China's Lunar Exploration: Water Discovered in Lunar Soil and Investment Outlook for Aerospace & Defense ETFs (U.S. vs. China)

Water from Heating Rock Samples Brought Back by China’s Lunar Probe?
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China's lunar probe, Chang'e 6, returned with soil samples collected from the far side of the Moon.

The soil brought back from the Moon was reported to contain hydrogen and iron oxide, which can produce water when heated.

By focusing sunlight with a concave mirror to heat the soil, steam can be generated and collected for use.

The collected steam can be separated into oxygen and hydrogen for various purposes, while the molten soil and byproducts like iron from the heating process can be repurposed as construction materials.

 

 

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What Can We Learn from This Article?

1. China Returned Lunar Soil Samples Faster than the U.S.
   • China's space science and technology have advanced to the point where they can compete with the U.S.
   • China's progress in aerospace and space exploration is worth considering as a potential investment opportunity.
2. The Construction of Lunar Exploration Bases is Not Far Off.
   • Officially, celestial bodies in space cannot be owned by any nation, as stipulated by Article 2 of the 1967 Outer Space Treaty. However, whoever plants their flag first and begins extracting resources will likely hold the advantage.
   • The Moon, which is rich in Helium-3—a strategic resource valued at six times the worth of gold—will likely motivate China to accelerate the construction of a lunar exploration base and secure resources in advance.
   Meanwhile, the U.S. is unlikely to simply sit back and let China dominate resource acquisition. In fact, the U.S. passed the 2015 Commercial Space Launch Competitiveness Act, allowing private companies to own the resources they extract in space. Companies like SpaceX and Blue Origin are already deeply involved in space development projects.
   • Resource extraction on the Moon will be possible with machines.
     • Mars is already seeing active exploration by robotic rovers, and advancements in artificial intelligence (AI) have progressed to a level capable of carrying out complex tasks.
     • The next Mars probe will include AI-powered robots, and it's highly likely that AI robots will begin operations on the Moon before humans arrive.

 

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Investment Perspective

1. Should We Pay Close Attention to the Hang Seng China A Aerospace & Defence Index?
   • Since it has not been listed for long, it is difficult to determine whether it is currently undervalued.
   • Considering that the Tiger China Hang Seng Tech ETF hit its lowest point in January 2024, falling roughly 70% from its peak, it is likely that the Hang Seng China A Aerospace & Defence Index is not at a high valuation either.
   • However, given the potential for further declines due to ongoing U.S.-China trade tensions, it would be wise to approach this with a long-term perspective.
   • A recommended strategy might be to invest small amounts of money regularly—money that can remain untouched for an extended period—with the mindset of accumulating during dips (from the "knee" to the "feet") and waiting patiently until the upward trend returns.

 

 

 

2. Continuous Investment in U.S. Aerospace Defense

• Similar to the ongoing upward trend of U.S. stocks, U.S. Aerospace Defense ETFs are also trending upward. However, it is difficult to pinpoint where the peak might be.
• Given the possibility of a future decline in the U.S. stock market, making large investments could feel burdensome.
• A prudent strategy might be to steadily invest small amounts over time and increase the investment if a market downturn occurs.