On Tuesday, July 21st, leading technology stocks staged a powerful comeback, with capital aggressively chasing opportunities in optical modules, semiconductors, and equipment. The semiconductor equipment sector ignited a surge, with companies like Topking Technology Ltd and Changchuan Technology hitting the 20% daily limit-up, while Advanced Micro-Fabrication Equipment Inc. China (AMEC) surged nearly 19%, and NAURA Technology Group Co., Ltd. also reached the limit-up. The memory chip segment mounted a strong rebound, with GigaDevice Semiconductor (Beijing) Inc. hitting the limit-up, Dah Ming Technology (Shenzhen) Co., Ltd. staging a dramatic reversal from limit-down to near limit-up during the session, and Montage Technology Co., Ltd. soaring over 15%. The optical module sector also saw a powerful breakout, led by a more than 13% gain for Zhongji Innolight Co., Ltd., while Accelink Technologies Co., Ltd. rebounded sharply from a limit-down to approach the limit-up.
Among popular ETFs, the Hwabao WP Technology ETF (515000), which combines exposure to the 'hard tech beta' with the 'high-quality alpha' of leading companies, experienced a V-shaped recovery followed by a sustained upward trend, nearing the daily limit-up in the afternoon session and closing up 9.02%—its largest single-day gain this year. The ETF saw heavy turnover exceeding 3 billion yuan for the day, with capital inflows totaling approximately 2 billion yuan over the past two sessions.
Meanwhile, the ChiNext Artificial Intelligence ETF Hwabao WP (159363), which focuses on leading CPO (Co-Packaged Optics) players in the optical module space, closed strongly up 7.62% with an intraday amplitude of 13%. Its daily turnover surpassed 16 billion yuan, with a net subscription of 30 million units on the day. The fund had already accumulated net inflows of over 1.1 billion yuan in the preceding 10 trading days.
What's Driving the Tech Rebound?
The direct catalyst appears to be the entry of long-term, incremental capital. Market news indicates that state-owned capital platforms, including China Reform Holdings Corp., Ltd. and Chengtong Group, have entered the market with over 60 billion yuan in fresh funds. This move, coupled with statements from several major insurance companies pledging support for capital market development, commitments to increase equity allocation ratios, and plans to boost investment in strategic emerging industries, has significantly improved market liquidity expectations.
On a deeper level, the recent pullback is viewed more as an emotional sell-off rather than a fundamental reversal. Analysis suggests the global semiconductor sector's correction since early July was not driven by major negative fundamental news but rather by factors such as fund deleveraging, profit-taking in the memory segment, and valuation adjustments for certain stocks.
Looking ahead, foreign institutions have reiterated their positive outlook on technology and AI-themed investment opportunities. Some analysts note that the sharp sell-off in momentum stocks may be nearing its end, potentially creating an opportunity for investors to rebuild positions in AI and semiconductor stocks. Following the recent intense volatility in global capital markets and a release of crowded positioning in the tech sector, technology and AI are still seen as key market themes for the second half of the year.
Focusing on Leading Technology Companies
The Hwabao WP Technology ETF (515000) and its feeder funds (Feeder Fund A: 007873, Feeder Fund C: 007874) select 50 large-scale, high-market-share, growth-oriented, and R&D-intensive listed companies from the technology sector, representing a concentrated portfolio of core A-share tech leaders. The fund combines exposure to the 'hard tech beta' with the potential 'excess alpha' from high-quality leaders. Its top ten holdings aggregate leading companies from various sub-sectors including optical modules, semiconductor equipment, memory chips, and PCBs.
For targeted exposure to specific verticals, the ChiNext Artificial Intelligence ETF Hwabao WP (159363) and its feeder funds (Feeder Fund A: 023407, Feeder Fund C: 023408) focus on leading CPO players in the optical module space. The underlying index has a combined weighting of approximately 40% in Zhongji Innolight Co., Ltd., New Seaunion Technology Co., Ltd., and TFC Optical Communication Co., Ltd., positioning it as a core vehicle for AI computing power investment. Furthermore, the ETF has grown to over 7.3 billion yuan in assets under management, with an average daily turnover exceeding 1 billion yuan over the past six months, leading its peer group of eight ETFs tracking the same index in both size and liquidity.
Important Fund Information and Risk Disclosures
The ChiNext Artificial Intelligence ETF Hwabao WP (159363) passively tracks the ChiNext Artificial Intelligence Index (Base Date: December 28, 2018; Release Date: July 11, 2024). The Hwabao WP Technology ETF (515000) passively tracks the CSI Technology Leaders Index (Base Date: June 29, 2012; Release Date: March 20, 2019). The composition of the indices' constituent stocks is adjusted according to their respective rules, and their historical back-tested performance is not indicative of future results. The mention of index constituents is for illustrative purposes only and does not constitute any form of investment advice or represent the holdings or trading activities of any fund managed by the asset manager.
According to the fund manager's assessment, the Hwabao WP Technology ETF (515000) carries a risk rating of R3 (Medium Risk), suitable for investors with a Balanced (C3) or higher risk profile. The ChiNext Artificial Intelligence ETF Hwabao WP (159363) carries a risk rating of R4 (Medium-High Risk), suitable for investors with an Aggressive (C4) or higher risk profile. The final suitability assessment is subject to the sales institution. All information presented is for reference only, and investors are responsible for their own investment decisions. The views, analysis, and forecasts herein do not constitute investment advice of any kind, and no liability is accepted for any direct or indirect losses arising from the use of this content. Fund investment involves risks. Past performance of a fund is not indicative of its future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Investors should exercise caution.
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