Group 1 - The defense and military industry sector is experiencing a correction, with the defense military ETF (512810) dropping over 3% in the afternoon and a trading volume exceeding 140 million yuan [1] - Many constituent stocks are declining, with popular stocks like Great Wall Industry and Inner Mongolia First Machinery Manufacturing facing consecutive trading halts, while heavyweight stocks such as China Shipbuilding and Huayin Technology are rising over 1% [1][3] - The market's risk appetite has shifted rapidly, impacting the growth-oriented defense and military sector, exacerbated by the withdrawal of speculative funds following significant historical events [3] Group 2 - Long-term logic for the defense and military sector remains positive, driven by complex international military situations, adjustments in military deployments by countries like the US and India, and ongoing regional conflicts [3] - The construction of regional air defense and missile defense systems is crucial for national security, highlighting the importance of intelligent military equipment in modern warfare [3] - The defense military ETF (512810) passively tracks the CSI Military Index (399967), with the top ten weighted stocks including China Shipbuilding, AVIC Shenyang Aircraft, and others [3]

Core Viewpoint - The intensification of great power competition is a long-term trend, leading to a positive outlook for the military industry as defense investments are expected to increase due to rising tensions in the Asia-Pacific region [3][4]. Group 1: Military Industry Trends - The military industry index increased by 0.23% last week, underperforming the Shanghai Composite Index, which rose by 1.70%, and the ChiNext Index, which surged by 8.58% [4]. - The first comprehensive rehearsal for the 80th anniversary of the victory in the Anti-Japanese War was successfully completed, indicating a focus on military readiness [4]. - Significant advancements in space technology were reported, including the successful launch of low-orbit satellites and the completion of a spacewalk by the Shenzhou 20 astronaut crew, showcasing progress in military and aerospace capabilities [4]. Group 2: International Military Dynamics - The international military situation remains complex, with ongoing strategic adjustments and regional conflicts. The U.S. military in South Korea has called for increased deterrence responsibilities from South Korea regarding North Korea, potentially escalating tensions in the Asia-Pacific [5]. - Recent military exercises involving the U.S. and its allies in the Arctic and the South China Sea highlight the growing military presence and strategic maneuvers in these regions [5]. - Japan plans to allocate over 100 billion yen for deploying defense drones in the 2026 fiscal year, signaling a shift towards increased militarization [5]. - The ongoing conflict in Ukraine and the recent escalation in Gaza further illustrate the volatility of global military dynamics, emphasizing the importance of advanced military technology and regional defense capabilities [5].