On July 2nd, the A-share and Hong Kong semiconductor and chip sectors experienced a collective cooling off. Within Hong Kong's hard tech segment, stocks such as Guanghe Technology, ASMPT, Kingboard Laminates Holdings Ltd, Kingboard Holdings Ltd, Shenghong Technology, and Tianshu Zhixin fell by over 10%. The largest and most liquid Hong Kong Stock Connect information technology ETF, Hua Bao (159131), saw its on-exchange price decline by 4.21%. Capital quickly flowed in on the dip, resulting in a net real-time subscription of 15 million shares.
In related news, reports indicate that Meta Platforms Inc is discussing the development of a new cloud computing business. This could involve opening access to AI models deployed on Meta's infrastructure for external clients in the future, or directly selling its surplus AI computing power. This strategy aims to improve the commercial returns on its tens of billions of dollars in AI infrastructure investments. Overnight, the three major U.S. stock indices closed lower, with chip and optical communication concept stocks facing heavy selling pressure. The Philadelphia Semiconductor Index plunged over 6%, Micron Technology and SanDisk plummeted more than 10%, and Corning crashed over 13%. Most large-cap tech stocks, however, strengthened, with Meta surging over 8%.
Judging from the performance of U.S. memory chip and optical communication stocks, the market appears to have interpreted Meta's statement as a signal of a potential future slowdown in capital expenditure growth and a shortened duration of above-trend demand. Concurrently, some Wall Street institutions believe the market may have overreacted to this news. They suggest Meta's sale of surplus AI computing power is more akin to finding a commercial outlet for its massive AI capital expenditures, rather than indicating a slowdown in its own AI investments.
Regarding industry trends, analysis from CITIC Securities points out that the global semiconductor equipment upcycle continues to be confirmed, with attention on price increases and overseas expansion. On June 11th, SEMI released a report significantly raising its 2026 growth forecast for the global front-end semiconductor equipment market from a previous 16.5% to 23.5%, reaching $152.2 billion. Q1 global semiconductor equipment billings reached $36.55 billion, a year-on-year increase of 14%, setting a new historical quarterly record. Following the announcement of SK Hynix's five-year plan to double capacity earlier this month, SK Group Chairman Choi Tae-won recently revealed in an interview that if all construction plans proceed as expected, Hynix's capacity could triple by 2034. The global semiconductor equipment components sector is experiencing a historically rare, comprehensive price increase across the entire supply chain. Pricing power within the semiconductor industry chain is structurally shifting from chip end-users towards the equipment and components segments.
Looking at performance over the past six months, a stark divergence has emerged within the Hong Kong tech sector. The benchmark index for the Hong Kong Stock Connect Information Technology ETF Hua Bao (159131), which focuses on Hong Kong hard tech—the CSI Hong Kong Stock Connect Information Technology Composite Index (HK Connect Info C)—has gained 30.85% cumulatively. This outperformed the Hang Seng Tech Index by approximately 50%, surpassed the Hong Kong Stock Connect Tech Index by about 45%, and exceeded the Hong Kong Stock Connect Internet Index by over 65%, demonstrating significantly superior sharpness and elasticity. Extending the view to nearly three years, the HK Connect Info C Index has surged over 126%, outperforming the Hang Seng Tech Index by more than 117%.
Statistical period: December 30, 2025, to June 30, 2026. The annual historical returns for the HK Connect Info C Index from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30%, respectively. Its volatility for those years was: 4.13%, 4.63%, 3.40%, 5.49%, and 5.45%, respectively. Past index performance is not indicative of future results. Images are AI-generated.
Hua Bao (159131) is a rare "pure-play" hard tech ETF in Hong Kong, supporting T+0 trading. It is the market's first and the largest, most liquid Hong Kong Stock Connect Information Technology ETF. Its feeder fund code is 026755. The underlying index is composed of "80% hardware + 20% software," heavily weighted towards Hong Kong-listed "semiconductors + electronics + computer software." It covers 60 Hong Kong hard tech companies. The combined weight of the two wafer foundry giants, SMIC and Huahong Grace, exceeds 26%. The weight of domestic AI PC leader Lenovo Group is over 10%. The combined weight of PCB leaders Kingboard Holdings Ltd and Kingboard Laminates Holdings Ltd is over 11%. All three represent the highest concentrations in their respective indices among all market-linked products. Furthermore, the index recently included several new Hong Kong hard tech entrants on June 15th, such as Zhipu AI, Biren Technology, and Shenghong Technology. The constituent stocks exclude large-cap internet enterprises like Alibaba, Tencent, and Meituan, resulting in higher sharpness and making it easier to capture Hong Kong's AI hard tech trends.
Data source: CSI Indexes, as of June 24, 2026. Images are AI-generated.
Data source: China Securities Index Co., Ltd., Shanghai and Shenzhen Stock Exchanges.
Note: "First in the market" refers to Hua Bao (159131) being the first ETF to track the CSI Hong Kong Stock Connect Information Technology Composite Index. As of June 26, 2026, the latest on-exchange size of Hua Bao (159131) was 1.887 billion yuan, making it the largest among the 8 ETFs tracking the same index. Its year-to-date average daily turnover was 659 million yuan. The annual historical returns of the underlying index, the CSI Hong Kong Stock Connect Information Technology Composite Index (HKD), from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30%, respectively. Past index performance is not indicative of future results.
Fund fee explanation: Subscription and redemption agents for Hua Bao (159131) may charge a commission not exceeding 0.5%. On-exchange trading fees are subject to the actual charges by securities firms. No sales service fee is charged.
Reference institutional view source: Soochow Securities report "Controversies and Opportunities in Tech Hardware."
Risk Disclosure: Hua Bao (159131) and its feeder fund passively track the CSI Hong Kong Stock Connect Information Technology Composite Index. The index base date is November 14, 2014, and its release date is June 23, 2017. The index constituents mentioned in the material are for illustrative purposes only. Descriptions of individual stocks are not investment advice in any form and do not represent the holdings or trading动向 of any fund managed by the asset manager. This product is issued and managed by HuaBao Fund Management Co., Ltd.. Distributors do not bear responsibility for the investment performance or redemption of the product. Investors should carefully read the Fund Contract, Prospectus, Fund Product Key Facts Statement, and other legal fund documents to understand the fund's risk-return characteristics and choose products suitable for their own risk tolerance. Past fund performance does not predict future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Fund investment involves risks! The fund manager assesses this fund's risk等级 as R4 - Medium to High Risk, suitable for Aggressive (C4) and above investors.销售机构 (including the fund manager's直销机构 and other sales agents) evaluate this fund's risk according to relevant laws and regulations. Investors should promptly pay attention to the appropriateness opinions issued by sales agents and base their decisions on the matching results. Appropriateness opinions from different sales agents may not necessarily be consistent. The fund product risk等级 evaluation results issued by fund sales agents shall not be lower than the risk等级 evaluation results made by the fund manager. The description of the fund's risk-return characteristics in the Fund Contract and its risk等级 may differ due to different考虑因素. Investors should understand the fund's risk-return profile and结合自身投资目的, investment horizon, investment experience, and risk承受能力 to谨慎选择基金产品 and bear the risks themselves. The China Securities Regulatory Commission's registration of this fund does not indicate a substantive judgment or guarantee of its investment value, market prospects, or returns. Funds carry risks; investment requires caution.
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