In investing, narratives can matter a lot more than earnings or cash flow analysis.
Pakistan is certainly spinning a good story about China’s defense industry. Its army said it used Chinese J-10C planes to shoot down five Indian jets, including three Rafales, a MIG-29 and an Su-30. Rafales are made by France’s Dassault Aviation, while the other two were imported from Russia. India’s government has not confirmed or denied Islamabad’s claim and evidence remains inconclusive.
Nonetheless, investors got excited. It was the first real combat between modern Chinese warplanes and advanced Western jets — and surprisingly, China seems to have come out on top. On Monday, Avic Chengdu Aircraft, which made the J-10C jets, soared 20.6%, while Dassault tumbled 6.2%.
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