Hong Kong's major stock indices showed a mixed performance, with technology stocks broadly under pressure. Sentiment in Hong Kong-listed ETFs was impacted by turmoil in the South Korean markets. By the close, the Hang Seng Index fell 0.22% to 26,347.91 points, with a daily turnover of HKD 262.6 billion. The Hang Seng Tech Index declined 0.7% to 5,070.61 points. Among Hong Kong-listed ETFs, Tracker Fund (02800) dropped 0.23% to HKD 26.48, while CSOP Hang Seng Tech Index ETF (03033) fell 0.6% to HKD 4.968. CSOP 2X Leveraged SK Hynix ETF (07709) plunged 5.18% to HKD 91.98.
**Sector Performance** A proposed "AI dividend for all citizens" in South Korea triggered market panic, leading to rollercoaster swings in the KOSPI index. Affected by this fear-driven selling and capital outflows, ETFs tracking South Korean markets and memory chip concepts collectively retreated. TR Korea ETF (02848) fell 2.56% to HKD 1842.5. CSOP Hong Kong-Korea Tech ETF (03431) dropped 2.34% to HKD 10.42. CSOP 2X Leveraged SK Hynix ETF (07709) declined 5.18% to HKD 91.98. CSOP 2X Leveraged Samsung ETF (07747) decreased 4.69% to HKD 140.2.
On the news front, South Korea's Financial Supervisory Service Vice Chairman Hwang Seon-oh expressed concerns about signs of overheating in the stock market and the expansion of margin trading balances. He stated that "preemptive measures will be taken if necessary to ensure market stability." Concurrently, BlackRock's iShares MSCI South Korea ETF, with assets of nearly $23 billion, recorded a net outflow of $970 million last week, marking the largest weekly sell-off in its history. The KOSPI index experienced intraday swings of up to 3.3 percentage points, turning from gains to losses and at one point falling more than 5%.
Nomura analysis suggests that foreign investors who increased their holdings in South Korean stocks during the AI-driven rally from September to October last year are now selling to lock in profits amid the recent market rebound. Nomura also noted that, from a macro perspective, as long as the blockade of the Strait of Hormuz persists (with the U.S. and Iran still divided over ceasefire terms), the AI-driven market trend could exhibit greater sustainability. The energy supply shock from the Middle East situation has, in a way, reinforced market preference for the AI theme.
The domestic substitution theme gained momentum, with semiconductor equipment ETFs bucking the downtrend. Despite the Hang Seng Tech Index closing lower, strong first-quarter earnings from domestic semiconductor companies and announcements of increased investment by packaging and testing foundries have significantly boosted market confidence in the self-reliance and control of semiconductor equipment. Related semiconductor ETFs rose against the trend. Huatai-PineBridge SSE STAR Semiconductor Equipment ETF (588710) gained 3.76% to CNY 2.293. ChinaAMC SSE STAR Semiconductor ETF (588170) climbed 3.61% to CNY 2.212. ChinaAMC Semiconductor Equipment ETF (562590) advanced 2.16% to CNY 2.37.
Sinolink Securities believes the high earnings growth of industry chain companies stems from two factors. On the supply side, memory chip companies have begun raising product contract prices. On the demand side, capital expenditure by internet companies has spurred increased demand for enterprise-level storage, while peak season stocking and inventory replenishment for consumer electronics are also strengthening demand, indicating a clear upward cycle for memory chips.
Datong Securities analysis points out that, based on disclosed first-quarter reports, gross margins for memory chip modules and niche memory have improved substantially. Semiconductor equipment companies are benefiting from wafer fab capacity expansion, leading to accelerated profit releases. The high growth driven by AI is transitioning from expectations to tangible results, with domestic memory industry chain companies actively positioning themselves to seize opportunities.
**Institutional Views** An analyst from Morningstar (China) Fund Research Center advises investors not to enter the market blindly based solely on its热度 (hotness). They should pay close attention to the high premium risks associated with cross-border QDII-ETFs (referring to exchange-traded funds that raise RMB funds domestically to invest in overseas capital markets). Once secondary market buying sentiment surges, it can easily create a significant premium deviating from net asset value. Chasing highs may lead to losses if the premium contracts later. Additionally, some ETFs have small asset sizes and insufficient liquidity, coupled with mismatched cross-border trading hours, which can also affect trade execution. Furthermore, QDII-ETF fees are generally higher than those of domestic products, potentially diluting actual returns over the long term.
**ETF Developments** On May 12th, two funds debuted on the exchange-traded fund market. CICC SSE STAR & ChiNext AI ETF (588480) listed for the first time, closing up 0.29% at CNY 1.034 with a turnover of CNY 119 million. The fund tracks the STAR & ChiNext + AI concept, focusing on AI industry chain stocks listed on the STAR Market and ChiNext Board. ChinaAMC Grain ETF (159030) also debuted, closing down 1.2% at CNY 0.984 with a turnover of CNY 24.593 million. The fund focuses on the entire grain industry chain, covering concepts like food security, seed industry, and agricultural cultivation.
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