Reverberations of the maiden flight of China's highly advanced sixth-generation fighter jet were felt in the US stock markets as well with shares of Lockheed Martin, the maker of multi-role fighter aircraft F-35 among others, falling 1.34 per cent in the past five days.
A few days ago, videos of and images of a tailless stealth combat jet, rumoured to be a sixth-generation aircraft accompanied by a fifth-generation J-20S, conducting a daytime test flight, went viral. Many have hailed this to be a major leap in China's defence capabilities and military modernisation attempts.
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Media reports suggest that China's speculated progress in developing the sixth-generation fighter jets with enhanced stealth and hypersonic capabilities has raised concerns about the sale of F-35, which has a combination of stealth, advanced sensors, and networked warfare features; as the sixth-generation platform of China is expected to surpass it in terms of all these capabilities.
Shares of Lockheed declined on Thursday after Deutsche Bank downgraded its rating from 'Buy' to 'Hold' saying the investment bank is struggling to find a compelling upside case on estimates.
“We are downgrading Lockheed to Hold (from Buy) as we feel our prior thesis struggles to hold water and we have increased concern on the long-term support for F-35 in the face of China’s combat aircraft modernization efforts," analyst Scott Deuschle of Deutsche Bank wrote.
He further wrote: “...the reveal of further advancements in combat aircraft capabilities by China as potentially undermining long-term (Department of Defense) demand for the F-35 aircraft.”
According to him, “The developments in China are likely to accelerate the need for NGAD (next-generation air dominance), and the ultimate success in fielding NGAD by the early-mid 2030s could…partially cut into the F-35 procurement program.”
NGAD is the initiative by the United States Air Force (USAF) to develop a sixth-generation air superiority fighter. Lockheed Martin is one of the prime contractors for the programme, competing alongside Boeing and Northrop Grumman.
