What is the relationship between the 'fluctuations' in the shares of the companies that manufacture the Chinese J10C and the French Rafale aircraft and the Pakistan-India conflict?

 

What is the relationship between the 'fluctuations' in the shares of the companies that manufacture the Chinese J10C and the French Rafale aircraft and the Pakistan-India conflict?

Following the recent tensions between Pakistan and India, claims are being made that the shares of Chengdu Aircraft Corporation, the manufacturer of the Chinese J-10 aircraft, have increased, while those of Dassault Aviation, the French company that manufactures the Rafale aircraft, have decreased.

These claims began to emerge when Pakistan claimed that it had shot down five Indian aircraft, including three Rafales, on the intervening night of May 6-7. Although India has not confirmed the downing of the aircraft, Indian Air Marshal AK Bharti had only said in the past few days that ‘losses are part of the fight.’

Videos that were claimed to show the debris seen in them are of a French-made Rafale aircraft that is used by the Indian Air Force have been confirmed.

On the other hand, a US official, speaking on condition of anonymity, told Reuters that "at least one of the Indian aircraft shot down was a French-made Rafale," while a French intelligence official also confirmed this while speaking to CNN. Image caption: Indian Air Marshal AK Bharti only said that ‘losses are part of the fight’

It should be noted that after the 2019 India-Pakistan tension, India had acquired 36 Rafale aircraft from the French company Dassault Aviation, while according to the London-based International Institute of Strategic Studies, ‘During the same period, Pakistan acquired at least 20 J-10C fighter jets from China, and these are equipped with Chinese-made PL-15 missiles.’

It should be recalled that Pakistan Air Force Deputy Chief of Air Operations Air Vice Marshal Aurangzeb said that JF-17, F-16 and J-10 aircraft participated in the airstrikes against India, but he did not comment on whether Pakistan used the Chinese-made PL-15.

Regardless of the debate over whether Pakistan shot down Indian planes or not, the BBC has taken a look at some of the Chinese, French and Israeli companies that sell defense equipment to Pakistan and India and tried to find out how the recent tensions have affected them.

Chinese, French and Israeli companies selling weapons to Pakistan, India

 

On May 7, Bloomberg wrote in its report that the value of shares of Chinese defense companies increased during the tension between India and Pakistan.

While a CNBC report on May 8 said that the value of shares of Chengdu, the manufacturer of the J10C aircraft, increased. It said that its share price listed in Hong Kong increased by 6 percent and in Shenzhen by 16 percent, which was its biggest increase in value since October.

This was the same day when Pakistani authorities claimed to have shot down several Indian aircraft, including Rafale, in response to India's Operation Sindoor.

Chengdu Aircraft Corporation (CAC), the manufacturer of the J10C aircraft, is a Chinese aerospace group that also collaborated with Pakistan in the production of the JF-17 Thunder fighter aircraft.

Its main function is to research, manufacture and export aviation weapons (weapons used in fighter aircraft) and equipment. So far, the group has developed aircraft such as the J-5, J-7, J-9, J-10, J-20 and Shivling for combat purposes.

Not only do China and Pakistan hold joint military exercises, but Pakistan also purchases modern weapons from China on a large scale. According to a report by the Stockholm International Peace Research Institute, 81 percent of Pakistan’s arms imports in the last five years were purchased from China, while China has sold weapons worth $5.28 billion to Pakistan, which accounts for 63 percent of its global arms exports.

According to Chinese media, Pakistan has also announced the purchase of FC-31 stealth fighter jets from China.

On the other hand, Dassault Aviation, the French company that makes the Rafale aircraft, is listed on the European Stock Exchange, and its value has decreased by about 24 euros from May 6 to May 12. This development is being linked to the claim by Pakistani officials last week that the Pakistani Air Force shot down Rafale aircraft with the help of J-10C during India’s Operation Sindoor.

The French company Dassault Aviation, which has been active since 1929, designs other military aircraft, business jets and spacecraft in addition to the Rafale, and the 10,000 aircraft manufactured by this company are in the hands of 90 countries around the world (including India and Pakistan). The number of active military aircraft it has manufactured is 1,000, while the number of Falcon jets is 2,150.

India has long relied on French defense equipment. It bought Mirage 2000 aircraft in the 1980s and submarines in 2005. In 2019, it received 36 Rafale aircraft from Dassault Aviation, while in April 2025, it signed a deal to buy another 26 Rafale aircraft worth $7.4 billion.

Similarly, the value of the shares of Israeli Aerospace Industries, the Israeli company that makes Harpoon drones, also recorded some increase.

In this context, a report by the Israeli news website Ynet News on May 9 said that the defense industry is closely monitoring the tense situation between India and Pakistan. A day earlier, Pakistani officials had alleged that India had infiltrated its borders with the help of Israeli Harpoon drones. While New Delhi accused Pakistan of infiltration using Turkish-made drones.

The report quoted Israeli defense sources as saying that India bought weapons worth about $1.5 billion from Israel last year, making India an excellent market for Israeli defense companies.

The report also said that an Israeli company called Albit Systems supplies the Indian army with Hormuz drones and also has a drone manufacturing plant in Hyderabad. With the help of this partnership, India helped Israel by supplying raw materials and drones after the October 7 attack by Hamas.

But after the announcement of a ceasefire between India and Pakistan and other developments at the global level, the value of shares of Israeli defense companies was recorded to decrease.

According to a Reuters report, India is the largest buyer of Israeli military equipment. India has purchased $2.9 billion worth of military equipment from Israel in the past decade, including radar, surveillance, drones and missiles. According to a study by the Stockholm International Peace Research Institute, India is the world's largest defense importer, buying $37 billion worth of military equipment from 2021 to 2022.

Meanwhile, India has purchased defense equipment worth $21.8 billion from Russia, $5.2 billion from France, and $4.5 billion from the United States over the past decade.

Why are Chengdu and Dassault facing ups and downs?

Regarding the rise and fall in the shares of Chinese and French aircraft companies, stock exchange experts say that behind this change are the drivers of the capital market, which play a fundamental role in the buying and selling of shares of companies listed on stock exchanges in the world.

Samiullah Tariq, Head of Research and Development at Pak Kuwait Investment Company, told the BBC that during the air war between Pakistan and India, there was a technology competition and the share prices of these two companies changed based on their performance.

He said that apparently Dassault Aviation’s performance was below expectations and Chengdu’s was above expectations, ‘so the same effect was also on the share prices.’

On the other hand, Sana Tawfiq, Head of Research at Arif Habib Limited, is of the opinion that ‘Perhaps the confidence of Rafale investors has been damaged, while on the other hand it is also possible that investors are showing interest in Chengdu.’

However, Sana Tawfiq pointed out that ‘After the initial increase in the value of Chengdu’s shares, it decreased somewhat, which is called technical correction. This means that when a company’s shares are overbought in the stock exchange, some investors think that they should sell it and make a profit, which is called profit-taking in the stock market.’

Do defense companies benefit from clashes between two countries?

Dr. David Ko, co-founder of The Smart Investor, a company that tracks the stock market, especially global markets, believes that news of cross-border fighting can definitely affect the shares of defense companies.

However, he tells  that “if a company benefits from it and its share price increases temporarily, this increase will not last long. But this does not mean that the demand for defense equipment is likely to decrease in the near future.”

He explains that “there is an apparent increase in global unrest. The increase in demand for defense equipment can also be long-term when governments are increasing their defense budgets.”

“These projects are not limited to days but last for many years.” He gives the example that a tank or an aircraft cannot be built in just a few weeks.

Dr. David Ko says that “the defense sector these days is much broader than bullets and missiles. The defense industry is also involved in surveillance and information technology in modern ways.

But in his opinion, it is not correct to say that no global market will “react to news of war.”

When we asked this Singapore-based stock market expert specifically about the recent performance of the Chinese company Chengdu Aircraft Corporation, he said that the share value of this company, which makes the J-10C aircraft, has been increasing for a long time. According to his analysis, the reason for this is ‘possibly an increase in China’s defense budget.’

In the same context, David Roach, associated with Quantum Strategy, is of the opinion that the increase in the value of shares of Chinese defense companies in the markets probably highlights that if tensions between Pakistan and India increase, ‘China will provide Pakistan with more weapons to compensate for the losses.’

According to a report by the International Institute for Strategic Studies, global defense spending has reached $2.46 trillion in 2024 in view of the growing threats to security. Countries in Asia, the Middle East, North Africa and Europe have increased their defense budgets. This trend is likely to continue in 2025 as well.