On Friday (October 23), the software development sector staged a dramatic wave of limit-up moves in the afternoon session. Haitian Ruaisheng and Nsfocus Technologies Group Co., Ltd. (ASX: 300369) surged by the full 20% daily limit, while Dazhihui, Qiming Xingchen, Shuiyou Co., and Nengke Technology each hit the 10% ceiling. Cybersecurity, AI applications, and fintech concepts powered higher in tandem, driving the Software Development ETF Huabao (159036), which tracks an index comprising 107 software development stocks, up as much as 6.42% intraday before closing 6.02% higher. The daily candlestick formed a strong bullish engulfing pattern, signaling a notable surge in capital attention.
On the news front, multiple favorable developments emerged across key sub-sectors of the software development industry. In cybersecurity, PHP, an open-source server-side scripting language used by approximately 70% of websites worldwide, exposed a critical vulnerability. Governments in Japan, the UK, Germany, and other countries urgently launched security audits. China's Ministry of Industry and Information Technology also issued a risk advisory, while cloud service providers including Tencent Cloud and Alibaba Cloud reminded users to inspect their business systems and promptly install security updates. CITIC Securities believes that new security risks introduced by AI are now translating into actual orders, security spending is expected to continue commanding a higher priority in IT budgets, and domestic AI security demand is likely to gradually transition from thematic catalysis into a phase of order fulfillment.
In AI applications, on October 23, the Shanghai Municipal Commission of Economy and Informatization issued the Shanghai Action Plan for Accelerating AI-Empowered High-Quality Development of Industrial Services (2027-2028), encouraging R&D and design enterprises to deepen the application of artificial intelligence technology with support of up to 10 million yuan. The plan also promotes accelerating technological transformation of R&D software companies and enhancing AI programming capabilities. Guosen Securities believes that as AI and software become more deeply integrated, corporate performance benefiting from AI empowerment is expected to be further unleashed.
In fintech, on October 21, the central bank announced a comprehensive upgrade of the digital yuan infrastructure service system. After the upgrade, each digital yuan unit can carry built-in execution conditions. Bank system renovation demand has been triggered, though order fulfillment awaits tender verification. Industry insiders noted that programmable money has already been deployed across five scenarios: prepaid fund management, supply chain finance, fiscal subsidies, consumer red envelopes, and migrant worker wage payments. What these cases share in common is shifting processes that previously relied on contractual constraints and manual oversight to programmatic execution.
It is worth noting that the underlying index of Software Development ETF Huabao (159036) 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, which is below more than 78% of its historical trading range since listing, highlighting its valuation appeal.
The End of Hardware May Signal the Spring of Software
Software Development ETF Huabao (159036) passively tracks the Software Development Index, targeting the frontiers of AI applications and maintaining a 100% allocation to the software development industry. It comprises 107 constituent stocks spanning AI plus finance, AI plus healthcare, AI plus office, AI plus education, AI plus information security, AI plus government affairs, and other domains. The software development sector currently offers valuation appeal, and with the combined drivers of AI empowerment, domestic innovation, and policy support, the software development space 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 referenced from CITIC Securities' September report titled Value AI Security: AI Agent Risks Accelerating Exposure Plus Tech Giants Entering to Build Security Infrastructure, AI Security Entering Industrial Fulfillment Phase, and Guosen Securities' September 15 report titled Integration of AI and Traditional Software, FDE Model Bringing New Opportunities. ETF fee disclosure: Software Development ETF Huabao does not charge a sales service fee. When investors subscribe or redeem fund shares, the subscription and redemption agent broker may charge a commission of no more than 0.3%. On-exchange trading fees are subject to actual charges by the securities company. Feeder fund fee rates are detailed in the fund legal documents. The fund manager has assessed the risk level of this fund as R3-Medium Risk, suitable for balanced (C3) and above investors. The suitability matching opinion should be based on the sales institution's assessment. Risk disclosure: Software Development ETF Huabao 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 the distribution agency does 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 risk-return characteristics of the fund and select 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 the suitability opinions issued by sales institutions and rely on their 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-return characteristics and the fund risk rating due to different consideration factors. Investors should understand the fund's risk-return situation, carefully select fund products based on their own investment objectives, horizon, investment experience, and risk tolerance, and bear risks themselves. The registration of this fund by the China Securities Regulatory Commission does not indicate any substantive judgment or guarantee regarding the fund's investment value, market prospects, or returns. Past performance and net asset value levels of the fund 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! MACD golden cross signals have formed, and these stocks are performing well!
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