On Friday, October 23, the software development sector staged a dramatic afternoon rally with a wave of limit-up moves. Haitian Ruisheng and Nsfocus Technologies each surged 20%, while Shanghai Dzh Limited (ASX: 601519), Venustech, Serving Tax, and Nengke Technology all climbed 10% to hit their daily limits. Cybersecurity, AI applications and fintech concepts charged higher in tandem, with the software development ETF tracking an index of 107 software stocks in the sector reaching an intraday high of 6.42% before closing up 6.02%, forming a bullish engulfing pattern on the daily chart as investor attention rose markedly.
On the news front, favorable developments emerged across multiple sub-sectors of the software development industry. First, in cybersecurity, an open-source server-side scripting language PHP used by roughly 70% of websites worldwide exposed a critical vulnerability, prompting emergency security investigations by governments in Japan, the UK, Germany and other countries. China's Ministry of Industry and Information Technology also issued a risk warning, while cloud service providers including Tencent Cloud and Alibaba Cloud urged users to check their business systems and promptly install security updates. CITIC Securities believes that new security risks brought by AI are translating into real orders, security spending is expected to continue occupying a higher priority in IT budgets, and domestic AI security demand is likely to gradually move from thematic catalysis into an order realization phase.
Second, in AI applications, on October 23, the Shanghai Municipal Commission of Economy and Informatization issued the "Shanghai Action Plan for Accelerating Artificial Intelligence Empowerment of High-Quality Development of Industrial Services (2027-2028)," encouraging R&D and design enterprises to deepen AI technology applications with support of up to 10 million yuan. The plan also promotes R&D software enterprises to accelerate technological transformation and enhance AI programming capabilities. Guosen Securities believes that with the deep integration of AI and software, the performance of enterprises benefiting from AI empowerment is expected to be further unleashed.
Third, in fintech, on October 21, the central bank announced a comprehensive upgrade of the digital yuan infrastructure service system. After the upgrade, a digital yuan unit can carry built-in execution conditions. Bank system transformation demand has been triggered, though order realization awaits tender verification. Industry insiders noted that conditional money has already been deployed in five scenarios: prepaid fund management, supply chain finance, fiscal subsidies, consumer red envelopes, and migrant worker wage payments. The common thread across these cases is transferring processes that previously relied on contract enforcement and manual supervision to programmatic execution.
It is worth noting that the software development ETF's underlying index encompasses popular concepts. As of the end of September, AI applications, fintech and cybersecurity concept constituents accounted for 47%, 33% and 17% of the index weight respectively. In terms of valuation, as of October 22, the software development index had a price-to-earnings ratio (TTM) of 167.10 times, lower than more than 78% of the time since its listing, highlighting its valuation appeal.
The End of Hardware May Signal the Spring of Software
The software development ETF passively tracks the software development index, targeting the frontier of AI applications with 100% allocation to the software development industry across 107 constituent stocks, covering areas including AI plus finance, AI plus healthcare, AI plus office, AI plus education, AI plus information security and AI plus government affairs. The software development sector currently offers valuation appeal, and with AI empowerment, domestic innovation drivers and policy support, the software development direction is poised to ride the momentum. Its feeder funds (Class A: 028914, Class C: 028915) are currently available for subscription.
Source: Shanghai and Shenzhen Stock Exchanges, etc., as of October 23, 2026. Institutional views reference: CITIC Securities' September report titled "Emphasizing AI Security: AI Agent Risks Accelerating Exposure Plus Tech Giants Entering to Build Security Infrastructure, AI Security Entering Industrial Realization Phase"; Guosen Securities' September 15 report titled "Integration of AI and Traditional Software, FDE Model Brings New Opportunities." ETF fee disclosure: The software development ETF does not charge sales service fees. Investors may be charged a commission of no more than 0.3% by subscription and redemption agency brokers when subscribing or redeeming fund shares. On-exchange transaction fees are subject to actual charges by securities companies. Feeder fund fee rates are detailed in the fund legal documents. The fund manager has assessed the fund's risk level as R3-medium risk, suitable for balanced-type (C3) and above investors. Suitability matching opinions should be based on the sales institution's assessment. Risk disclosure: The software development ETF passively tracks the CSI All-Share Software Development Index. The index base date is December 31, 2021, and the publication date is March 29, 2023. The fund is issued and managed by Huabao Fund, and distribution institutions do not bear responsibility for product investment and redemption. Investors should carefully read the fund contract, prospectus, fund product information summary and other fund legal documents to understand the fund's risk and return characteristics and choose products suitable for their own risk tolerance. Sales institutions (including the fund manager's direct sales channel and other sales institutions) conduct risk assessments of the fund in accordance with relevant laws and regulations. Investors should promptly pay attention to suitability opinions issued by sales institutions and base their decisions on the matching results. Suitability opinions among different sales institutions may not necessarily be consistent, and the fund product risk rating results issued by fund sales institutions shall not be lower than the risk rating results made by the fund manager. Differences exist between the fund contract's description of fund risk and return characteristics and the fund risk rating due to different consideration factors. Investors should understand the fund's risk and return situation, carefully select fund products based on their own investment objectives, time horizon, investment experience and risk tolerance, and bear risks themselves. The China Securities Regulatory Commission's registration of this fund does not indicate any substantive judgment or guarantee regarding the fund's investment value, market prospects or returns. Past performance of the fund and its net asset value do not predict future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of this fund's performance. Funds carry risks, and investment requires caution!
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