China’s ‘Rocket Shares’ Surge as Investors Pivot from AI to Aerospace

The Chinese equity market is witnessing a significant thematic rotation as the 'AI trade' that dominated previous cycles begins to lose momentum. In its place, a new class of 'rocket shares' has emerged, capturing the imagination of both retail and institutional investors. According to data from Shanghai DZH, a gauge of commercial aerospace companies listed in Shanghai and Shenzhen has climbed approximately 10% in early 2026. This follows a staggering 76% surge throughout 2025, a performance that dwarfs the benchmark CSI 300 Index’s modest 2% gain over the same period. This trend signals a transition from software-driven speculation to hard-tech industrial priorities, as Beijing positions commercial space as a critical frontier in its ongoing technological rivalry with the United States.

Central to this investment frenzy is the strategic imperative to close the gap with Elon Musk’s SpaceX. For years, the American firm has maintained a near-monopoly on cost-effective, reusable rocket technology, a lead that has redefined the economics of satellite deployment and lunar exploration. China has responded by elevating aerospace to a top-tier priority within its latest five-year development plan. This policy framework is not merely aspirational; it provides the financial and regulatory scaffolding for domestic firms to accelerate testing of reusable launch vehicles. Analysts, including Hou Bin of Great Wall Securities, suggest that with sustained state support, Chinese launch costs could eventually reach parity with SpaceX, unlocking massive downstream opportunities in telecommunications, Earth observation, and global internet coverage.

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This follows a staggering 76% surge throughout 2025, a performance that dwarfs the benchmark CSI 300 Index’s modest 2% gain over the same period.

Market enthusiasm has been further catalyzed by the regulatory environment. The fast-track initial public offering (IPO) review of LandSpace, a private firm widely regarded as China’s most viable challenger to SpaceX, has served as a powerful signal to the market. By streamlining the path to public capital for high-tech aerospace startups, Chinese regulators are encouraging a venture-to-public pipeline that mirrors the dynamism of the U.S. commercial space sector. This move has buoyed the valuations of established players like China Spacesat and Hunan Aerospace Huanyu Communication Technology, which are seen as the primary beneficiaries of increased state procurement and domestic substitution efforts.

The rise of rocket shares also reflects a broader defensive posture among Chinese investors. As traditional technology stocks trade sideways due to concerns over global trade tensions and AI overvaluation, aerospace offers a unique 'sovereign growth' narrative. Because the sector is heavily insulated by national security requirements and state-backed demand, it is perceived as less vulnerable to the external shocks that have recently plagued the consumer internet and semiconductor sectors. However, the 'meme' label attached to these stocks by some market observers suggests a degree of caution is warranted. While the long-term strategic value of the sector is clear, the rapid influx of retail capital could lead to short-term volatility if technical milestones—such as successful reusable orbital flights—face delays.

Looking ahead, the performance of this sector will likely hinge on the successful execution of upcoming reusable rocket tests and the eventual market debut of LandSpace. If these milestones are met, the commercial aerospace sector could transition from a high-growth speculative play into a foundational pillar of the Chinese industrial economy. Investors are increasingly betting that the next decade of market leadership will not be won in the cloud, but in low Earth orbit, as the race for space supremacy becomes the defining economic contest of the late 2020s.