China's three major A-share indices showed mixed performance today (June 16th), with the ChiNext Index surging 1.72% on increased volume to close above 4,100 points, once again surpassing the Shanghai Composite Index's closing level. The combined turnover for the Shanghai, Shenzhen, and Beijing markets reached 3.09 trillion yuan, a slight increase of 35.6 billion yuan from yesterday.
In the market, computing power hardware continued its strong performance, and optical communications remained active. The high-"light" ChiNext Artificial Intelligence ETF (159363) saw its on-exchange price rise another 1.67%, nearing its previous high. The fund had previously accumulated net inflows of 240 million yuan over the past four trading days. Prices for PCB raw materials like electronic cloth, copper-clad laminates, PPE resin, and copper foil continued to rise. Coupled with active performance in concepts like MLCC and semiconductor silicon wafers, the Electronic ETF (515260), which encompasses these popular themes, saw its on-exchange price rise 0.84% following a 7.16% surge yesterday, also challenging its previous highs.
Hong Kong-listed hard tech stocks experienced volatile consolidation. Zhipu, dubbed the "global first large language model stock," surged over 13% intraday after yesterday's 32% rally, before paring gains to close up 1.17% in the afternoon. The largest and most liquid* ETF in its category, the Hong Kong Stock Connect Information Technology ETF (159131), saw its on-exchange price close down 1.46%.
In the new energy sector, lithium battery leader Eve Energy forecast a 95%-110% year-on-year increase in first-half net profit, indicating robust industry sentiment. The sole ETF tracking the green energy index, the Green Energy ETF (562010), saw its on-exchange price surge 1.52%. The STAR and ChiNext 50 ETF (588330), a broad-based hard tech fund covering new energy, optical modules, and semiconductors, rose nearly 1.7% intraday before closing up 0.92%.
Regarding cyclical sectors, a significant shift in the Middle East geopolitical landscape, with the US and Iran reaching a ceasefire agreement, is expected to help repair market risk appetite. Funds are accelerating their deployment into cyclical directions. The Chemical ETF (516020) attracted a net inflow of 320 million yuan yesterday alone, while the Nonferrous Metals ETF (159876) has seen cumulative inflows of 51.99 million yuan over the past five days.
Market Analysis and Outlook
One securities firm points out that three key overseas developments warrant attention: first, following the release of US inflation and employment data, the Federal Reserve is widely expected to hold rates steady in June, shifting market focus to the policy statement and the new Chair's remarks. Second, the SpaceX IPO is anticipated to have a limited liquidity impact on markets. Third, rising expectations for de-escalation in the Middle East should help reduce energy risk premiums.*
Looking ahead, the firm believes that with the June FOMC meeting concluded and geopolitical tensions easing, market risk appetite is poised for recovery. Technology stocks and previously suppressed sectors like nonferrous metals and mid-to-downstream chemicals are expected to outperform.*
Focus on Key Sector ETFs
Optical Communications: Two Trading Themes Emerge
Optical communications remained active, driving gains in the high-"light" ChiNext AI theme. Among constituents, Taisun Communications surged 18.55%, hitting new highs in both volume and price. Tianfu Communication, Zhishang Technology, and Changxin Bochuang rose over 5%, while Xinyisheng and Zhongji Xunchuang also closed higher.
For popular ETFs, after yesterday's 7.71% surge, the largest and most liquid ETF in its category, the ChiNext Artificial Intelligence ETF (159363), gained another 1.67% on-exchange today, approaching its previous high, with turnover nearing 1.4 billion yuan. The fund continued to see net inflows, having accumulated 240 million yuan over the prior four sessions.
Two potential trading themes are emerging for the optical communications sector. The first is the earnings theme, represented by leading optical module companies. As the mid-year reporting season approaches, market focus may gradually shift from thematic trading to earnings verification. Another securities firm notes that high-certainty AI directions, such as the North American computing power chain (e.g., optical modules, fiber optic cables within optical communications), may become more resilient focal points for the market amid external volatility and could form the strongest consensus during the July earnings season.*
The second is the elasticity theme, represented by MPO concept stocks. MPO, a core component for high-density optical interconnects in AI data centers, is benefiting from surging demand driven by increasing interconnect density. Volume growth stems from the ramp-up of high-speed optical modules and incremental demand from new NPO/CPO architectures. Price increases are driven by product evolution towards higher densities (16+ fibers) and the push for ultra-miniaturization of ferrules due to precision requirements, leading to a significant jump in unit value.*
To gain exposure to optical communications leaders, investors may consider the largest and most liquid ChiNext Artificial Intelligence ETF (159363) and its corresponding feeder funds (Class A: 023407, Class C: 023408). The underlying index has approximately 50% exposure to optical modules and significant weight in leading companies, with about 30% allocated to AI applications, representing not just computing power but also AI applications.
As of June 12, 2026, the ChiNext Artificial Intelligence ETF (159363) had reached a size of 7.175 billion yuan, ranking first in the STAR and ChiNext AI thematic space. Its average daily turnover over the past six months exceeded 900 million yuan, also leading the AI thematic space.
Chemicals: Pullback After Rally, Inflows Persist
The chemical sector experienced a volatile pullback. The Chemical ETF (516020), reflecting the sector's overall trend, opened lower, rallied to briefly turn positive intraday, but fell back in the afternoon to close down 0.97% on-exchange, ending a five-day winning streak.
Among constituent stocks, some companies in lithium battery, phosphate chemical, and titanium dioxide sectors led gains. By the close, Dongcai Technology hit the limit-up, while Tianneng Chemical and Tianci Material both rose over 6%. Xingyuan Material, Xingfa Group, and Shengquan Group also posted notable gains.
In terms of fund flows, the basic chemicals sector has recently attracted significant attention from major funds. Data shows that as of the close, the sector saw net inflows from major funds exceeding 40 billion yuan over the past five days, ranking third among 30 CITIC primary industries.
The popular on-exchange tool for the sector, the Chemical ETF (516020), also continued to see fund inflows. Exchange data shows that as of yesterday's close (June 15th), the ETF recorded net inflows on three of the past five trading days, with a three-day total exceeding 340 million yuan.
Another securities firm states that core market concerns about the chemical industry have centered on high volatility due to uncertain Middle East tensions and demand headwinds from high oil prices. However, from the current standpoint, with a major shift in Middle East tensions and industry fundamentals and valuations near bottom, a window for actively positioning in chemicals may have emerged.*
A further securities firm points out that negative domestic capital expenditure, industry efforts to stabilize prices amid reduced internal competition, the end of a deep US inventory destocking cycle, and marginal demand pull from Asian, African, and Latin American countries suggest a chemical industry upturn following PPI may be seen in 2026. The scarcity of quality chemical assets is increasing, further enhancing the reliability of the profit bottom for Chinese chemical companies.*
For investors seeking to capture the chemical sector's rebound potential, accessing the market via the Chemical ETF (516020) may offer higher efficiency. Public information shows the ETF tracks the CSI Segmented Chemical Industry Theme Index, whose constituents cover popular themes like AI computing power, reduced internal competition, robotics, and new energy. Off-exchange investors can also access the sector through the ETF's feeder funds (Class A: 012537, Class C: 012538).
Hong Kong Hard Tech: Consolidation or Pause in Uptrend?
Hong Kong-listed hard tech stocks saw volatile consolidation. SMIC fell over 3%, Xiaomi Group dropped 1.8%. Zhipu, after surging 32% yesterday, jumped over 13% intraday before retreating to close up 1.17% in the afternoon. The largest and most liquid* ETF in its category, the Hong Kong Stock Connect Information Technology ETF (159131), opened lower and traded in negative territory throughout the day, closing down 1.46% on-exchange with a daily turnover of 1.7 billion yuan.
With recent increased market volatility, what is the outlook for Hong Kong hard tech?
An analysis from another securities firm suggests catalysts for Hong Kong stocks have increased significantly compared to earlier periods: 1) A recovery in overseas risk appetite may allow tech stocks to move in sync with US markets, especially in AI application software, where accelerated overseas AI adoption could directly benefit relevant Hong Kong-listed stocks. 2) The US-Iran agreement is positive for a broad rebound in risk assets. Falling oil prices and geopolitical easing further support market sentiment. HALO assets also benefit from improved risk appetite. 3) Beyond the US-Iran agreement, this week's FOMC meeting is a key catalyst. As long as the new Fed Chair's remarks are relatively neutral (avoiding strongly hawkish signals), it could effectively underpin global risk assets, benefiting a Hong Kong stock rebound and foreign capital inflows.
Regarding investment direction, the firm suggests investors focus on offensive-oriented technology as the core theme, prioritizing exposure to AI applications, software, and hardware beneficiaries of global AI trends, while also considering tactical opportunities in HALO assets.
It is noted that on June 15th, Zhipu was formally included in the underlying index of the Hong Kong Stock Connect Information Technology ETF (159131), making this index one of the first Hong Kong tech indices in the market to include the stock. Other newly added constituents include hardware leaders like Biren Technology, Shenghong Technology, Tianshu Zhixin, and Haizhi Technology. Consequently, the number of constituents in the underlying index expanded from 52 to 60, further enhancing its hard tech attributes.
Over the past six months, the underlying index of the hard tech-focused Hong Kong Stock Connect Information Technology ETF (159131)—the CSI Hong Kong Stock Connect Information Technology Composite Index—has gained over 24%, outperforming the Hang Seng TECH Index by 39%, the Hong Kong Stock Connect Technology Index by 37%, and the Hong Kong Stock Connect Internet Index by over 53%, demonstrating significant sharpness and elasticity.
The Hong Kong Stock Connect Information Technology ETF is positioned as a rare "pure-play" hard tech option for Hong Kong, supporting T+0 trading. As the market's first, largest, and most liquid ETF tracking its index, with feeder fund code 026755, its underlying index comprises "80% hardware + 20% software." It focuses on Hong Kong-listed "semiconductors + electronics + computer software," covering 60 hard tech companies. The combined weight of the two leading wafer foundries, SMIC and Huahong Semiconductor, exceeds 21%. The weight of domestic AI PC leader Lenovo Group is 15.89%. The combined weight of PCB leaders "Kingboard Holdings and Kingboard Laminates" exceeds 10%. All three represent the highest exposure levels among comparable index-linked products in the market. The index recently included new hard tech giants like Zhipu and Biren Technology. The index excludes large-cap internet companies like Alibaba, Tencent, and Meituan, offering higher sharpness and better potential to capture Hong Kong's AI hard tech trends.
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