Hard technology stocks in the Hong Kong market staged another rally today (July 21st). Knowledge Atlas surged 9%, while Hua Hong Grace rose more than 7%. Kingboard Holdings, Kingboard Laminates Holdings, and Biren Technology all gained over 5%. The largest and most liquid* Hong Kong Connect Information Technology ETF, Huabao (159131), saw its on-exchange price rise by 2.37%, reclaiming its half-year moving average during the session, with real-time turnover exceeding 1.3 billion yuan.
Galaxy Securities noted that the global semiconductor sector has been in a correction since July, with the decline intensifying last week. There are no major negative fundamental factors in the industry; the moves are primarily driven by deleveraging, profit-taking in the memory segment, and valuation adjustments for certain stocks. The brokerage believes the sector's current position has largely released risk. It suggests focusing on advanced packaging, wafer foundries, semiconductor equipment and materials related to capacity expansion, as well as the domestic computing power theme.
During yesterday's trading session, Cao Xuchen, the fund manager of the Hong Kong Connect Information Technology ETF Huabao (159131), pointed out that despite recent increased market volatility, he still believes a computing power rally could occur in August-September. Investors may subsequently watch for three key event catalysts: July 22nd-30th: Quarterly reports from the four major CSPs (Google, Microsoft, Meta, Amazon); August 7th: US July Non-Farm Payrolls and Unemployment Rate; August 26th: Nvidia's earnings report. In terms of investment themes, the optical module focus of the ChiNext AI ETF Huabao (159363) and the FAB (wafer fab) focus of the Hong Kong Connect Information Technology ETF Huabao (159131) are currently relatively resilient and high-quality directions, maintaining a firm stance.
A rare 'pure-play' hard tech offering for Hong Kong! Supports T+0 trading! The first-ever, largest, and most liquid Hong Kong Connect Information Technology ETF Huabao (159131) in the market. Its off-exchange feeder fund code is 026755. The underlying index, the Hong Kong Connect Information C Index, is composed of "85% hardware + 15% software," heavily weighted towards Hong Kong-listed "semiconductors + electronics + computer software." It covers 60 Hong Kong-listed hard tech companies. The combined weight of the two wafer foundry giants, SMIC and Hua Hong Grace, exceeds 26%. The weight of domestic AI PC leader Lenovo Group is over 10%. The combined weight of PCB leaders Kingboard Holdings and Kingboard Laminates Holdings exceeds 11%. These three holdings represent the highest concentration among all indices with linked products in the market. Furthermore, on June 15th, the index included several new Hong Kong-listed hard tech players such as Knowledge Atlas, Shenghong Technology, Days Zhixin, and Biren Technology. The constituent stocks do not include large-cap internet firms like Alibaba, Tencent, or Meituan, resulting in higher sharpness and a greater ability to capture the Hong Kong AI hard tech trend.
Recent market volatility may be significant. Short-term gains or losses do not indicate future performance. Fund investments may incur losses. Investors must invest rationally based on their own financial situation and risk tolerance, paying high attention to position sizing and risk management.
*Note: "First-ever in the market" refers to the Hong Kong Connect Information Technology ETF Huabao being the first ETF in the market to track the CSI Hong Kong Connect Information Technology Composite Index. As of June 30, 2026, the ETF's latest on-exchange size was 1.979 billion yuan, the largest among the 8 ETFs tracking the same index. Its year-to-date average daily turnover was 689 million yuan, the highest among the 8 ETFs tracking the same index. The historical annual returns of the underlying index, the CSI Hong Kong Connect Information Technology Composite Index (HKD), from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, 39.30% respectively. Its annual volatility from 2021 to 2025 was: 4.13%, 4.63%, 4.00%, 5.49%, 5.45% respectively. Past index performance does not indicate future results.
Fund Fee Note: Subscription and redemption agents for the Hong Kong Connect Information Technology ETF Huabao may charge a commission of up to 0.5%. On-exchange trading fees are subject to the actual charges by securities firms. No sales service fee is charged.
Institutional View Source: Galaxy Securities report dated July 17, 2026, titled "Sector Correction Accelerates, Risk Largely Released."
Risk Warning: The Hong Kong Connect Information Technology ETF Huabao and its feeder fund passively track the CSI Hong Kong Connect Information Technology Composite Index. The index base date is November 14, 2014, and it was launched on June 23, 2017. Index constituents mentioned in the material are for illustrative purposes only. Descriptions of individual stocks do not constitute any form of investment advice nor represent the holdings or trading activities of any fund managed by the fund manager. This product is issued and managed by Huabao Fund. Distributors do not bear responsibility for the product's investment or performance. Investors should carefully read the "Fund Contract," "Prospectus," "Fund Product Key Facts Statement," and other fund legal documents to understand the fund's risk-return characteristics and choose a product suitable for their own risk tolerance. Past fund performance does not predict its future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Fund investment involves risk! The fund manager assesses this fund's risk level as R4 - Medium to High Risk, suitable for Aggressive (C4) and above investors. Distributors (including the fund manager's direct sales channels and other distributors) assess this fund's risk according to relevant laws and regulations. Investors should promptly pay attention to the appropriateness opinions provided by distributors and base their decisions on the matching results. Appropriateness opinions from different distributors may not necessarily be consistent. The fund product risk rating results issued by distributors shall not be lower than the risk rating results determined by the fund manager. The description of the fund's risk-return characteristics in the fund contract and its risk rating may differ due to different considerations. Investors should understand the fund's risk-return profile and choose fund products cautiously based on their own investment objectives, horizon, experience, and risk tolerance, bearing 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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