Hong Kong and A-share hard technology sectors experienced a significant correction today (June 26). The largest and most liquid* Hong Kong Stock Connect Information Technology ETF, Huabao (159131), opened lower and continued to weaken, with its intraday price falling over 6% at one point. As of this report, it is down 4.79%.
Despite the market decline, funds flowed in aggressively. As of this report, net subscriptions have increased to 145 million units, with net purchases reaching 115 million units. Over the previous three trading sessions, funds have poured in consecutively, totaling over 440 million yuan.
Heavyweight constituents collectively weakened. As of this report, SMIC and Kingboard Laminates Holdings Ltd fell over 6%, while Lenovo Group, Hua Hong Semiconductor Ltd, and Xiaomi Corporation also underperformed.
Recent Performance Context
Despite today's pullback, the index has shown sustained strength recently. Over the past six months, the underlying index for the Hong Kong Stock Connect Information Technology ETF Huabao (159131), the CSI Hong Kong Stock Connect Information Technology Composite Index, has gained 29.81% cumulatively. This significantly outperformed the Hang Seng TECH Index (-19.88%), the HK Connect Technology Index (-16.42%), and the HK Connect Internet Index (-35.79%) over the same period, demonstrating superior sharpness and elasticity.
Statistical period: Dec 25, 2025 - Jun 25, 2026. The annual returns for the HK Connect Information C index from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30% respectively. Past index performance does not indicate future results.
Sector Outlook and Analysis
Some institutions note that order visibility for AI computing hardware has extended into 2027, with both short-term and medium-term demand showing a consistently stronger-than-expected trend. Against this backdrop, demand for AI servers and high-speed switches is experiencing explosive growth, and the PCB sector is entering a favorable cycle with simultaneous increases in volume and price.
They also point out that several core domestic AI PCB suppliers have already reached peak historical capacity utilization rates, with full order books and operating at full capacity. These companies are actively expanding capital expenditure to increase production capacity in response to urgent downstream demand. The certainty of high earnings growth is strong, and positive earnings elasticity is expected to continue being released. There is sustained optimism regarding the earnings breakout potential of the PCB sector driven by price-volume synergy, alongside recommendations to focus on allocation opportunities in core computing hardware and semiconductor equipment.
Dongguan Securities stated that, on one hand, the continuous growth in AI training and inference demand, coupled with the construction of a national integrated computing power network, is expected to boost sentiment in segments like computing chips, storage, AI servers, switches, advanced packaging, and liquid cooling. On the other hand, against the backdrop of technological self-reliance and supply chain security, upstream semiconductor equipment and materials are expected to continue benefiting from the domestic substitution process, with their strategic importance likely to keep rising. They suggest focusing on the two major investment themes of "computing infrastructure and domestic substitution."
ETF Product Highlights
The Hong Kong Stock Connect Information Technology ETF Huabao (159131) offers a rare, pure-play exposure to Hong Kong-listed hard tech stocks. It supports T+0 trading. As the first and largest ETF of its kind with the strongest liquidity in the market, its offshore feeder fund code is 026755. The underlying index is composed of "80% hardware + 20% software," heavily weighted towards Hong Kong-listed "semiconductors + electronics + computer software." It covers 60 Hong Kong-listed hard tech companies. Notably, the combined weight of the two wafer fabrication giants, SMIC and Hua Hong Semiconductor Ltd, exceeds 24%. The domestic AI PC leader, Lenovo Group, has a weight exceeding 11%. The combined weight of PCB leaders Kingboard Holdings Ltd and Kingboard Laminates Holdings Ltd exceeds 11%. These three groups represent the highest concentration in any index with linked products across the entire market. Furthermore, the index recently included new additions like Zhipu AI and Biren Technology, among other high-value Hong Kong hard tech newcomers. The index components exclude large-cap internet companies like Alibaba, Tencent, and Meituan, resulting in higher sharpness and better positioning to capture the AI hard tech trend in Hong Kong.
Data Source: China Securities Index Co., Ltd., Shanghai and Shenzhen Stock Exchanges.
Note: "First in the market" refers to the Hong Kong Stock Connect Information Technology ETF Huabao being the first ETF to track the CSI Hong Kong Stock Connect Information Technology Composite Index. As of June 16, 2026, the ETF's latest on-market size was 1.337 billion yuan, making it the largest among the 8 ETFs currently tracking the index. Its average daily turnover this year has been 565 million yuan. The annual historical returns of the underlying index, the CSI Hong Kong Stock Connect Information Technology Composite Index (HKD), from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30% respectively. Past index performance does not indicate future results.
Fund Fee Information: Subscription and redemption agents for the Hong Kong Stock Connect Information Technology ETF Huabao may charge a commission of up to 0.5%. On-market trading fees are subject to the actual charges by securities firms. No sales service fee is charged.
Risk Disclosure: The Hong Kong Stock Connect Information Technology ETF Huabao and its feeder fund passively track the CSI Hong Kong Stock Connect Information Technology Composite Index. The index base date is November 14, 2014, and it was launched on June 23, 2017. The index constituents mentioned in this material are for illustrative purposes only. Descriptions of individual stocks do not constitute any form of investment advice nor represent the holdings or trading动向 of any fund managed by the fund manager. This product is issued and managed by Huabao Fund. Distribution agents do not assume responsibility for the investment or redemption of the product. Investors should carefully read the Fund Contract, Prospectus, Fund Product Summary, and other legal fund 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 future results. 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. Sales institutions (including the fund manager's direct sales channels and other sales institutions) evaluate the fund's risk according to relevant laws and regulations. Investors should promptly pay attention to the appropriateness opinions issued by sales institutions and base their decisions on the matching results. Appropriateness opinions from different sales institutions are not necessarily consistent, and the fund product risk等级 evaluation results issued by fund sales institutions 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 considerations. Investors should understand the fund's risk-return profile and choose fund products prudently 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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