Putin’s tough speech once inspired defense stocks and Chinese electric vehicle stocks were hit hard | Anue Juheng-US Stocks

Defense stocks rose alongside global tensions after President Vladimir Putin gave a tough talk on the war between Russia and Ukraine on Wednesday. However, some were happy and some were sad, and as defense stocks rose, some seemingly unrelated stocks were hit hard.

Putin on Wednesday called in 300,000 Russian reservists to join the fight against Ukraine and raised the possibility of using nuclear weapons in response to recapturing some territory after a recent Ukrainian incursion and escalating the war

Rob Stallard, an analyst at investment research firm Vertical Research Partners, added on Wednesday that the call-up would be the first such mobilization in Russia since World War II.

The iShares US Aerospace & Defense ETF (ITA-US) rose 1.7% in midday trade on Wednesday, when the S&P 500 and the Dow gained 0.5% and 0.6%, respectively. The ETF was down about 1 percent in midday trading.

Defense-focused corporate stocks in the ETF fared better, rising about 2.4% on average, including Lockheed Martin (LMT-US), Northrop Grumman (NOC-US), Raytheon Technologies (RTX-US) and General Dynamics (GD-US) .

Putin’s comments also appeared to affect Chinese stocks. China has not condemned Russia’s aggression against Ukraine as strongly as Western countries.

The Invesco Golden Dragon China ETF (PGJ-US), which holds stocks of Chinese companies listed in the United States, fell more than 6 percent on Wednesday.

Chinese electric vehicle makers Xiaopeng Motors (XPEV-US), Li Auto (LI-US) and NIO (NIO-US) fell 11.55%, 8.84% and 10.34%, respectively. But the sell-off was not limited to one industry, with 55 stocks in the ETF falling and only 11 ending higher.

The aerospace and defense ETF is down about 2% so far this year, but larger defense stocks have averaged about 12% so far this year. Defense stocks have been relative winners this year.

The Invesco Golden Dragon ETF is down about 26% so far this year, partly due to heightened tensions between the US and China.

So far this year, the ADRs of the three major US-listed EV manufacturers in China have fallen by an average of 47%. In addition to geopolitical tensions, rising interest rates are also a major obstacle, as this is detrimental to highly valued growth stocks. such as Xpeng, Ideal and Weilai, etc. The combined sales of the three major Chinese automakers are expected to increase by 68% this year compared to last year, but none of them are currently generating consecutive profits.


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