On Tuesday, October 20, the A-share market surged in late trading, with the Shanghai Composite Index closing higher, the ChiNext Index narrowing its decline, and the STAR 50 Index rising 1%. Combined turnover across the two markets reached approximately 1.46 trillion yuan, a modest increase from the previous trading day. Hong Kong stocks remained sluggish all day, with the Hang Seng Tech Index plunging as much as 2% in the afternoon and setting a fresh recent adjustment low. Edge AI concept stocks collectively surged, and the "AI twin stars" performed actively. The underlying index of the HUABAO SHANGHAI SCIENCE AND TECHNOLOGY INNOVATION BOARD ARTIFICIAL INTELLIGENCE TRADING OPEN ENDED INDEX SEC (589520) probed more than 5% intraday and closed up 4.53%, while the underlying index of the Huabao ChiNext Artificial Intelligence ETF (159363) halted its decline and closed higher. Nvidia's GTC Berlin conference kicked off, focusing on AI factories and physical AI, which, combined with the collective explosion of edge AI concept stocks and the strong third-quarter earnings growth of domestic computing power leaders, provided multiple validations for the prosperity of the computing power chain. Chip design and computing power directions strengthened, with the underlying index of the Huabao STAR Chip Design ETF (589430) rising 3.13%, the underlying index of the Huabao Big Data ETF (516700) rising 2.23%, and the underlying index of the Huabao Cloud Computing ETF (159099) rising 1.67%. Semiconductor third-quarter earnings were broadly pre-announced higher, edge SoC chips saw volume ramp-ups, and storage price increases resonated with domestic substitution. The pharmaceutical and healthcare sector remained active for consecutive days, with the underlying index of the Huabao Medical ETF (512170) rising 2.21%, the underlying index of the Huabao Hong Kong Stock Connect Medical ETF (159137) rising 1.58%, the underlying index of the Huabao Hong Kong Stock Connect Innovative Drug ETF (520880) rising 1.49%, and the underlying index of the Huabao Pharma ETF (562050) rising 0.70%. With the ESMO annual meeting approaching and the revised technology export list landing, expectations for innovative drug overseas expansion and data catalysts are heating up. Looking ahead, institutional consensus focuses on three main lines: 1) after the oversold in tech growth, repair opportunities during the third-quarter earnings window are worth watching; 2) innovative drugs benefit from ESMO data catalysts and the continuation of the overseas expansion logic; 3) a "tech plus dividend" barbell allocation is recommended, using dividend bottom positions to hedge against overseas disturbances. In the ETF Hotspot Review, the focus is on the trading and fundamental conditions of industry-themed ETFs such as STAR AI, Hong Kong pharmaceuticals, and technology. First, with Nvidia's GTC conference imminent, physical AI and edge AI strengthened together! Hengxuan Technology hit the 20CM limit-up, and the STAR AI Index probed as high as 5.14%! Possibly due to the upcoming Nvidia GTC conference, edge AI and physical AI concepts strengthened together. The underlying index of the HUABAO SHANGHAI SCIENCE AND TECHNOLOGY INNOVATION BOARD ARTIFICIAL INTELLIGENCE TRADING OPEN ENDED INDEX SEC (589520), which focuses on the domestic AI industry chain, probed as high as 5.14% intraday and closed up 4.53%, strongly reclaiming the 5-day and 10-day moving averages and securing a three-day winning streak. In edge AI, smart audio/wearable SoC leader Hengxuan Technology hit the 20CM limit-up, and AIoT chip leader Espressif Technology rose over 16%; in physical AI, 3D vision sensor leader Orbbec-W surged over 15%, and machine vision core software and hardware provider OPT Machine Vision rose over 13%, leading the gains. The chart shows the top 10 constituent stock gainers of the Huabao STAR AI ETF (589520). Behind the outbreak is the resonance of physical AI and edge AI industry logic, combined with performance validation from domestic computing power leaders, with multiple industry data points and institutional views further confirming the growth space of the sector: 1) In physical AI, Nvidia's GTC conference will be held locally from October 20-22 in Berlin, Germany, with Jensen Huang delivering a keynote on October 21. The conference focuses on accelerated computing, agentic AI, physical AI, robotics, and other directions. This year's conference, for the first time, takes "AI factories" as its core narrative—packaging training and inference clusters as deliverable computing infrastructure rather than selling GPUs individually. Guolian Minsheng Securities believes physical AI is expected to become an important development direction for artificial intelligence. 2) In edge AI, according to Counterpoint, the global penetration rate of generative AI phones is expected to reach 52% by 2027, with edge AI transitioning from a high-end selling point to a standard factory feature. Gartner data shows that AI PC shipment share will jump from 15.6% in 2024 to about 54.7% in 2026, and AI PCs are expected to become the norm by 2029. Guosheng Securities pointed out that edge AI is accelerating its rise. The maturity of edge AI is expected to push the large model industry into a new stage of edge-cloud collaboration, forming a layered collaboration of "cloud defines the ceiling, industry defines the depth, and edge defines the entry point." Hualong Securities noted that leaders such as Hygon Information have pre-announced strong earnings growth for the first three quarters of 2026, validating the prosperity of the computing power industry. Accelerated domestic substitution combined with "AI plus" policy tailwinds makes the investment opportunities in AI computing power and AI applications attractive, with recommendations to focus on chip and server leaders with independent computing power supply capabilities, as well as AI application leaders with industry know-how. The light of domestic substitution, STAR self-reliance. The HUABAO SHANGHAI SCIENCE AND TECHNOLOGY INNOVATION BOARD ARTIFICIAL INTELLIGENCE TRADING OPEN ENDED INDEX SEC (589520) and its feeder funds (Feeder A: 024560, Feeder C: 024561), which focus on the domestic AI industry chain, include 30 larger-cap STAR board listed companies that provide basic resources, technology, and application support for AI. Semiconductors account for 65%, AI applications account for 30%, and it also includes GPU concept stocks such as Hygon Information, VeriSilicon, Cambricon, Loongson Technology, and MetaX. With a 20% single-day price limit, the ETF provides low-threshold access to the breakthrough power of the STAR track. Additionally, the ETF is a margin trading and short selling target, making it an efficient tool for one-click allocation to domestic computing power. Second, a new record for ADC overseas expansion, Hansoh Pharma surged 9%, greatly boosting Hong Kong Stock Connect innovative drugs! CXO and internet healthcare rose together, and the Huabao Hong Kong Stock Connect Medical ETF surged on heavy volume. A+H pharmaceutical assets performed brilliantly. The A-share medical sector opened low and moved high, with Dian Diagnostics hitting the 20CM limit-up, and the Huabao Medical ETF (512170) reclaiming its half-year line; innovative drugs continued to recover, and the Huabao Pharma ETF (562050) posted a fourth consecutive gain. The Hong Kong market adjusted broadly, but the pharmaceutical sector staged an independent rally, with innovative drugs, CXO, and internet healthcare all blooming! The underlying indices of the Huabao Hong Kong Stock Connect Medical ETF (159137) and the Huabao Hong Kong Stock Connect Innovative Drug ETF (520880) probed 3% and 2.4% intraday respectively, closing up 1.58% and 1.49%. Boosted by a BD deal exceeding $15.5 billion, Hansoh Pharma surged over 9% intraday and closed up 8.32%. With the "old乌龙 news" clarified, the WuXi group rebounded collectively, with WuXi Biologics closing up 3.84%. Internet healthcare leaders quietly staged a comeback, with JD Health rising 3.22% for its 10th gain in 11 days, and Alibaba Health rising for a fifth consecutive day. On October 19, Hansoh Pharma announced the overall licensing of an ADC combination to Roche, with a total package exceeding $15.5 billion, including a $400 million upfront payment, setting a new record for the potential total value of a domestic ADC overseas deal! On the same day, Jitai Technology announced a collaboration with Eli Lilly on an AI-driven extrahepatic LNP delivery platform, with an upfront payment of over $10 million and a total value of up to $1.1 billion. Notably, according to PharmaCube data, the total value of innovative drug BD transactions in the first three quarters of 2026 reached $127.98 billion. Adding yesterday's two major deals, the year-to-date BD transaction total stands at $144.58 billion, already surpassing the full-year 2025 total of $135.655 billion and setting a new historical record ahead of schedule! On the policy front, on October 16, the "Catalogue of Technologies Prohibited or Restricted from Export in China" was released for public comment. The new rules clarify that "BD transactions for conventional single-product pipelines are not restricted, and CRO/CDMO R&D and manufacturing services have no substantial impact." Looking ahead, China Merchants Securities stated it is watching ESMO data catalysts and third-quarter earnings, and is bullish on the innovative drug industry chain and performance delivery directions. According to public information, at the 2026 ESMO conference, 47 Chinese innovative drug studies were selected for oral presentations (versus 35 in the same period of 2025), and 29 studies were selected as LBA (29/96, about one-third), with 12 studies in the most heavyweight presidential session taking 5 spots. For full-chain allocation to innovative drugs, two T+0 trading tools can be considered: the Huabao Hong Kong Stock Connect Innovative Drug ETF (520880): its underlying index is 100% allocated to innovative drug R&D companies, with nearly 70% of positions in innovative drug R&D leaders. Off-exchange feeder fund: 025221. The Huabao Hong Kong Stock Connect Medical ETF (159137): its underlying index is heavily weighted in the innovative drug industry chain, with AI pharma content exceeding 73% and CXO content near 60%. Off-exchange feeder fund: 026922. Note on "AI pharma content" and "CXO content": The Hong Kong Stock Connect Medical Theme Index tracked by the Huabao Hong Kong Stock Connect Medical ETF covers 17 AI pharma-related constituent stocks (including pure AI pharma platforms, AI plus CRO, and innovative drug companies deploying AI pharma), with a combined weight of 73.04%, of which CXO companies account for 59%. Third, this AI sub-sector suddenly exploded! Tech leaders counterattacked, and the underlying index of the Huabao STAR Chip Design ETF (589430) rose over 3%! Is the adjustment nearing its end? Edge AI concept stocks suddenly erupted, and tech stocks rebounded to "recover." The underlying index of the Huabao Tech ETF (515000), which represents the overall performance of tech leaders, rebounded and closed higher, continuously attracting capital attention; in sub-sectors, the underlying index of the Huabao STAR Chip Design ETF (589430), with high edge AI content, rose over 3%. In STAR chip design, Hengxuan Technology hit the 20CM limit-up, Espressif Technology rose over 16%, Telink Micro, Moore Threads, and Actions Technology rose over 10%, and Amlogic, Zhuhai Jieli Technology, and other stocks rose over 5%. The top 10 constituent gainers of the Huabao STAR Chip Design ETF (589430) and other tech stocks: chip stocks led overall, with Rockchip hitting the limit-up, and Sitronix and Huatian Technology rising over 3%; innovative drugs strengthened repeatedly, with Hengrui Medicine rising nearly 3%; the cloud computing industry chain was active, with Sangfor Technologies rising over 7%. The top 10 constituent gainers of the Huabao Tech ETF (515000) show the edge AI chain charging first, with tech leaders following up, and the market signals are already clear—this rebound is not without precedent. Behind the collective recovery of tech stocks, several factors may be at play: First, edge AI catalysts are密集, and the new tech narrative is strengthening. Industry signals continue to reinforce: Counterpoint predicts that the global penetration rate of generative AI phones will reach 52% by 2027, with edge AI transitioning from a high-end selling point to a standard factory feature; the maturity of compute-in-memory chips also drives their accelerated deployment toward Agent Computers, intelligent terminals, and other directions, with the industry trend shifting from concept to volume ramp-up. Second, the tech stock adjustment may be nearing its end, and rebound momentum is gradually building. CITIC Securities judges that the adjustment magnitude and duration of this round's AI core stocks are close to those of new energy core stocks from the end of 2021 to April 2022. The first round of hardware valuation adjustment is nearing its end, and the surge in broad-based ETF volume is a positive signal; CITIC Jiantou also noted that short-term selling pressure has been relatively fully released, and a technical rebound is expected after the oversold, with valuation and chip clearing creating conditions for a rebound. Third, performance delivery is accelerating, and fundamental support is strengthening. Taking Rockchip as an example, its net profit attributable to shareholders for the first three quarters is pre-increased by 68%-73%, with profit growth faster than revenue. This qualitative change means the sector is shifting from "expectation-driven" to "earnings-driven," with industry prosperity and financial statement delivery mutually reinforcing, helping to repair market concerns about the sustainability of tech stock earnings and forming a rebound foundation where valuation and performance resonate. Under the resonance of the above catalysts, valuation, and performance, the demand for tool-based allocation in the tech sector has risen. Two types of tools can be considered: tech leaders and high-elasticity sub-sectors. The Huabao Tech ETF (515000): a Pro Max version of a broad-based tech fund, a core tool for the tech main line. It gathers 50 core assets of A-share tech leaders, combining "hard tech beta" plus "quality leader excess alpha," and brings together leaders in sub-sectors such as optical modules, semiconductor equipment, storage chips, and computers. Feeder funds: Class A 007873, Class C 007874. The Huabao STAR Chip Design ETF (589430): Fabless asset-light model, pure design-side high elasticity! Its underlying index covers four main lines: computing power, storage, interconnect and customization, and specialty sensing and SoC. It grasps China's core chip design capabilities and is a core standard-bearer for AI computing power and domestic substitution. Note: Fee rates are detailed in each fund's legal documents. Source: Shanghai, Shenzhen, and Hong Kong exchanges, CSI Index, CNI Index, Hang Seng Index Company, etc., as of October 20, 2026. Reminder: Recent market volatility may be significant, and short-term gains or losses do not predict future performance. Investors must invest rationally based on their own financial conditions and risk tolerance, and pay close attention to position and risk management. Institutional views reference sources: Guosheng Securities' September 5 report "Edge AI Terminal Catalysts Released Intensively, Industry Entering Accelerated Landing Period"; Guolian Minsheng Securities' June report "Physical AI: Data Lays the Foundation, Models Build the Stage, Rapid Growth Imminent"; Hualong Securities' October 19 report "Domestic Computing Power Performance Delivery Validates High Prosperity, Bullish on AI Agent Landing"; China Merchants Securities' 20261020 "Biopharmaceutical Industry Weekly: ESMO and Third-Quarter Earnings Approaching, Bullish on Innovative Drug Industry Chain and Performance Delivery Direction"; CITIC Securities' "Market Adjustment Nearing Its End"; CITIC Jiantou's "Tech Sector Medium-Term Trend Still Mainly Volatile Bottoming." According to the fund manager's assessment, the risk levels of the Huabao STAR AI ETF, Huabao ChiNext AI ETF, Huabao STAR Chip Design ETF, Huabao Hong Kong Stock Connect Innovative Drug ETF, and Huabao Hong Kong Stock Connect Medical ETF are R4-medium-high risk, suitable for aggressive (C4) and above investors. The risk levels of the Huabao Tech ETF, Huabao Pharma ETF, and Huabao Medical ETF are R3-medium risk, suitable for balanced (C3) and above investors. The suitability matching opinions should be based on the sales institution. Risk disclosure: The Huabao STAR AI ETF passively tracks the SSE STAR Artificial Intelligence Index, with a base date of December 30, 2022, and published on July 25, 2024; the Huabao Tech ETF passively tracks the CSI Tech Leaders Index, with a base date of June 29, 2012, and published on March 20, 2019; the Huabao STAR Chip Design ETF passively tracks the SSE STAR Chip Design Theme Index, with a base date of December 31, 2019, and a publication date of July 26, 2024; the index constituent stocks are adjusted in a timely manner according to the index compilation rules, and their backtested historical performance does not predict the future performance of the index. The individual stocks mentioned in this article are only objectively listed as index constituent stocks and are not recommendations for any individual stock, nor do they represent the fund manager or fund investment direction. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only, and investors must be responsible for their own investment decisions. In addition, any views, analyses, and forecasts 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 the content of this article. Investors should carefully read the "Fund Contract," "Prospectus," "Fund Product Information Summary," and other fund legal documents to understand the risk-return characteristics of the fund and choose products suitable for their own risk tolerance. The past performance of a fund does not predict its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the fund's 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. Investors should promptly pay attention to the suitability opinions issued by the fund manager. The suitability opinions of various sales institutions are not necessarily consistent, and the risk rating evaluation results of fund products issued by fund sales institutions shall not be lower than the risk rating evaluation results made by the fund manager. There are differences between the risk-return characteristics of the fund in the fund contract and the fund risk rating due to different consideration factors. Investors should understand the risk-return situation of the fund, carefully select fund products in light of their own investment objectives, duration, investment experience, and risk tolerance, and bear the risks themselves. The registration of the above funds by the China Securities Regulatory Commission does not indicate that it has made a substantive judgment or guarantee on the investment value, market prospects, and returns of the funds. Fund investment must be cautious. MACD golden cross signals have formed, and these stocks are rising well!
Comments