The A-share and Hong Kong tech sectors suffered a significant setback today (July 28). The largest and most liquid Hong Kong Stock Connect Information Technology ETF (159131) fell sharply in early trading and continued to trade weakly, ending the session down 4.29% with a single-day turnover exceeding 20 billion yuan. Notably, during the recent period of consolidation, funds have continued to pour in, with cumulative net inflows surpassing 6.5 billion yuan over the past 10 trading days.
Among its constituent stocks, 13 posted gains while 47 declined. Stocks such as Zhipu, GigaDevice, Kingboard Laminates, Victory Giant Technology, and ASMPT saw drops of more than 10%. Hua Hong Semiconductor fell over 6%, and SMIC declined more than 2%. Among the top ten heavyweight holdings, only Xiaomi and SenseTime managed to stay in positive territory.
Where to start
According to Galaxy Securities, Google and Intel have successively raised their 2026 capital expenditure targets to $200 billion and $20 billion, respectively, focusing on AI infrastructure investments. This is expected to drive demand in sectors such as CPUs, optical modules, and IDCs. China Merchants Securities further noted that the AI industry exhibits a typical J-curve characteristic, where the initial investment phase involves prolonged periods of negative or low returns, followed by a rapid reversal and high-growth phase as business models mature and economies of scale develop. Currently, AI is accelerating its integration into various fields, but most industries have not yet reached large-scale deployment. Once application-side volume ramps up, the AI industry will form a closed commercial logic loop.
Why just 10 ASX 200 shares?
Looking ahead, Soochow Securities believes that with marginal improvements in capital flow conditions, the upstream hardware sector may see differentiated recovery opportunities in the second half of the year. It recommends focusing on directions with volume-driven growth logic and sub-sectors with high supply barriers and few alternative technology routes. However, some "price-increase" segments have overestimated the supply-demand balance in the medium to long term, requiring investors to lower expectations and differentiate between genuine and inflated opportunities.
Hong Kong's scarce "pure-blood" hard tech stocks are available for T+0 trading. The Hong Kong Stock Connect Information Technology ETF (159131) is the first of its kind in the market, with the largest scale and highest liquidity among its peers. Its off-exchange feeder fund code is 026755, and the underlying index, the Hong Kong Stock Connect Information Technology Index, is composed of "85% hardware + 15% software." It heavily weights Hong Kong-listed "semiconductors, electronics, and computer software," covering 60 hard tech companies. Major holdings include SMIC and Hua Hong Semiconductor, which together account for over 26% of the index weight as the top two wafer foundry giants. Lenovo Group, a leading domestic AI PC maker, has a weight of over 10%, while PCB leaders Kingboard Group and Kingboard Laminates together account for over 11%. These three represent the highest concentration among all index-linked products in the market. Additionally, on June 15, the index added several new Hong Kong hard tech stocks, including Zhipu, Victory Giant Technology, Tianshu Zhixin, and Biren Technology. The index excludes large-cap internet companies like Alibaba, Tencent, and Meituan, offering higher sharpness and making it easier to capture Hong Kong's AI hard tech trends.
Data source: China Securities Index, as of June 30, 2026. Image generated by AI. Market volatility may be significant in the near term, and short-term fluctuations do not indicate future performance. Fund investments may incur losses. Investors should make rational decisions based on their own capital situation and risk tolerance, paying close attention to position and risk management. The stocks mentioned in this material are for illustrative purposes only and do not constitute investment advice, nor do they represent the holdings or trading activities of any fund managed by the manager. Data sources: China Securities Index, Shanghai and Shenzhen Stock Exchanges. Note: "First in the market" refers to the Hong Kong Stock Connect Information Technology ETF being the first ETF tracking the CSI Hong Kong Stock Connect Information Technology Index. As of July 22, 2026, the on-exchange scale of the Hong Kong Stock Connect Information Technology ETF was 2.319 billion yuan, making it the largest among the eight ETFs tracking the same index. Its average daily turnover this year has been 957 million yuan, the highest among the same group. The underlying CSI Hong Kong Stock Connect Information Technology Index (HKD) had annual historical returns of -9.54%, -34.47%, -0.25%, 21.58%, and 39.30% from 2021 to 2025, with annualized volatilities of 4.13%, 4.63%, 4.00%, 5.49%, and 5.45% for the same period. Past performance does not guarantee future results. Fee explanation: The Hong Kong Stock Connect Information Technology ETF's subscription and redemption agents may charge commissions at a rate not exceeding 0.5%. On-exchange trading fees are subject to actual charges by securities firms. No sales service fee is charged. Reference institutional views: Galaxy Securities, July 28, 2026, "AI Delivers Substantial Returns, Google and Intel Raise Capex"; China Merchants Securities, July 27, 2026, "Overseas Tech Giants' Earnings Guidance on AI Industry"; Soochow Securities, July 26, 2026, "How to Capture Subsequent Tech Hardware Recovery Opportunities."
Risk warning: The Hong Kong Stock Connect Information Technology ETF and its feeder fund passively track the CSI Hong Kong Stock Connect Information Technology Index, which was established on November 14, 2014, and released on June 23, 2017. The index constituents shown in this material are for illustrative purposes only and do not constitute investment advice, nor do they represent the holdings or trading activities of any fund managed by the manager. This product is issued and managed by Hwabao Fund. Distributors are not responsible for the product's investment or payment obligations. 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 select products that match their risk tolerance. Past performance does not guarantee future results. The performance of other funds managed by the fund manager does not constitute a guarantee of this fund's performance. Fund investment requires caution. The fund manager has assessed the fund's risk level as R4 (medium-high risk), suitable for aggressive (C4) and above investors. Distributors (including the fund manager's direct sales and other distributors) conduct risk assessments of the fund based on relevant laws and regulations. Investors should promptly pay attention to the suitability opinions issued by distributors and rely on their matching results. The suitability opinions of different distributors may not be consistent, and the fund product risk rating results issued by fund distributors should not be lower than the fund manager's risk rating results. The fund's risk-return characteristics and risk level as stated in the Fund Contract may differ due to varying factors considered. Investors should understand the fund's risk-return profile and carefully select fund products based on their own investment objectives, time horizon, investment experience, and risk tolerance, bearing the risks themselves. Registration of this fund by the China Securities Regulatory Commission does not imply a substantive judgment or guarantee of its investment value, market prospects, or returns. Fund investment involves risk; invest with caution. MACD golden cross signal formed; these stocks are showing positive momentum!
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