Hong Kong's hard technology stocks experienced volatile trading and consolidation today (June 16). Semiconductor Manufacturing International Corporation (SMIC) fell over 3%, while Xiaomi Group declined by 1.8%. Zhipu AI, after surging 32% yesterday, saw its intraday price jump over 13% before pulling back in the afternoon to close with a 1.17% gain. The largest and most liquid* Hong Kong Stock Connect Information Technology ETF, Huabao (159131), opened lower and traded in negative territory throughout the day, with its on-market price closing down 1.46% on a daily turnover of 1.7 billion yuan.
Market Outlook Amidst Recent Volatility
With recent market volatility increasing, what are the prospects for Hong Kong's hard tech sector? Analysis from Soochow Securities suggests that catalysts for Hong Kong stocks have increased significantly compared to earlier periods. Firstly, a recovery in overseas risk appetite could lead to a synchronized uptrend for tech stocks with the US market, especially in AI application software, where accelerated overseas AI adoption would directly benefit relevant Hong Kong-listed companies. Secondly, the implementation of the US-Iran agreement is favorable for a broad rebound in risk assets. Falling oil prices and easing geopolitical tensions further support market sentiment. HALO assets also benefit from improved risk appetite. Third, aside from the US-Iran agreement, this week's Federal Reserve interest rate meeting is a key catalyst. As long as the new Fed Chair's stance remains relatively neutral (avoiding strongly hawkish signals), it could effectively underpin global risk assets, benefiting a Hong Kong stock rebound and foreign capital inflows.
Recommended Investment Strategy
Regarding investment direction, Soochow Securities believes investors should focus on offensive technology as the core theme, prioritizing exposure to AI applications, software, and hardware companies benefiting from the global AI trend, while also considering tactical opportunities in HALO assets.
Index Rebalancing and Performance
It is reported that on June 15, Zhipu AI was formally included in the underlying index constituents of the Hong Kong Stock Connect Information Technology ETF Huabao (159131), making this index one of the first Hong Kong tech indices in the market to include Zhipu. Other newly added constituents include hardware leaders such as Biren Technology, Shenghong Technology, Tianshu Zhixin, and Haizhi Technology. Consequently, the number of constituents in the Hang Seng Stock Connect Information C Index has expanded from 52 to 60, further enhancing its hard tech characteristics.
Looking at the past six months, the underlying index of the Hong Kong Stock Connect Information Technology ETF Huabao (159131), which focuses on Hong Kong hard tech—the CSI Hong Kong Stock Connect Information Technology Composite Index—has accumulated gains exceeding 24%. This performance has outpaced the Hang Seng Tech Index by 39%, the Hong Kong Stock Connect Tech Index by 37%, and the Hong Kong Stock Connect Internet Index by over 53%, demonstrating significantly sharper focus and greater elasticity.
Statistical period: November 16, 2025, to June 16, 2026. The annual historical returns of the Hang Seng Stock 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.
Product Features Highlighted
This ETF offers a rare "pure-play" exposure to Hong Kong's hard tech sector and supports T+0 trading. As the first, largest, and most liquid Hong Kong Stock Connect Information Technology ETF in the market, Huabao (159131) has an off-exchange feeder fund with code 026755. Its underlying index is composed of "80% hardware + 20% software," heavily weighted towards Hong Kong's "semiconductors + electronics + computer software" sectors, covering 60 Hong Kong-listed hard tech companies. The combined weight of the two major wafer foundry giants, SMIC and Huahong Semiconductor, exceeds 21%. The leading domestic AI PC manufacturer, Lenovo Group, holds a 15.89% weight. The combined weight of PCB leaders Kingboard Holdings and Kingboard Laminates is over 10%. These three holdings represent the highest concentrations in any market index with linked products. The index has recently included several new Hong Kong-listed hard tech heavyweights like Zhipu AI and Biren Technology. The index constituents exclude large-cap internet companies such as Alibaba, Tencent, and Meituan, resulting in a sharper focus that is more conducive to capturing the Hong Kong AI hardware theme.
Additional Product Information
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 9, 2026, the latest on-market size of the Hong Kong Stock Connect Information Technology ETF Huabao was 1.33 billion yuan, making it the largest among the eight ETFs currently tracking the CSI Hong Kong Stock Connect Information Technology Composite Index. Its average daily turnover year-to-date is 499 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.
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 base date for this index is November 14, 2014, and it was published on June 23, 2017. Index constituents mentioned in the material are for illustrative purposes only. Descriptions of individual stocks do not constitute any form of investment advice nor represent the holdings or trading intentions of any fund managed by the asset manager. This product is issued and managed by Huabao Fund Management Co., Ltd. Distributing institutions do not assume responsibility for the investment performance or redemption of the product. Investors should carefully read the Fund Contract, Prospectus, Fund Product Key Facts Statement, 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 rating as R4 (Medium-High Risk), suitable for aggressive (C4) and above investors. Distributing institutions (including the fund manager's direct sales channels and other distributors) evaluate the fund's risk according to relevant laws and regulations. Investors should pay attention to the suitability assessment opinions provided by distributors and base their decisions on the matching results. Suitability opinions from different distributors may not be consistent. The fund product risk rating results issued by fund distributors shall not be lower than the risk rating assessment made by the fund manager. The fund's risk-return characteristics in the Fund Contract and its risk rating may differ due to different considerations. Investors should understand the fund's risk-return profile and make their own investment decisions based on their investment objectives, horizon, experience, and risk tolerance, bearing the associated risks. 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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