Core Viewpoint - The recent military parade in Beijing showcased advanced military equipment, leading to a surge in the defense sector of the capital market, although a subsequent pullback was observed in stock prices after the event [1][3][11]. Market Performance - The military sector has seen significant gains, with the China Securities Military Industry Index rising over 10% in the past month, outperforming the Shanghai Composite Index [1][3]. - The Guozheng Aerospace Index reported a return of 62.45% over the past year, indicating strong performance in the aerospace sector [6][11]. - Notable stocks like Beifang Longteng have surged over 400% in two months, reflecting heightened investor interest [1]. Stock Reactions - Following the parade, stocks such as AVIC Chengfei and Beifang Longteng experienced declines, indicating a market correction after the initial excitement [1][6]. - Zhongbing Hongjian, a key player in the ammunition sector, saw its stock price peak at 24.32 CNY per share before dropping to 19.76 CNY, with a total market capitalization of 27.5 billion CNY [6][11]. Financial Performance - The aerospace and defense sector reported a total revenue of 185.43 billion CNY in the first half of 2025, a year-on-year increase of 0.76%, while net profit decreased by 7.18% to 9.31 billion CNY [7]. - AVIC Chengfei reported a staggering revenue increase of 915.84% and a net profit growth of 675.74% in the first quarter of 2025 [9]. Future Outlook - Analysts remain optimistic about the long-term performance of the military sector, with expectations of continued growth driven by government defense spending and military modernization initiatives [11][12]. - The 2025 defense budget is projected to reach 1.81 trillion CNY, with over 40% allocated to equipment, particularly in aerospace and unmanned systems [11][12]. - The military industry is expected to transition from speculative trading to performance-based investment as the fundamentals improve [11][17]. Investment Considerations - Investors are advised to focus on sectors with potential for recovery, such as military electronics and materials, while being cautious of short-term volatility in stock prices [17][18]. - The military sector is characterized by strong policy support and a high degree of cyclicality, making it essential for investors to assess company fundamentals and long-term strategies [17][18].