A-share markets staged a broad rebound on October 28, with the benchmark Shanghai Composite rising 0.91% to 3,681.47 points, the Shenzhen Component Index gaining 2.02%, and the ChiNext Index climbing 3.40%. Total turnover across the Shanghai, Shenzhen and Beijing exchanges reached 1.64 trillion yuan, an increase of 169.3 billion yuan from the previous session.
On the board, AI hardware showed notable recovery, led by optical modules. The underlying index of the STAR Market AI ETF (159363), which focuses on optical module leaders, closed up 4.81%. AI chip-related segments also advanced broadly, with the underlying index of the STAR Chip ETF (589190), which carries relatively low fees among peers, briefly testing a 4.65% gain before closing up 3.62%, while the STAR Chip Design ETF (589430) also staged a strong recovery with its underlying index closing up 4.75%.
In Hong Kong, hard tech sectors represented by chip semiconductors rebounded strongly. The underlying index of the Hong Kong Stock Connect Information Technology ETF (159131), which concentrates on Hong Kong hard tech, closed up 3.9%.
Looking ahead, Founder Securities stated that once the liquidity shock is resolved, the market will see a considerable recovery. Recently, regulators released clear market-stabilizing signals at the 2026 Financial Street Forum annual meeting, including establishing a liquidity support tool to address large redemptions by non-bank institutions and accelerating the improvement of long-cycle assessment mechanisms. Policy support for market stabilization continues to strengthen, demonstrating regulators' confidence in steadying the market.
Regarding specific allocation, the brokerage noted that after sufficient market adjustment, sectors with earnings and logic see their allocation value become more prominent. Market stabilization depends on technology, trend formation depends on domestic demand, and from a medium-term perspective, three allocation opportunities deserve attention: first, the oversold rebound in technology; second, the allocation value of domestic demand and pro-cyclical sectors; third, non-bank financials, which respond most directly to monetary policy changes, have good earnings-valuation matching, and can stabilize the index.
ETF Hotspot Review
Focusing on the trading and fundamental situations of industry-themed ETFs including ChiNext AI, Hong Kong information technology, and STAR chip sectors.
One: Optical Module Recovery Accelerates, Zhongji Innolight Jumps Over 10% on Heavy Volume, Valuation Repair Window Opening?
AI hardware showed notable recovery, led by optical modules. The underlying index of the ChiNext AI ETF (159363), which focuses on optical module leaders, closed up 4.81%, with high trading activity. Optical module leaders rallied collectively, with Zhongji Innolight surging over 10% on heavy volume, Eoptolink Technology rising 8%, and T&S Communications leading with a gain of over 6%. Chip-related segments were also active, with edge AI chip maker Fullhan Micro hitting the 20% daily limit and memory chip company Junzheng Shares rising over 18%.
Based on market information, the rebound was not driven by a single piece of news but resulted from the resonance of three factors: upward revision of overseas expectations, third-quarter earnings, and leading companies' order disclosures. The direct trigger may be the easing of computing power capital financing constraints and confirmation that overseas computing expenditure has not peaked. Anthropic submitted for a Nasdaq IPO and committed to over $518 billion in computing power and cloud service spending over the next decade; Meta launched $95 billion in equity financing with an initial $35 billion tranche, with NVIDIA and others planning to subscribe $5 billion; SpaceX obtained $40 billion in GPU leasing financing. Together, these indicate that leading companies have smooth access to financing.
Second, with the third-quarter earnings window approaching, the earnings verification path is clear and has been preliminarily validated in pre-announcements, with strong willingness to trade at low points. Companies including Accelink Technologies, AFR Technology, and Jingdong Technology pre-announced high growth, showing downstream demand spreading from optical modules to upstream optical components; verifiable clues such as orders, production scheduling, prices and capacity utilization jointly support "rising volume and price," reinforcing the sustainability of prosperity.
Finally, optical module leaders intensively announced that "orders are scheduled through 2027," transitioning from narrative to formal disclosure, which may mark the starting point of this rebound. On October 23, Zhongji Innolight stated that orders from major customers are scheduled through 2027 and some customers have provided 2028 guidance, with stable supply chains, sufficient capacity and healthy prices; Eoptolink Technology stated that 800G/1.6T are the main delivery products, with 1.6T continuing to ramp up, and launched an 800 million to 1 billion yuan buyback; T&S Communications stated that CPO-supporting FAU and ELS are in stable mass production.
Overall, the optical module sector is experiencing a phased recovery after "prosperity verification and valuation compression." Attention should be paid to whether cloud providers' capital expenditure guidance continues to rise, as well as the proportion of 800G/1.6T in third-quarter earnings and related gross margins. North American cloud providers' results may become a key turning point for market expectations, with some AI commercialization increments expected to be reflected in related cloud platform revenues. The optical module and optical fiber sectors have already gone through a bottoming phase, with earnings catalysts approaching, and valuation repair opportunities for leading companies are recommended for attention.
To position in optical module leaders plus AI applications, the ChiNext AI ETF (159363) and its off-exchange feeder funds (Class A 023407, Class C 023408) are recommended, focusing on CPO optical module leaders while covering AI applications. The underlying index has over 35% weight in "Zhongji Innolight + Eoptolink Technology + T&S Communications," serving as a core standard-bearer for AI computing power. Note: As of September 30, 2026, according to the China Securities Index, the top three constituents of the ChiNext AI Index are Eoptolink Technology (12.98% weight), Zhongji Innolight (12.09% weight), and T&S Communications (10.8% weight).
Two: SENASIC Surges 24%, Hong Kong Stock Connect Information Technology ETF (159131) Underlying Index Closes Up 3.9%
Hard tech sectors represented by chip semiconductors rebounded strongly. The underlying index of the Hong Kong Stock Connect Information Technology ETF (159131), which concentrates on Hong Kong hard tech, closed up 3.9%. Among index constituents, SENASIC surged over 24%, Manycore Tech rose over 20%, Fortior Technology and AAC Technologies gained over 10%, Hua Hong Semiconductor rose over 8%, and Lenovo Group gained over 6%.
On the news front, on October 27, CITIC Securities released a preview report on Lenovo Group's fiscal 2026/2027 second-quarter results, noting that despite rising market concerns about the sustainability of AI capital expenditure and financing risks of Neoclouds, demand for traditional servers and AI servers remains strong, and Lenovo's Infrastructure Solutions Group (ISG) is expected to maintain high prosperity.
Regarding physical AI, a research report from Huatai Securities pointed out that frontier AI model capability boundaries are broadening and generalization ability is strengthening, which is expected to accelerate the application of complex scenarios. Policy guidance and actual labor demand are expected to resonate, with large-scale deployment and volume ramp-up of physical AI applications imminent, achieving "entering scenarios and reshaping industries," with labor-scarce and high-risk environment scenarios expected to benefit first.
On investment strategy, a research report from Sinolink Securities analyzed that although the overall market lacks a "perfect" signal for hitting the bottom range, some sub-sectors have already reached positions with sufficiently deep declines and sufficient chip clearing, and these areas are where funds may first replenish after the market rebounds. Setting thresholds of declines exceeding 15% since June 30 and composite crowding below 40%, 23 oversold rebound industries were screened out, concentrated in four directions: electronics (semiconductors, consumer electronics), communications (communication equipment), machinery (general equipment, automation equipment), and power equipment (grid equipment).
Hong Kong's scarce "pure-blood" hard tech! Supporting T+0 trading! The Hong Kong Stock Connect Information Technology ETF (159131) tracks the Hong Kong Stock Connect Information C Index, which consists of approximately "80% hardware + 20% software," heavily weighted in Hong Kong's "semiconductors + electronics + computer software," covering 74 Hong Kong hard tech companies, including "wafer foundry duo" SMIC + Hua Hong Semiconductor, "domestic AI PC leader" Lenovo Group, and "domestic large model duo" Zhipu + Minimax. Constituents exclude large-cap internet companies such as Alibaba, Tencent and Meituan, making it easier to capture Hong Kong AI hard tech trends. Additionally, investors without securities accounts can also gain one-click exposure to Hong Kong hard tech through the off-exchange feeder fund (026755).
Three: Record Earnings Plus Strong Trends, Memory Sector Welcomes Multiple Positive Catalysts! STAR Chip ETF (589190) Underlying Index Tests 4.6%!
"Wrongly Killed" Repair Moment? AI hardware sectors rebounded notably, with memory, AI chips and other directions advancing broadly. The underlying index of the STAR Chip ETF (589190), which carries relatively low fees among peers, briefly tested a 4.65% gain before closing up 3.62%. Puya Semiconductor and 3PEAK led with double-digit gains, while ASR Microelectronics, Biwin Storage, Skyverse Technology and Montage Technology also posted strong gains.
Explosive earnings from overseas memory giants ignited the sector. SK Hynix's third-quarter revenue broke through the 100 trillion won mark for the first time in history, with operating profit of 83.33 trillion won, surging 631% and setting a new quarterly record simultaneously. SK Hynix expects the memory market supply shortage to persist until 2030, and stated it will significantly expand investment next year, while announcing a 100 trillion won shareholder return plan. Additionally, Elon Musk recently stated that the memory capacity required by robots will exceed that of all other devices on Earth combined, and memory chip manufacturers may welcome even greater market opportunities.
It is worth noting that the memory price increase wave continues. TrendForce expects general DRAM contract prices to rise 10%-15% quarter-on-quarter in the fourth quarter of 2026, and NAND Flash contract prices to rise 15%-20% quarter-on-quarter. AI financing also showed positive developments, with Meta raising its total equity financing scale from $95 billion to $97.5 billion, of which the $25 billion common stock offering received approximately 5 times oversubscription, indicating investors' undiminished enthusiasm for AI investment.
Domestically, alongside the intensive disclosure of third-quarter earnings, earnings verification is being demonstrated simultaneously. After the previous rapid correction, domestic chip valuation levels have clearly retreated. The price-to-earnings ratio (TTM) of the SSE STAR Chip Index stands at 122.12 times, below the median level at the 49.1% percentile since the index was launched (as of October 27, 2026).
Industrial Securities believes that the computing power industry chain and autonomous controllable directions maintain high prosperity, with the pace of order implementation, capital expenditure and profit realization remaining stable. Against the backdrop of core industries maintaining high prosperity, if the index finds it difficult to achieve positive returns for the full year, it would not conform to the laws of fundamental pricing, as earnings growth itself constitutes the intrinsic driving force for valuation repair.
Galaxy Securities noted that the adjustment is approaching a phased end, and the concentrated fund clustering at the end of June has dissolved. Industrial fundamentals continue to deliver strong earnings performance, and oversold rebound opportunities are recommended for attention on dips.
For investors, selecting among chip sub-sectors is difficult, so it may be better to gain exposure through an index covering the entire chip industry chain. The STAR Chip ETF (589190) passively tracks the SSE STAR Chip Index, covering the entire chip industry chain, heavily weighted in core segments such as AI chips, memory, and semiconductor equipment and materials. It can effectively map the industry development trends brought by the continuous upgrading of AI computing power infrastructure, with strong aggressiveness and 20% high elasticity. Off-exchange investors can look to the feeder fund 021225.
Public data shows that the STAR Chip ETF (589190) has a management fee of 0.3%, a custody fee of 0.08%, and a comprehensive fee of 0.38%, which is relatively low among ETFs tracking the same index. Note: For fee rates, please refer to each fund's legal documents. Source: Shanghai, Shenzhen and Hong Kong exchanges, China Securities Index, etc., as of October 28, 2026.
Reminder: Recent market volatility may be significant, and short-term gains or losses do not predict future performance. Investors should invest rationally based on their own financial conditions and risk tolerance, and pay close attention to position and risk management.
Risk disclosure: The ChiNext AI ETF passively tracks the ChiNext AI Index, whose base date is December 28, 2018, and was published on July 11, 2024; the Hong Kong Information Technology ETF and its feeder fund passively track the CSI Hong Kong Stock Connect Information Technology Composite Index, whose base date is November 14, 2014, and was published on June 23, 2017; the STAR Chip ETF and its feeder fund passively track the SSE STAR Chip Index, whose base date is December 31, 2019, and was published on June 13, 2022; the STAR Chip Design ETF passively tracks the SSE STAR Chip Design Theme Index, whose base date is December 31, 2019. Index constituent compositions are adjusted in due course according to the index compilation rules, and their backtested historical performance does not predict future index performance. Individual stocks mentioned in this article are only objectively listed as index constituents for demonstration purposes, not as recommendations for any individual stock, and do not represent the fund manager or fund investment direction. Any information appearing in this article (including but not limited to individual stocks, comments, predictions, charts, indicators, theories, any form of expression, etc.) is for reference only, and investors must be responsible for any investment decisions they independently make. Additionally, any views, analyses and predictions in this article do not constitute any form of investment advice to readers, nor do they bear any responsibility for direct or indirect losses caused by the use of this article's content. According to the fund manager's assessment, the risk levels of the ChiNext AI ETF, STAR Chip ETF, Hong Kong Information Technology ETF, and STAR Chip Design ETF are R4-medium-high risk, suitable for aggressive (C4) and above investors, and suitability matching opinions should be based on the sales institution. Investors should carefully read fund legal documents such as the Fund Contract, Prospectus, and Fund Product Information Summary to understand the fund's risk-return characteristics and choose products suitable for their own risk tolerance. Past performance of funds does not predict future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. Sales institutions (including the fund manager's direct sales institution and other sales institutions) conduct risk assessments of the above funds in accordance with relevant laws and regulations, and investors should promptly pay attention to the suitability opinions issued by the fund manager. Suitability opinions of various sales institutions may not necessarily be consistent, and the fund product risk level evaluation results issued by fund sales institutions shall not be lower than the risk level evaluation results made by the fund manager. There are differences between the fund's risk-return characteristics and fund risk level in the fund contract due to different consideration factors. Investors should understand the fund's risk-return situation, carefully select fund products based on their own investment objectives, time horizon, investment experience and risk tolerance, and bear risks themselves. The China Securities Regulatory Commission's registration of the above funds does not indicate that it makes substantive judgments or guarantees on the investment value, market prospects and returns of these funds. Fund investment involves risks and should be approached with caution.
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