Bet on Defense

Good timing on the part of Chinese securities companies: China Stock Traders Bet $305 Million on Rising Military Tension
China’s stock investors are making a $305 million bet on the nation’s military complex.

That’s the total that Guotai Asset Management Co., GF Fund Management Co. and Fortune SG Fund Management Co. raised since July from selling the nation’s first exchange-traded funds following defense shares. The funds track the CSI National Defense Industry Index, which was up 18 percent from its May low as of Monday, outpacing the Shanghai Composite Index’s 9.4 percent rebound.

The ETF creators are seeking to capitalize on escalating geopolitical tensions, with an international tribunal ruling in July that China’s efforts to assert control over the South China Sea exceeded the law and South Korea agreeing to allow the U.S. to deploy an anti-ballistic missile system on the peninsula. China is expected to upgrade its military equipment and let more weapon-making units access the capital market, according to GF Fund Management.

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