On Thursday, August 13th, A-share markets experienced a volatile session, with all three major indices closing in negative territory. Trading volume expanded significantly, reaching 2.55 trillion yuan in combined turnover. Market themes were fragmented, and over 4,300 individual stocks declined. Hong Kong markets also weakened in late trading, mirroring the downturn.
Amidst the market weakness, the technology sector staged a strong comeback, with Hong Kong-listed hard tech stocks leading the charge. The explosive earnings report from Lenovo Group Ltd (HK: 00992) provided a powerful catalyst. The Hua Bao Hong Kong Stock Connect Information Technology ETF (159131), the largest and most liquid ETF of its kind, surged over 4% during the session before closing 2.99% higher, extending its winning streak. In A-shares, computing power themes performed well, with IDC computing power leasing stocks rising sharply. Cloud computing and big data sectors also showed active trading. The Cloud Computing ETF Hua Bao (159099) and the Big Data ETF Hua Bao (516700), both deeply tied to domestic computing power, each climbed over 3% during intraday trading.
In a reversal of fortune, the Contract Research Organization (CRO) / Contract Development and Manufacturing Organization (CDMO) sector, often referred to as CXO, made a strong comeback. The Medical ETF Hua Bao (512170), the largest healthcare ETF by size, hit a new 6-month high during the session, rising up to 2.86%, and closed 1.43% higher, marking a five-day winning streak. In Hong Kong, the Hong Kong Stock Connect Medical ETF Hua Bao (159137) and the Hong Kong Stock Connect Innovative Drug ETF Hua Bao (520880) both managed to close in positive territory despite the broader market weakness. CITIC Securities suggests that A-share structural market trends are likely to persist.
Where to Begin
The strong performance was driven by Lenovo's stellar quarterly results. Lenovo Group Ltd (HK: 00992) shares soared over 19% to an all-time high. The company's fiscal first-quarter report showed a record quarterly performance, with revenue surging 43% year-on-year to $26.9 billion. AI-related revenue jumped 60% and accounted for 35% of total sales. Adjusted equity holder profit for the period more than doubled, jumping 176% to $1.075 billion, surpassing the $1 billion milestone for the first time. The Intelligent Devices Group (IDG) posted a record first-quarter revenue of $17.1 billion, a 27% increase. Analysts point to the potential for an AI PC upgrade cycle driven by hardware upgrades and expanding applications.
The Hua Bao Hong Kong Stock Connect Information Technology ETF (159131) is noted for its unique composition, heavily weighted towards Hong Kong hard tech stocks like semiconductor giants Semiconductor Manufacturing International Corp (SMIC) and Hua Hong Semiconductor, which together account for over 26% of the portfolio, alongside Lenovo Group (over 10%) and PCB leaders Kingboard Holdings and Kingboard Laminates (over 11% combined). The fund supports T+0 trading.
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The healthcare sector was a standout performer. The medical and pharmaceutical sector led the market in both gains and net capital inflows, with the Shenwan Medical and Biological industry index rising 1.13% and attracting net capital inflows of 116.33 billion yuan. The Medical ETF Hua Bao (512170) hit its highest intraday price in six months, driven by strong performances from medical device and CXO component stocks. MGI Tech (BGI Genomics) surged 9.97% after announcing a new single-cell automation solution. CXO heavyweights also performed well, with WuXi AppTec (A-shares) rising 2.07% and extending its daily trading volume above 100 billion yuan for eight consecutive days. Analyst interest in the healthcare sector is rising sharply, with public funds conducting the highest number of company visits in this sector last week.
The recovery narrative for the CXO sector is underpinned by a resurgence in R&D demand both domestically and internationally. Overseas pharmaceutical companies are increasing R&D budgets, and Chinese biotech firms are securing licensing deals, which is revitalizing financing and R&D activity. Furthermore, the role of AI in drug discovery is starting to create a positive feedback loop, accelerating the design and validation process. The Medical ETF Hua Bao (512170) offers broad exposure to medical devices and services, while the Hong Kong Stock Connect Medical ETF Hua Bao (159137) focuses more heavily on the innovative drug and CXO supply chain.
Key Reasons for the Tech and Healthcare Rally
The cloud computing and AI computing power segment also saw significant strength. The Cloud Computing ETF Hua Bao (159099) rose over 3% intraday before closing 0.88% higher. This was fueled by strong overseas earnings reports from cloud giants like Nebius and CoreWeave, which validated the global AI computing power demand growth story. Domestically, tech giant Tencent significantly raised its full-year capital expenditure guidance, with its quarterly report showing a 176% surge in capital spending to 52.8 billion yuan, primarily for IT infrastructure including AI computing power. Additionally, DeepSeek announced plans to raise its API service pricing, signaling a shift towards value-based pricing for tokens.
This combination of strong overseas validation and increased domestic investment supports the long-term expansion of AI computing power demand. The computing power leasing, intelligent computing centers, and AI hardware supply chain are expected to benefit from this trend. Analysts from firms like Tianfeng Securities and Guohai Securities anticipate a volume and price growth phase for the computing power leasing industry, driven by tightening supply-demand dynamics and the positive cash flow from model pricing increases. The Cloud Computing ETF Hua Bao (159099), tracking the CSI Cloud Computing 50 Index, has a significant 58.95% exposure to computing power leasing companies, making it a key tool for investors looking to capitalize on the AI infrastructure boom.
Disclaimer: Market volatility may be high. Past performance is not indicative of future results. Investors should carefully consider their risk tolerance and financial situation before investing.
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