On September 16th, the tech and growth sectors launched a robust counterattack, with the defense industry rallying alongside the broader market. After turning positive in the morning session, the sector consistently outperformed the wider market, with the CSI Defense Industry Index climbing nearly 1%. The tracker, Defense ETF Huabao (512810), also closed higher, snapping a four-day losing streak.

Within the sector, defense electronics and commercial space emerged as standout performers. Guangqi Technology surged nearly 6%, Hongda Electronics jumped 5.13%, while Aopu Optronics, Huafeng Technology, and Raytron Micro all advanced more than 4%. Conversely, the CSSC-affiliated names continued their adjustment, with China Shipbuilding down nearly 1% and China Power suffering a sharp 5.59% decline.

From a catalyst perspective, the defense sector's rebound is likely benefiting from policy support and event-driven momentum. On the policy front, on September 15th, the Ministry of Industry and Information Technology and the National Development and Reform Commission jointly released the "15th Five-Year Plan for the Electronic Information Manufacturing Industry," which explicitly calls for building a smart aerospace electronic product system to support space-based computing. This is expected to be a direct positive for aerospace electronics suppliers.

On the event front, at 2:26 PM on September 15th, the Zhuque-2 Improved Y7 carrier rocket, developed by LandSpace, successfully placed 10 Qianfan Constellation networking satellites into their designated orbits. This mission marks the first time a private Chinese commercial space company has undertaken a large-scale satellite internet constellation deployment task.

At 6 AM on September 16th, the Gravity-1 (Y3) carrier rocket from Orienspace ignited and lifted off from the East China Sea, successfully delivering 8 Qianfan Constellation satellites and 1 EUHT technology test satellite into their intended orbits. This mission set a new national record for both the payload weight and orbital altitude of a single sea launch!

Entering mid-September, China's commercial space sector is experiencing a new wave of high-frequency launch windows. China Securities notes that a concentration of positive developments is likely to drive commercial space from event-driven momentum into a phase of application ecosystem building, reusable rocket closure and subsequent refurbishment, and batch production validation. This runs in parallel with other major defense industry themes such as arms trade and large aircraft/commercial engines.

In the secondary market, after the deep correction in July and August's valuation repair, the defense sector may still be in a transition window from "de-rating" to "waiting for catalysts and validating fundamentals." Downside adjustment potential appears relatively limited, while upside elasticity will depend more on the realization of catalysts and order recovery.

Looking ahead, three key signals warrant close attention. First, the pace at which the first batch of large-scale orders under the "15th Five-Year Plan" is issued - this is the core variable for the sector's shift from "expectation-driven" to "earnings-driven." Second, expectations for arms trade orders ahead of the Zhuhai Airshow, with export directions such as drones, air defense systems, and precision-guided munitions deserving particular focus. Third, changes in public funds' defense sector holdings revealed in Q3 reports. Defense positioning in 2026Q2 stood at 3.77%, down slightly from Q1, and subsequent shifts in institutional allocation willingness could influence the sector's capital flows.

Investing in defense? Choose "81". The Defense ETF Huabao (512810) (formerly National Defense ETF) passively tracks the CSI Defense Industry Index, comprehensively covering popular themes such as commercial space, low-altitude economy, large aircraft, MLCC, defense AI, and gas turbines. It is also a qualifying security for margin trading and Stock Connect, making it an efficient tool for one-stop investment in core defense assets.

Data source: SSE, SZSE, CSI Index Company and other public information. Institutional view: China Securities 20260905 "Defense Industry Weekly Report: 2026 Half-Year Review and Outlook." Fund fees: When investors subscribe or redeem fund shares, the subscribing/redeeming agent may charge a commission of up to 0.5%, which includes fees charged by the stock exchange, registration institution, etc.

Special note: The risk rating of Defense ETF Huabao as assessed by the fund manager is R3-Medium Risk, suitable for balanced (C3) and above investors. Risk disclaimer: Defense ETF Huabao passively tracks the CSI Defense Industry Index, which has a base date of December 31, 2004, and was published on December 26, 2013. Its historical annual returns/annualized volatility for 2021-2025 were 14.28%/33.05%, -25.74%/23.44%, -11.02%/18.34%, 8.20%/34.39%, and 31.55%/21.43%, respectively. The index's constituent stocks are adjusted according to its compilation rules. Past performance does not indicate future results. The weightings of stocks mentioned in this article within the CSI Defense Industry Index can be found in the accompanying charts, with data as of July 31, 2026. Stock descriptions do not constitute investment advice in any form, nor do they represent the holdings or trading activities of any fund under the manager. Index constituent composition is adjusted according to index compilation rules. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors must be responsible for their own investment decisions. Furthermore, any views, analyses, or forecasts in this article do not constitute investment advice to readers of any form, and the author is not liable for any direct or indirect losses arising from the use of this content. Fund investment carries risks. Past performance of a fund does not represent its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. Investors should invest cautiously.