On July 16, the semiconductor sector experienced a broad decline, with Hong Kong's hard tech stocks initially rallying before giving up gains. The largest and most liquid* Hong Kong Stock Connect Information Technology ETF (159131) surged as much as 1.51% early in the session before fluctuating and closing down 1.51%, with daily turnover reaching 2.6 billion yuan.
Component stocks showed a clear divergence between software and hardware performance. Mafreelive Ltd soared over 30%, Fubo Group rose more than 11%, and Xiaomi Corporation gained over 6%. Conversely, Kingboard Laminates Holdings Ltd fell more than 13%, Hua Hong Semiconductor Ltd dropped over 7%, while Lenovo Group and ASMPT Ltd both declined more than 6%. Semiconductor Manufacturing International Corporation (SMIC) fell over 1%.
Market Developments and Analysis
In market news, ChangXin Memory Technologies initiated its IPO subscription on the Sci-Tech Innovation Board today. The initial public offering involves approximately 6.688 billion shares, representing 10% of the post-issue total share capital, with plans to raise 29.5 billion yuan. This marks the largest A-share IPO since 2026. Some concerns have been raised regarding whether such a large fundraising scale and anticipated post-listing size could impact the secondary market.
Yao Pei, a strategy analyst at Huachuang Securities, analyzed that against the backdrop of increased market capacity and rising trading volume averages in this bull market, the substantial impact of large IPOs on the overall liquidity of the current A-share market is limited. It is a common pattern for IPO volume to increase in the latter stages of a bull market, with no significant shift in market style observed around IPO events. IPOs are not the root cause of a bull market's end.
Datong Securities analysis pointed out that volatility in overseas semiconductor markets has amplified this week, with the South Korean stock market exhibiting characteristics of "sharp rallies and steep declines." The core reasons include concentrated weight in semiconductor leaders, leveraged ETF tools magnifying volatility, and retail investors crowding into leveraged positions. This reflects overheated short-term sentiment and intensified valuation games in the global semiconductor growth sector, warranting caution regarding near-term volatility risks. From a medium to long-term perspective, marginal positive fundamentals support the industry. Micron Technology's official announcement to increase its US domestic investment scale from $200 billion to $250 billion reflects the continued expansion of global AI computing infrastructure, supporting the demand growth logic for memory chips. The localization of memory chips and the upstream materials and equipment sectors are supported by industrial logic and can be tracked by monitoring fundamental data such as pre-announced mid-year earnings growth and order changes.
ETF Spotlight
A rare "pure-play" hard tech offering for the Hong Kong market, supporting T+0 trading! The first-of-its-kind, largest, and most liquid Hong Kong Stock Connect Information Technology ETF (159131), with its feeder fund code 026755. The underlying index, HK Connect Information C, is composed of "85% hardware + 15% software," heavily weighted towards Hong Kong-listed "semiconductors + electronics + computer software." It covers 60 Hong Kong-listed hard tech companies, where the combined weight of the two wafer foundry giants, Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor Ltd, exceeds 26%. The domestic AI PC leader, Lenovo Group, has a weight exceeding 10%, and the combined weight of PCB leaders Kingboard Holdings Ltd and Kingboard Laminates Holdings Ltd exceeds 11%. These three holdings represent the highest concentrations in any index with linked products across the entire market. Furthermore, on June 15, the index incorporated several Hong Kong-listed hard tech newcomers, including Zhipu AI, Sheng Hong Technology, TianShu ZhiXin, and BiRen Technology. The constituent stocks exclude large-cap internet enterprises like Alibaba, Tencent, and Meituan, offering higher sharpness and making it easier to capture the Hong Kong AI hard tech market trend.
*Data source: China Securities Index Co., Ltd., as of June 30, 2026. Image generated by AI.
*Note: "First-of-its-kind in the market" refers to the Hong Kong Stock Connect Information Technology ETF being the first ETF to track the CSI Hong Kong Stock Connect Information Technology Composite Index. As of June 30, 2026, the latest on-exchange size of this ETF was 1.979 billion yuan, making it the largest among the 8 ETFs tracking the same index. Its year-to-date average daily turnover was 689 million yuan, the highest among the 8 ETFs tracking the same index. The annual historical returns of the underlying index, the CSI Hong Kong Stock 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. Recent market volatility may be significant, and short-term gains or losses do not predict future performance. Fund investments may incur losses. Investors must invest rationally based on their own financial situation and risk tolerance, paying close attention to position sizing and risk management.
Fund Fee Information: Subscription and redemption agents for the Hong Kong Stock Connect Information Technology ETF may charge a commission not exceeding 0.5%. On-exchange 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 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. 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 fund manager. This product is issued and managed by Huabao Fund. Distributors do not bear 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承受能力. Past fund performance does not predict its 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. Distributors (including the fund manager's direct sales机构 and other distributors) assess the risk of this fund according to relevant laws and regulations. Investors should promptly关注 the distributor's appropriateness opinion and base their decisions on the matching results. Appropriateness opinions from different distributors may not necessarily be consistent, and the fund product risk等级 assessment results issued by distributors shall not be lower than the risk等级 assessment results made by the fund manager. The description of the fund's risk-return characteristics in the fund contract and its risk等级 may differ due to different考虑 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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