Today (July 20th), Hong Kong-listed hard tech stocks warmed up after last week's sharp decline. The largest and most liquid* Hong Kong Connect Information Technology ETF Hua Bao (159131) saw its on-market price surge over 3% at one point, weaken in the afternoon session, and then rally again towards the close to finish up 2.09%. Recent market adjustments have seen continuous fund inflows, with a net inflow of nearly 1.3 billion yuan over the past five trading days.
Key Analyst's Perspective on Market Volatility
With technology sector volatility intensifying recently, what is the outlook? The latest views from Cao Xuchen, fund manager of the Hong Kong Connect Information Technology ETF Hua Bao (159131), are now available.
Cao Xuchen pointed out that influenced by the persistent weakness in U.S. stocks, the speed of the market sentiment collapse last Thursday and Friday exceeded expectations, necessitating a reassessment of the market's potential peak and starting point. The conclusion remains that a computing power-driven rally may still occur in August-September.
Current Market Cycle Analysis
First, let's review the state of this bull market. Since the "9/24" rally in 2024, the securities and liquor indices reached highs on November 7, 2024, before entering a downtrend, and remain suppressed below their annual resistance levels from the 2021 highs. Conversely, since "9/24", the communications and electronics sectors only set new highs on June 25, 2026, and June 30, 2026, respectively, breaking through their 2021 highs. Overall, after November 2024, the market has operated within a framework of a "structural bull market for tech sectors and a structural bear market for major consumption sectors." The rapid sell-off in the tech sector in July 2026 may indicate that the tech sector could also enter an adjustment cycle following the conclusion of this market phase.
Upcoming Catalysts to Monitor
Regarding catalysts from overseas core companies, investors may focus on the following three key event nodes: (1) July 22nd - July 30th: Quarterly reports from the four major CSPs—Google, Microsoft, Meta, and Amazon—paying attention to the impact of CapEx on fundamentals. (2) August 7th: U.S. July Non-Farm Payrolls and unemployment rate, monitoring their impact on interest rate cut pace and liquidity. (3) August 26th: NVIDIA's earnings report. These three events respectively influence the direction of tech stock movements, the overall market direction, and the acceleration of beta-driven rallies.
Investment Strategy and Focus Areas
On investment direction, Cao Xuchen noted that the optical modules focused on by the ChiNext Artificial Intelligence ETF Hua Bao (159363) and the FABs (foundries) focused on by the Hong Kong Connect Information Technology ETF Hua Bao (159131) are currently relatively resilient, high-quality areas, and investors should remain resolute.
ETF Product Details
This ETF offers a rare "pure-play" exposure to Hong Kong-listed hard tech! It supports T+0 trading! As the first of its kind in the market, the largest and most liquid Hong Kong Connect Information Technology ETF Hua Bao (159131), with its off-market feeder fund code 026755, tracks the underlying index composed of "85% hardware + 15% software." It is heavily weighted towards Hong Kong-listed "semiconductors + electronics + computer software," covering 60 Hong Kong-listed hard tech companies. The combined weight of the two major foundry giants, SMIC and Huahong Grace, exceeds 26%. The weight of domestic AI PC leader Lenovo Group exceeds 10%. The combined weight of PCB leaders Kingboard Holdings and Kingboard Laminates exceeds 11%. These three holdings represent the highest concentration among all market indices with linked products. Furthermore, on June 15th, the index incorporated several Hong Kong-listed hard tech newcomers including Zhipu AI, Shenghong Technology, Tianshu Zhixin, and Biren Technology. The constituent stocks exclude large-cap internet companies like Alibaba, Tencent, and Meituan, resulting in a sharper focus that is more conducive to capturing the Hong Kong AI hard tech rally.
Market volatility may be elevated recently, and short-term price movements do not predict future performance. Fund investments may incur losses. Investors must invest rationally based on their own capital situation and risk tolerance, paying high attention to position sizing and risk management.
*Note: "First in the market" refers to this ETF being the first to track the CSI Hong Kong Connect Information Technology Composite Index. As of June 30, 2026, the latest on-market size of the Hong Kong Connect Information Technology ETF Hua Bao was 19.79 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 those 8 ETFs. The annual historical returns of the underlying index, the CSI Hong Kong Connect Information Technology Composite Index (HKD), for 2021-2025 were: -9.54%, -34.47%, -0.25%, 21.58%, 39.30% respectively; its annual volatility for 2021-2025 was: 4.13%, 4.63%, 4.00%, 5.49%, 5.45% respectively. Past index performance does not indicate future results.
The ETF's subscription and redemption agents may charge a commission of up to 0.5%. On-market trading fees are subject to the rates set by securities firms. No sales service fee is charged.
Risk Warning: The Hong Kong Connect Information Technology ETF Hua Bao and its feeder fund passively track the CSI Hong Kong Connect Information Technology Composite Index, which has a base date of November 14, 2014, and was launched on June 23, 2017. Index constituents mentioned in the material are for illustrative purposes only; descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings or trading动向 of any fund managed by the asset manager. This product is issued and managed by Hua Bao Fund Management Co., Ltd. Selling agents do not assume responsibility for the product's investment performance or redemption. 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 performance. 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. Selling agencies (including the fund manager's直销机构 and other selling agencies) evaluate this fund's risk according to relevant laws and regulations. Investors should pay timely attention to the appropriateness opinions provided by selling agencies and base their decisions on the matching results. Appropriateness opinions from different selling agencies may not be consistent, and the fund product risk等级 evaluation results issued by fund selling agencies shall not be lower than the risk等级 evaluation results made by the fund manager. There may be differences between the fund's risk-return characteristics described in the fund contract and its risk等级 due to different consideration factors. Investors should understand the fund's risk-return profile and choose fund products prudently based on their own investment objectives, horizon, experience, and risk承受能力, 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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