The A-share market experienced a volatile adjustment on Friday, July 10th, with the STAR and ChiNext boards tumbling in the afternoon session. Trading volume expanded significantly, with the combined turnover for the Shanghai and Shenzhen exchanges reaching 3.39 trillion yuan. In contrast, the Hong Kong market closed higher against the trend.
Aerospace, Defense, and Pharmaceutical assets across A-shares and H-shares showed strong performance. The Medical ETF Huabao (512170) and the Southbound Stock Connect Medical ETF Huabao (159137) jointly climbed by up to 4.56%. The innovative drug sector followed closely, with the Southbound Stock Connect Innovative Drug ETF Huabao (520880) and the Pharmaceutical ETF Huabao (562050) reaching highs of 4.38% and 3.59%, respectively. The catalyst was the significant expansion of the "National Essential Medicines List (2026 Edition)," which saw 16 domestic innovative drugs included on a large scale for the first time, signaling continued policy support.
A major positive development emerged for commercial aerospace around midday. The General Aviation ETF Huabao (159231) and the Defense Industry ETF Huabao (512810) surged over 6% intraday in response, ultimately closing up 3.38% and 2.76%. This followed the successful controlled recovery of the first stage of the Long March 10B carrier rocket, potentially marking a pivotal "DeepSeek moment" for the commercial aerospace sector and heralding a new upward cycle.
Technology stocks experienced a sharp divergence, rallying before a significant afternoon pullback. The optical and semiconductor sectors both tumbled. The Technology ETF Huabao (515000) recorded an intraday amplitude of 7.83% with a single-day turnover exceeding 800 million yuan. The ChiNext AI ETF Huabao (159363), focused on the optical sector, closed down 2.75%, while the STAR Market Chip ETF Huabao (589190), offering a comprehensive chip industry exposure, plunged nearly 7%. The short-term volatility is attributed to sentiment-driven trading, while the medium-to-long-term fundamental outlook remains supportive, suggesting the pullback may present a buying opportunity.
Looking ahead, Huatai Securities noted that while a technical rebound is possible for the oversold tech sector, high volatility may persist until crowding pressure is fully digested. A potential window for long positioning could emerge in mid-to-late July, coinciding with earnings seasons in both China and the US. Within the tech space, it is advisable to avoid pure thematic plays and overly crowded segments, focusing instead on four key areas: domestic AI computing power (including the Ascend ecosystem, domestic GPU supply chains, and actual model usage); memory (particularly long-term agreements, capacity expansion, and the HBM/high-end DRAM supply chain); semiconductor equipment benefiting from memory expansion and domestic substitution expectations; and components like MLCCs, PCBs, and upstream materials benefiting from AI-driven demand.
Pharmaceutical Sector: A Major Boost After Eight Years
Catalysts continue to drive a strong pharmaceutical rally. On July 10th, pharmaceutical assets across A-shares and H-shares strengthened across the board. CXO (Contract Research Organization) stocks led the gains in the morning session. The Medical ETF Huabao (512170) and the Southbound Stock Connect Medical ETF Huabao (159137) jointly climbed by up to 4.56%. The innovative drug sector followed closely.
Focusing on A-share and H-share innovative drugs, the A-share pharmaceutical sector significantly outperformed the broader market despite some pullback from intraday highs. Leaders in innovative drugs and traditional Chinese medicine performed well, with Tonghua Jinma and Pien Tze Huang leading gains of over 6%. The market's sole ETF tracking a pharmaceutical index, the Pharmaceutical ETF Huabao (562050), closed up 2.01% with an amplitude nearing 5% and a record-breaking turnover of 46.63 million yuan.
Southbound Stock Connect innovative drug stocks showed higher elasticity. The Southbound Stock Connect Innovative Drug ETF Huabao (520880), which allows T+0 trading, had an amplitude near 6%, closing up 3.46% and reclaiming its 60-day moving average, with a substantial turnover of 949 million yuan. Heavyweight constituents like Innovent Biologics, CSPC Pharmaceutical Group, and Sino Biopharmaceutical all rose over 3%.
This week, after a brief correction, the Southbound innovative drug sector resumed its upward trend. Following a historic 16.4% surge last week, the 520880 ETF gained another 2.05%, achieving a weekly winning streak. Trading volume expanded significantly, with weekly turnover reaching 4.283 billion yuan, marking the second-highest level in history.
The key news was the official release of the "National Essential Medicines List (2026 Edition)" on July 9th, effective from September 1, 2026. The new list expands the total number of drugs to 794, with 16 innovative drugs included on a large scale for the first time, accounting for over 5%.
Huatai Securities pointed out that this revision marks the first time innovative drugs have been a key focus for inclusion in the essential medicines list, reflecting stronger policy support for high-clinical-value innovative products. Support policies for innovative drugs are extending from review and approval, and医保准入 to the essential medicines list, primary care allocation, standardized use, and medication linkage between different levels of medical institutions, which is expected to enhance the clinical accessibility of domestic innovative drugs.
Alongside continuous policy support, the innovative drug sector has recently received multi-dimensional boosts, including ongoing business development (BD) deals and strength in the US-listed XBI ETF. This week saw several major deals, such as Sino Biopharmaceutical with AstraZeneca, CSPC Pharmaceutical Group with AZ, and Insilico Medicine with Takeda, with potential total transaction values reaching $1.9 billion, $1.74 billion, and $600 million, respectively. Overseas, the US-listed SPDR S&P Biotech ETF (XBI) has shown strong performance recently.
Looking forward, Guojin Securities believes that against the backdrop of strengthening global innovative drug asset sentiment, the current Chinese innovative drug sector faces a divergence between improving fundamentals and declining valuations, potentially offering highly elastic bottom-fishing investment value.
Aerospace Sector Ignited by Long March 10B Success
News of the successful first flight and recovery of the Long March 10B rocket immediately ignited the aerospace sector, leading the market. The General Aviation ETF Huabao (159231), providing one-stop exposure to commercial aerospace, satellite navigation, low-altitude economy, and large aircraft, saw its price surge up to 6.75% intraday before consolidating. It ultimately closed up 3.38% on high volume, extending its winning streak, and received a net subscription of 1 million units during the session. Funds have continued to flow in, with a cumulative net inflow of 12.88 million yuan over the past five trading days.
Among its constituents, 43 stocks rose while 7 fell. Aerospace Universe hit the 20% daily limit up, Aerospace Electronics and China Satellite both hit the 10% limit up, CAS Star gained over 9%, Haige Communications and Tianyin Electromechanical rose over 8%, and BDStar Navigation climbed over 7%.
The news was that at 12:14 on July 10, 2026, the Long March 10B carrier rocket lifted off from the Hainan Commercial Space Launch Site. Approximately six minutes after stage separation, the first stage performed a vertical return and was successfully recovered on a sea-based platform using a net capture system. This mission marked China's first successful controlled recovery of a launch vehicle's first stage and the world's first net-based recovery of a launch vehicle. The Long March 10B thus became China's first reusable launch vehicle model to achieve successful recovery.
Dongfang Securities previously noted in a report that starting mid-July, the Long March 10B and the Zhuque-3 would successively conduct reusable experiments. A breakthrough in these experiments could bring forward the timeline for large-scale reuse and constellation launches, while also potentially accelerating the capital market activities of leading private rocket companies. The approaching catalysts are expected to bring investment opportunities in the commercial aerospace sector, with continued看好 for core companies in the Qianfan constellation, key supporting companies in the rocket segment, and core companies with early布局 in next-generation satellite technologies like high-speed laser communication terminals, baseband processing, and mobile phone chips.
Big Data Sector Rises on Infrastructure News
Is the lower-priced segment within technology experiencing a catch-up rally? The Big Data ETF Huabao (516700), deeply linked to domestic computing power (IDC, servers) and AI applications, saw its intraday gain reach a high of 5.22%, closing up 1.54% and securing a three-day winning streak. Data shows the ETF attracted a net inflow of 5.57 million yuan over the past three trading days.
Among its constituents, Inspur Information, after two consecutive limit-up days, rose another 4.11% to hit a new historical high. CAS Star gained over 9%, Unisplendour Corporation rose more than 7%, with Tianxia Xiu, NavInfo, Sugon and others also advancing.
The strength in the big data industry can be analyzed from industrial, policy, and earnings perspectives. First, on the industrial front, Sugon announced on July 10th the official completion of China's first fully domestically-produced 100,000-card AI supercluster, "Sugon 8000 (Dengfeng)," which has been connected to the National Supercomputing Internet. This marks the transition of AI infrastructure construction from the 10,000-card level to the 100,000-card deployment stage.
Second, on the policy front, a State Council executive meeting explicitly called for "redoubling efforts to promote AI innovation breakthroughs, accelerating key technology R&D and the construction of ultra-large-scale intelligent computing clusters, and strengthening the supply of high-quality data." The high-frequency, high-level policy focus positions computing power as a new type of universally accessible infrastructure, akin to water and electricity.
Third, on the earnings front, Inspur Information released an earnings forecast, expecting first-half 2026 net profit attributable to the parent company to be between 2.6 billion and 3.1 billion yuan, a year-on-year increase of 226% to 288%. Its first-half profit scale has already surpassed the full-year 2025 figure (2.413 billion yuan), setting a new historical high for the same period since its listing. Industry insiders believe that the high景气 of AI computing power infrastructure translating into leading companies' earnings再次印证 the strong earnings elasticity of the computing power industry chain.
CITIC Securities pointed out that the computing power network has been incorporated into the national "Six Networks" major projects, a core infrastructure direction for the "15th Five-Year Plan" period. As trillion-level investments gradually materialize, computing power infrastructure is officially becoming a foundational and strategic facility in the digital economy era, with long-term policy红利. Against the backdrop of restricted overseas supply of high-end chips, the pace of building self-controllable intelligent computing centers and computing power hubs continues to accelerate, benefiting the entire industry chain.
The Big Data ETF Huabao (516700) passively tracks the CSI Data Index, offering deep exposure to domestic computing power (IDC, servers) and AI applications. It covers the entire data technology process, involving big data storage, production, analysis, operation platforms, and applications, better reflecting the overall development of China's big data industry.
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