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TheStreet Open House

Will Chinese Investors March with the People's Liberation Army?

Companies recently mentioned by Chinese stock analysts as possible candidates for fresh fundraisers in the near future include radar-microwave systems manufacturer Glarun Technology, satellite and rocket maker China Aerospace Science and Technology and naval defense electronics supplier Highland Digital Technology.

Many Chinese military suppliers are already strong players in civilian sectors. They're also reaching out for business overseas.

Glarun, for example, supplements weaponry with food irradiation and traffic-control products. Guangtai, which makes a wide range of airliner fueling and service vehicles for airports, is a military supplier that last fall started negotiating for U.S. airport contracts. Marketing departments for China's state-run satellite, rocket and space-related companies offer their wares globally.

Analysts this week were recommending defense stocks in anticipation of the Zaozhuang confab. Yet, investors who take their advice would be going against the grain because overall stock prices for these companies have been falling since the beginning of the year.

A defense industry index of 50 leading military supply companies listed on the Shenzhen exchange, for example, has declined 11% since January. The exchange's 100-company defense index has lost about 9%.

On Thursday in Shenzhen, Guangtai gained 0.05% to close at 14.78 yuan a share and Highlander rose 3.5% to 15.01 yuan. Shanghai-listed Glarun ended the day at 48.50 yuan a share, up 0.7%.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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