Taiwan defence stocks emerge as hot trade on tension with China

TAIWAN’S small-cap defence stocks are becoming popular among retail investors as geopolitical tensions with China increase.  

Aviation parts makers Chenfull Precision and Aero Win Technology have surged 65 per cent and 37 per cent over the past month, respectively. That compares with a 1.8 per cent drop in the island’s benchmark index and a 0.8 per cent gain in a Bloomberg gauge tracking defence stocks in Asia. 

Thunder Tiger, a maker of unmanned vehicle systems including drones, and Hocheng, a ceramics producer for bulletproof materials, have climbed more than 23 per cent during the period.

“Geopolitical risks and speculation have supported gains of military stocks,” said Li Fang-kuo, chairman at President Capital Management in Taipei. “But investors shouldn’t chase the rally as there are signs of some profit-taking.” BLOOMBERG