China stock traders bet US$305 mil on rising military tension

SHANGHAI (Aug 31): China’s stock investors are making a US$305 million ($416 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% from its May low as of Monday, outpacing the Shanghai Composite Index’s 9.4% 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 US 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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