Taiwan’s small-cap defense stocks are becoming popular among retail investors as geopolitical tensions with China increase.
(Bloomberg) — Taiwan’s small-cap defense stocks are becoming popular among retail investors as geopolitical tensions with China increase.
Aviation parts makers Chenfull Precision Co. and Aero Win Technology Corp. have surged 65% and 37% over the past month, respectively. That compares with a 1.8% drop in the island’s benchmark index and a 0.8% gain in a Bloomberg gauge tracking defense stocks in Asia.
Thunder Tiger Corp., a maker of unmanned vehicle systems including drones, and Hocheng Corp., a ceramics producer for bulletproof materials, have climbed more than 23% during the period.
Read: Top China Diplomat Defends Growth Model, Draws Line on Taiwan
“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.”
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