is higher than that of Brahmos. The whole supersonic cruise flight can greatly improve the maneuverability and penetration ability of the missile. Compared with Brahmos, HD-1 military trade market has a large space.
Zhongtai Securities pointed out that the industry prosperity continued to rise, looking at the overall situation of the military industry plate. In the first half of this year, affected by the spread of the epidemic, the domestic market and the international market have great downward pressure. The military industry plate is less affected by macroeconomic fluctuations and has a weak cyclical attribute, and the increase is relatively better than the market. The disclosure period of the interim report is coming, and several companies have released the semi annual performance forecast of 2020, and the overall fundamentals of the military industry are getting better. With the continuous improvement of national defense informatization and the acceleration of military modernization, it is expected that the state will continue to strengthen its investment in the field of military industry in the future, so as to form a stable support for the demand for military products, and the military industry is expected to maintain a high level of momentum.
Why will the military industry stocks in 2020 become one of the unexpected main lines of the market?
In a report in April 2020, Wells Fargo pointed out that, in fact, since the second half of 2018, the pace of northward capital allocation for military industry has been significantly accelerated, which means that in the eyes of foreign investors, Chinas military industry has long-term relatively good investment value.
In terms of space, the proportion of Chinas military expenditure in GDP is still low, only 1.87%. Compared with the proportion of 2% - 4% in developed countries, Chinas military expenditure has a large space for improvement. According to the Research Report of Wells Fargo fund, as of April 2020, the valuation of the military industry has been at a historically low level.
In addition, Wells Fargo also pointed out that the wind data showed that the value of military stock market held by public funds was less than 40 billion, accounting for only 1.43% of the market value of fund stock investment, which was equivalent to returning to the state before 2014. In other words, with some catalysts in the military industry in the future, even if it is from the historical average level (2.4%), there is still a large room for improvement.
Source: securities companies China editor: Yang Qian_ NF4425