China’s commercial space sector rallied hard on the back of Long March 10B’s successful debut and recovery, then fell just as quickly days later.
On July 13, the sector gave back gains across the board. Dikong Lantian fell more than 10%, while Aerospace Power, Xinwei Communication and Tongyu Communication also dropped. The Shenzhen Component Index and ChiNext Index both lost more than 2%, while AI-related names rebounded and funds rotated out of space stocks.
Breakthrough in recovery technology, but the rally lasted only a weekend
At 12:15 on July 10, Long March 10B lifted off from the Hainan commercial launch site. The rocket is 63 meters tall and has liftoff thrust of 890 tons. About six minutes after stage separation, its first stage returned vertically and was caught by the flexible net system on the “Navigator” recovery platform.
The source article describes the mission as China’s first controllable recovery of a heavy-lift rocket first stage and the world’s first net-based recovery. It says China became the second country after the United States to master this capability.
The market reaction was immediate. More than 30 stocks hit their daily upper limit on July 10, and heavyweight names China Spacesat and China Satcom both locked limit-up. That enthusiasm did not last. Friday’s surge turned into a Monday selloff.
The article points to quantitative trading as the key force
The piece argues that the move was driven less by the news itself than by the structure of capital in the sector.
Citing Securities Times, it says public mutual funds and social security funds have remained underweight or entirely absent in commercial space. Sray New Materials and Information Development, both up more than 100%, still had no public funds among their top 10 tradable shareholders. Aerospace Power and Aerospace Development had some institutional participation, but overall positions remained limited.
That leaves the sector without a meaningful long-term base of holders. Prices can rise quickly when money crowds in, then fall just as fast when buyers disappear. The article cites data showing that quantitative funds account for 20% to 30% of A-share turnover. In sectors with little institutional ballast, that influence becomes larger.
Its argument is that quant strategies are built around volatility arbitrage. A limit-up rush and a selloff can be two sides of the same trade. In commercial space, where long-only capital is thin, the strategy has had more room to work.
The article uses Aerospace Development as an example. On July 10, its top five buyers on the trading list included Shenzhen-Hong Kong Stock Connect, institutions and speculative brokerage seats, while the fifth-largest seller was East Money’s Lhasa Tuanjie Road No. 1 branch. Institutions were net buyers of 85.71 million yuan on the limit-up day, while Lhasa retail traders were net sellers of 18.06 million yuan. Over the past six months, the stock appeared on the list eight times, and the average decline five days after those appearances was 10.66%.
Primary-market capital is still backing the industry
The secondary-market volatility stands in contrast to continued investment in the primary market.
According to Taibo Think Tank, China’s commercial space industry recorded 89 publicly disclosed financing events in the first half of 2026, totaling 15.13 billion yuan. Rocket launch companies accounted for 44% of that financing, the largest share among subsectors. The article says state and local guidance funds have become the main source of patient capital, shifting the industry from spontaneous exploration toward state-led system guidance.
It also points to SpaceX. The article says the company’s market value reached $1.77 trillion after listing this year, even though it posted a net loss of $4.94 billion in 2025. In that framework, investors are pricing long-term launch capacity, orbital positioning and the broader space economy rather than near-term profits.
The article cites a 2.83 trillion yuan market-size estimate from CCID Think Tank and demand for tens of thousands of satellite launches over the coming years. Its point is that primary-market pricing and current secondary-market trading are not operating on the same timeline.
Over two years, the sector’s drivers have shifted from concept to policy to technical proof
The article breaks the past two years into three phases.
The first came in early 2025, when China submitted frequency and orbital resource applications for 203,000 satellites across 14 constellations to the International Telecommunication Union. That move sparked speculation around a “Chinese SpaceX.” China Spacesat’s price-to-earnings ratio climbed to 2,400x, and China Satcom issued a warning saying the “passing the parcel effect” was obvious.
The second phase arrived in late 2025. China’s National Space Administration set up a commercial space department, and the STAR Market’s fifth listing standard opened a financing path for unprofitable rocket companies. Blue Arrow Aerospace moved toward becoming the first commercial space listing in China’s A-share market. But recovery tests for Zhuque-3 and Long March 12A failed, and the rally faded before the technology had been validated.
The third phase unfolded in spring 2026. Reusable rockets entered an intensive testing window. Zhuque-3 Yao-2 completed a static fire test, Lijian-2 made a successful debut, and Long March 10B had originally been scheduled for a first launch in April. First-quarter earnings also exposed the industry’s profit split more clearly, with upstream firms earning strongly and downstream players deeply in the red. Then Tianlong-3 suffered a flight anomaly after ignition and failed on its debut, and an April 3 explosion cooled sentiment again.
Before the latest rebound, the commercial space sector had already fallen 8% over three trading days, with Shenjian Co. hitting limit-down and several other names dropping more than 10%. Sentiment turned only after Long March 10B completed a full “orbital launch plus controllable recovery” loop from Hainan on July 10.
Reusable rockets are now the core test for valuations
The article says the market’s fundamental driver path is now clear: concept, then policy, then technical proof. But pricing power in the capital market has moved on a different track, from speculative funds in the first wave to retail participation in the second, and increasingly quant-driven trading in the latest phase.
Reusable technology sits at the center of the industrial case. The article says the first stage accounts for more than 70% of rocket cost, so recovering it can remove roughly 70% of manufacturing expense. It says Falcon 9, after 34 reuses, reduced launch-to-orbit cost to 19,000 to 28,000 yuan per kilogram. Current domestic launch prices are 50,000 to 100,000 yuan per kilogram. Blue Arrow’s Zhuque-3 is targeting less than 20,000 yuan per kilogram, and some industry estimates see costs eventually falling below 1,000 yuan per kilogram if reusability matures.
On the demand side, the GW constellation plans 12,992 satellites, and the Qianfan constellation plans 13,904 plus another 1,296, taking the total planned count to more than 50,000 satellites. Against that, China has only 18 commercial launch pads in operation and seven under construction, with an average queue time of one month. The article’s conclusion is straightforward: launch capacity is a strategic resource in a market with too many satellites and too few rockets.
In a low-orbit satellite internet industry report, Yuanhe Chenkun ranked investment priorities in this order: rocket manufacturers, then satellite operators, then full-satellite builders, then satellite components. Its logic is that the first company to solve recovery and compress launch costs will control the key gateway to the constellation market. The article adds that China’s private rocket market may ultimately support only two or three leading firms.
The second half of the year will bring several tests at once
The article outlines a crowded schedule for the rest of the year. Zhuque-3 Yao-2’s recovery test is the nearest checkpoint. If it succeeds, it would become the first privately owned liquid rocket in China to achieve orbital-class recovery. Zhishenxing-1 is nearing its maiden launch, and Tianlong-3 is set to fly again in the second half after its April setback. Long March 10B is also expected to attempt its first reused flight before year-end, a step from “can be recovered” to “can be reused.”
Capital markets are moving in parallel. SpaceX’s $1.77 trillion valuation has created a fresh benchmark for global commercial space. Blue Arrow Aerospace has advanced to the inquiry stage of its STAR Market IPO, and CAS Space is moving behind it. That means China’s rocket companies are about to face their first direct valuation test in public markets.
Earnings are part of that test too. On July 12, China Spacesat forecast first-half net profit of 30.5 million yuan to 36.5 million yuan, turning profitable from a year earlier. Upstream supplier Zhenlei Technology posted more than 400 million yuan in Q1 revenue with a 31% profit margin, while Bright Laser Technologies reported 40.5% revenue growth and doubled net profit in the first quarter. Downstream player PIESAT, by contrast, saw Q1 revenue plunge 86% and has been tagged *ST.
Industrial progress and market pricing are still out of sync
The article closes with a simple point. Long March 10B’s successful recovery is a historic step for China’s commercial space sector. The key barrier in reusable technology has been crossed, and the path toward lower launch costs is clearer.
That still does not guarantee immediate recognition in the stock market. The sector remains highly volatile, quant-led pricing has not disappeared, and the profit split between upstream and downstream companies remains sharp.
For now, the article argues, the industry’s turning point and the market’s pricing turning point are not the same thing.