The market experienced a sharp downturn on July 17th, with significant losses in the storage chip and optical module sectors. Multiple stocks, including GigaDevice Semiconductor Inc., Demingli, Huatai Technology, Huaxun Technology, and Changfei Optical Fiber, hit their daily limit-down. Others, such as Tianfu Communication, Jiangbolong, Baiwei Storage, and Zhongji Xuchuang, saw steep declines of around 12%. The Huabao Technology ETF (515000), which tracks the overall performance of leading tech stocks, plummeted over 8% during the session before paring losses to around 5%.
Market Outlook and Analysis
When can the market stabilize? According to JPMorgan Chase, the recent pullback in China's A-share AI-themed sectors is essentially a deleveraging event, not a signal of deteriorating fundamentals. The long-term investment thesis for China's AI ecosystem remains intact. From a liquidity perspective, the proportion of margin financing in the A-share IT sector has dropped from a mid-term peak of about 12% to 8%-9%, indicating that the most highly leveraged positions have largely been forced out and the deleveraging process is largely complete.
Looking ahead, JPMorgan maintains its baseline scenario targets for the MSCI China Index and the CSI 300 Index at 100 points and 5,200 points, respectively, by the end of 2026. The firm advises investors to continue holding high-quality, large-cap AI stocks during short-term volatility, anticipating that China's AI ecosystem could regain leadership during the August earnings season.
Focusing on Tech Leaders
For exposure to the technology bull market, consider leading companies. The Huabao Technology ETF (515000) and its feeder funds (Feeder A: 007873, Feeder C: 007874) select 50 large, high-market-share, high-growth, and high-R&D-spend listed companies from sectors like electronics, computers, communications, and biotech in the Shanghai and Shenzhen markets. This portfolio represents the core assets of A-share tech leaders, combining the attributes of "hard tech beta" and "excess alpha from high-performing leaders."
In terms of sector distribution, the underlying CSI Science & Technology Leaders Index has a high concentration, with semiconductors, electronics, and communication equipment & technical services accounting for approximately 90% of its weight. This means the index's holdings are almost entirely focused on core technology areas, aligning closely with current market themes like the AI computing chain, semiconductor localization, and optical communications. Its top ten constituents include leaders from various sub-sectors such as optical modules, semiconductor equipment, storage chips, PCBs, and innovative drugs.
Important Fund Information
Data source: Shanghai and Shenzhen Stock Exchanges. Note: "First domestic" refers to the first ETF tracking the CSI Science & Technology Leaders Index.
ETF fee information: When subscribing for or redeeming fund units, subscription/redemption agents may charge a commission of up to 0.5%. On-exchange trading fees are subject to the actual charges by securities firms. No sales service fee is charged.
Feeder fund fee information: For Huabao Technology ETF Feeder A, the subscription fee is 1.00% for amounts below 1 million yuan, 0.60% for 1 million (inclusive) to 2 million yuan, and a flat 1,000 yuan per transaction for 2 million yuan (inclusive) and above. The redemption fee is 1.50% for holdings under 7 days, 0.50% for 7 days (inclusive) to 180 days, and 0.00% for 180 days (inclusive) and above. No sales service fee is charged. For Huabao Technology ETF Feeder C, no subscription fee is charged. The redemption fee is 1.50% for holdings under 7 days and 0.00% for 7 days (inclusive) and above. The sales service fee is 0.40% per annum. ETF subscription/redemption agents may charge a commission of up to 0.5%. On-exchange trading fees are subject to the actual charges by securities firms.
Risk Disclosure
The Huabao Technology ETF passively tracks the CSI Science & Technology Leaders Index. The base date for this index is June 29, 2012, and it was launched on March 20, 2019. The index constituents are adjusted according to its rules, and its backtested historical performance does not indicate future results. The constituent stocks mentioned are for illustrative purposes only; individual stock descriptions are not investment advice of any form and do not represent the holdings or trading intentions of any fund managed by the manager. The fund manager assesses this fund's risk level as R3-Medium Risk, suitable for Balanced (C3) and higher risk-tolerance investors. Any information appearing herein (including but not limited to stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are responsible for their own investment decisions. Furthermore, any views, analysis, or predictions herein do not constitute investment advice of any kind to readers, and no liability is accepted for any direct or indirect losses arising from the use of this content. Fund investment carries risks. A fund's past performance does not indicate its future results. The performance of other funds managed by the fund manager does not guarantee this fund's performance. Invest in funds with caution.
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