Soochow Securities: Beyond Commercial Aerospace, What Other Industry Trends Are Worth Watching?

Industry Allocation Along Two Main Themes—Technology & Security, Reform & Growth In 2026, sector allocation should focus more on "self-reliance," strengthening national security through technological independence and deepening reforms to enhance endogenous growth resilience. Prioritizing domestic development remains the core objective:

On one hand, breaking through industrial containment and technological blockades—gaining an edge in the AI revolution via breakthroughs and innovation—will elevate supply chain security and achieve autonomy in critical sectors.

On the other hand, reducing economic reliance on the U.S. and its strategic allies requires bolstering domestic demand resilience, addressing bottlenecks, and diversifying external demand through multilateral openness.

For 2026, our sector strategy centers on these two themes:

**Technology & Security**: AI Ecosystem, Resource/Energy Security, and Frontier Industries - **AI Trends**: Favor domestic computing power and semiconductor manufacturing chains, with attention to AI-powered infrastructure, smart glasses, humanoid robots, and enterprise AI applications. - **Resource & Energy Security**: Focus on strategic resource revaluation (e.g., copper, aluminum, tin, cobalt, tungsten, rare earths) and next-gen energy systems (e.g., hydrogen/ammonia/methanol, solid-state batteries, perovskite solar, nuclear).

**Reform & Growth**: Supply-Side Anti-Internal Competition & Demand-Side Consumption Boost - **Supply-Side**: Shift from policy speculation to pricing cyclical recoveries in sectors like electrolytes, battery materials, polysilicon, and photovoltaics. Capacity cuts in chemicals, steel, and thermal coal may also lift margins. - **Demand-Side**: Prioritize services and non-durables—travel (tourism, airlines, hotels, duty-free), sports, and staples (frozen foods, health supplements, snacks).

**Risks**: - Slower-than-expected domestic recovery may heighten market volatility. - Overseas rate cuts and U.S. policy shifts under a potential Trump administration could strain A-share liquidity. - Geopolitical "black swan" events may escalate tensions. - Sector fundamentals face risks from supply-demand swings, tech disruptions, and policy changes.