Core Viewpoint - The military industry sector is experiencing significant investment interest, particularly in military ETFs, driven by global geopolitical conflicts and advancements in China's military trade capabilities [1][2]. Group 1: Investment Trends - Military ETF (512660) has seen a net inflow of over 750 million yuan in the past five days, with a current scale of nearly 14 billion yuan, marking a nearly 40% increase in shares this year, making it the largest in its category [1]. - The military ETF closely tracks the CSI Military Index, which includes companies in aerospace, military electronics, shipbuilding, and weaponry, reflecting the overall performance of the military industry [2]. Group 2: Military Trade Developments - China's military trade products are gaining global attention due to their comparative advantages and improved production capabilities, with a focus on performance, cost-effectiveness, and production capacity [2]. - Pakistan, a key military trade partner, has sourced 81.15% of its military imports from China over the past five years, showcasing the high performance and cost-effectiveness of Chinese military equipment during recent conflicts [2]. Group 3: Industry Outlook - The military sector is expected to see strong domestic demand growth driven by the "14th Five-Year Plan," "Centenary of the Army," and "self-reliant domestic substitution" strategies, indicating a positive industry outlook [2].

2025 年 5 月的日内瓦，湖面上的天鹅正悠然划过碧波，而湖畔会议室里的中美贸易谈判却剑拔弩张。 美国财政部长贝森特手中的钢笔悬在文件上方，笔尖即将落下的位置，是 "对中国商品加征 245% 关税" 的最终条款。 就在这时，来自南亚的紧急军事情报传到会场 —— 巴基斯坦空军的歼 10CE 战斗机编队，在克什米尔 上空干净利落地击落 3 架印度 "阵风" 战机。 这声来自战场的枪响，意外地为僵持的谈判撕开了一道突破口。 回溯到 2022 年底，当巴基斯坦宣布采购歼 10CE 时，西方舆论场充满了质疑声。 英国《简氏防务周刊》曾酸溜溜地评论："这不过是中国战机的又一次国际阅兵式展示。" 但巴基斯坦军方用行动狠狠打了这些 "专家" 的脸：首批 20 架歼 10CE 仅用 18 个月完成交付，直接部 署到印巴边境的斯卡杜空军基地，机场跑道距离印控克什米尔前线不到 80 公里。 2025 年 5 月 7 日的空战堪称教科书级经典。巴基斯坦预警机 ZDK-03 在 200 公里外捕捉到印度机群动 向，4 架歼 10CE 随即以 1.6 马赫速度隐蔽接敌。 当印度 "阵风"M 战机还在调整雷达模式时，PL-15E 空空导 ...

Core Viewpoint - The geopolitical tensions between India and Pakistan are expected to stimulate the Chinese military industry, particularly in the context of military trade and investment opportunities [1][4]. Group 1: Geopolitical Impact on Military Sector - The conflict in the Kashmir region is closely linked to China, as Pakistan is a significant importer of Chinese military equipment, with 63.02% of China's military exports to Pakistan over the past five years [1]. - The recent policy signals from the Chinese government, including potential interest rate cuts, are likely to improve market risk appetite, providing a supportive environment for the military sector [2]. - The ongoing escalation of the India-Pakistan conflict may lead to a sustained period of heightened military activity, similar to past geopolitical events that have positively influenced military stocks [3]. Group 2: Long-term Military Trade Dynamics - The high dependency of Pakistan on Chinese military imports, especially in high-value sectors like aerospace and naval equipment, positions China favorably in the global military trade landscape [5]. - The current global geopolitical uncertainties, exacerbated by U.S. tariffs, are expected to enhance the demand for military trade, potentially leading to a shift in China's military export strategy from focusing on domestic needs to international markets [5]. - The military trade market in China is anticipated to experience continuous growth, driven by both domestic production capabilities and international demand, particularly as the country aligns its military exports with the Belt and Road Initiative [5].

Investment Rating - The report maintains an "Accumulate" investment rating for the defense industry [3]. Core Viewpoints - The intensification of the India-Pakistan conflict has drawn significant attention to the military industry, with defense stocks rising by 3.70% on May 7, 2025, marking the highest increase among 31 sectors [1][6]. - The report highlights that geopolitical events can have a short-term impact on military stock performance, influenced by the relevance of the event to China, market risk appetite, and the duration of the event [2][6]. - In the medium to long term, the India-Pakistan conflict is expected to strengthen global military trade logic, with China being a key supplier to Pakistan, which has a high dependency on Chinese military imports [7][8]. Summary by Sections Short-term Impact of the India-Pakistan Conflict - The conflict is likely to provide ongoing support for military stock performance due to its proximity to China and the heightened geopolitical tensions [6][7]. - The market's risk appetite has been somewhat restored following recent financial policy adjustments, which may further bolster military stocks [6]. Medium to Long-term Impact on Military Trade - Pakistan is a significant importer of Chinese military products, with 63.02% of China's military exports going to Pakistan from 2020 to 2024, and 81.15% of Pakistan's military imports coming from China [7][8]. - The report anticipates that the military trade market will continue to grow, driven by China's competitive advantages and the evolving global security landscape [17][25]. Investment Trends and Directions - The military industry is expected to remain in a favorable cycle, with a focus on unmanned equipment, military intelligence, satellite internet, and electronic countermeasures as key investment opportunities [13]. - The report emphasizes the importance of military trade in the context of the "Belt and Road" initiative, suggesting that it will serve as a new growth driver for China's military industry [25][30]. Global Military Trade Development - The global military trade market is projected to maintain a high level of activity, with increased military spending across various nations due to ongoing geopolitical conflicts [20][21]. - China's military exports are expected to shift from a recovery phase to a supply-demand resonance-driven growth phase by the end of the 14th Five-Year Plan [30][32]. Military Product Focus - The report indicates that military products will continue to concentrate on aviation, aerospace, and new domain weaponry, reflecting China's growing capabilities in these areas [49][50].