Stop fixating on commercial aerospace next week—the pharmaceutical and defense industry funds have already surged.

At the start of 2026, the capital flow in China’s A-share market has become increasingly clear. Although the previously hyped commercial aerospace sector still sees sporadic hotspots, its overall热度 has gradually cooled. In contrast, the pharmaceutical and defense sectors—bolstered by policy tailwinds, earnings realization, and other catalysts—have launched a powerful rally, emerging as the new core attracting concentrated institutional capital. For fund investors, promptly recognizing this market rotation and adjusting portfolio allocations accordingly is key to seizing early-year investment opportunities. Consider buying pharmaceutical ETFs and defense ETFs; media ETFs also warrant attention—Gravitational Media and BlueFocus are undoubtedly strong stocks. The pharmaceutical sector’s surge is no coincidence—it is the inevitable outcome of convergence among policy support, technological advancement, and market demand. As the opening year of the 15th Five-Year Plan, the pharmaceutical industry is entering a comprehensive period of opportunity. Sub-sectors—including innovative drugs, contract research and development organizations (CXO), and traditional Chinese medicine (TCM)—are all thriving. In the innovative drug space, breakthroughs continue: in 2025, 76 novel drugs were approved for marketing—a 58% year-on-year increase—with total overseas licensing deals exceeding USD 130 billion. In 2026, around 20 blockbuster new drugs are expected to launch, targeting high-need areas such as oncology and rare diseases. Star drugs like Biotech’s globally first-in-class bispecific ADC and BeiGene’s Sotorasib are fueling strong earnings growth expectations for their respective companies. The CXO industry is also rebounding steadily amid synergistic domestic and international factors: Fed rate cuts have revived overseas financing and investment activity; domestic biotech funding conditions have improved; and AI-driven innovation plus the emergence of new molecular modalities are lifting industry gross margins to as high as 40%. Industry leaders such as WuXi AppTec and Asymchem are accelerating expansion into peptides, oligonucleotides, and other cutting-edge domains, with orders flowing in continuously. The TCM sector benefits from favorable policies: new regulatory guidelines specifically governing TCM manufacturing are imminent; medical insurance centralized procurement policies explicitly discourage destructive price competition (“anti-internal competition”); and emerging business models—such as food-and-medicine dual-use products—are driving high-quality transformation across the industry. In medical devices, domestic substitution is accelerating rapidly. Companies like United Imaging and Mindray Medical are breaking foreign monopolies and achieving notable success overseas—powering robust sectoral growth. Additionally… The defense sector’s surge is equally well-founded, supported by both policy backing and real-world operational demands. At the PLA’s 2026 annual opening-of-training ceremony, new equipment—including unmanned combat systems, quadruped robots, and advanced fighter jets—were showcased en masse, highlighting tangible progress in military informatization and intelligent transformation. With the 15th Five-Year Plan underway and the centenary goal of building a world-class military approaching, defense spending is expected to maintain steady growth. In 2025, defense budget appropriations rose by 7.2%; in 2026, demand for military communications and BeiDou navigation equipment is projected to grow over 30% year-on-year.

My heavy positions finally rose~

BoGe’s on-exchange ETF account holds major positions in: Hong Kong-listed innovative pharmaceuticals and aerospace (including satellites). The Hong Kong-listed innovative pharmaceuticals position was initiated on April 7—the day of the sharp market decline—and has since delivered cumulative gains exceeding 100%. However, since late July, it has entered a two-month consolidation phase. Today, it finally posted a substantial gain. The aerospace (including satellites) position was re-added during a pullback triggered by major events. Yet, it remained flat for several weeks—until today, when it finally rose. For BoGe: The good news is that his core holdings have finally risen; The bad news? They rose only one day—then the holiday break begins. All that remains is hope that the rally continues after the holiday. Outlook for the market ahead: The market’s central level is likely to rise again in October. Structurally, the focus remains on sectors exhibiting strong earnings momentum and aligned with long-term industrial trends—particularly those highlighted by Q3 earnings reports and industries benefiting from the 15th Five-Year Plan, including innovative pharmaceuticals, AI (especially computing power and gaming), defense, batteries, and “anti-internal competition” themes. Both innovative pharmaceuticals and AI computing power are underpinned by solid earnings fundamentals.

FUL Stock Is Riding Medical, Aerospace and Pricing Trends

Jul 9, 2026

H.B. Fuller leverages specialty materials positioning to expand into medical markets while countering inflation through pricing strategies. Despite strong valuation, sustained volume growth remains challenged in consumer-linked sectors like automotive and flexible packaging.

TradingView

2026-07-09

H.B. Fuller Stock Outlook Hinges on Margins, Mix and M&A

2026-07-09

FUL Stock Is Riding Medical, Aerospace and Pricing Trends

2026-07-10

H. B. Fuller (FUL) Identified as Attractive Value Investment

2026-07-21

H.B. Fuller (FUL) Could Be 24% Below Fair Value On Credit Refinancing

2026-07-26

Refinancing and Dividend Move Might Change the Case for Investing in H.B. Fuller (FUL)