On October 10 local time, Trump posted on social media stating that starting November 1, he would impose 100% tariffs on all products from China. On the evening of October 12, U.S. Vice President Vance said in an interview: "Trump is willing to engage in rational negotiations with China." The hundred-billion-scale ETF giant Huabao Fund's Hong Kong Large Cap 30 ETF (520560) was listed and traded on the Shanghai Stock Exchange today (October 13). This ETF is currently the only product in the market tracking the Hang Seng China (Hong Kong Listed) 30 Index and supports "T+0" intraday trading.
The Hang Seng China (Hong Kong Listed) 30 Index consists of the 30 largest market capitalization stocks among mainland companies listed in Hong Kong. Its top weighted stock, Alibaba-W, currently accounts for over 18% of holdings. The index constituents are concentrated among leading listed companies, with the top ten constituents accounting for 73.85% of total weight, significantly higher than the 56.43% weight of the top ten constituents in the Hang Seng China Enterprises Index.
The index constituents combine new economy growth leaders with high-dividend value stocks, reflecting a "barbell strategy" of "technology + dividends." Industry coverage includes AI leaders, internet and media, finance, electronics, telecommunications, and consumer companies, including many high-dividend value stocks. The listing of this ETF will provide investors with another innovative ETF tool to participate in Hong Kong stock "China core assets" investment opportunities.
The investment value analysis of this ETF is as follows:
Liquidity improvement is an important driver for the Hong Kong stock market. Due to the Fed's resumption of rate cuts combined with U.S. debt risk concerns, the dollar index is trending downward. Hong Kong, as China's offshore financial market, will benefit more from cross-border capital inflows. Additionally, southbound funds have become one of the most important supporting forces in the Hong Kong stock market. In the domestic low interest rate environment, scarce targets in the Hong Kong market are expected to attract continuous domestic capital inflows.
From a fundamental perspective, domestic policies continue with proactive fiscal policy and moderately accommodative monetary policy. Policies to boost domestic demand and counter involution will drive supply-demand structure improvements in the medium to long term. As policy effects gradually emerge, the economy is expected to stabilize and recover, thereby improving listed companies' earnings expectations.
In terms of valuation, Hong Kong stocks remain in a global valuation trough. The Hang Seng Index's absolute valuation level is significantly low among major global market indices, while the Hang Seng Index's current ROE is in the global middle range, indicating clear undervaluation compared to major global markets. From historical valuation percentiles, the Hang Seng Index P/E ratio is around the 80th percentile of the past 5 years, while the Hang Seng Tech Index P/E ratio is only at the 35th percentile of the past 5 years. The Hang Seng Tech Index is one of the few indices whose current P/E ratio is below historical average.
Currently, although southbound funds' influence in Hong Kong stocks continues to strengthen, foreign capital still dominates. Foreign institutions generally prefer leading companies, resulting in very high trading concentration in Hong Kong stocks. Taking 2025 first-half statistics as an example, the top 1% (24 stocks) by market cap on the Hong Kong main board account for 40% of market turnover, with 99% of turnover concentrated in the top 30% stocks by market cap. Therefore, Hong Kong stock investment should focus on core leaders.
From an industry perspective, the differentiation between old and new economies is evident, with new economy enterprises represented by internet technology leaders showing prominent medium to long-term investment value. Driven by industry development trends and supportive policies, new economy sectors like information technology, pharmaceuticals, and consumer goods show impressive earnings growth. Their irreplaceable position as engines of China's new economy offers enormous future growth potential. Capital expenditure and R&D investment in technology industries will gradually convert to corporate profits over time, leveraging upstream and downstream industry chains as new growth drivers and promoting value revaluation of these core assets.
Additionally, high-dividend strategies remain cost-effective base allocation varieties. On one hand, the current dividend yield of the Hang Seng High Dividend Strategy Index remains above 6%. In the context of "low interest rates" and "asset shortage," Hong Kong high-dividend assets have strong appeal for low-risk capital, especially as insurance funds are increasing their Hong Kong market allocation through OCI accounts. On the other hand, frequent global conflicts in recent years make stable dividend income an important component of investment returns from an asset allocation perspective.
Since October 9, China-U.S. trade friction has rapidly escalated, causing significant adjustments in A-shares, Hong Kong stocks, and U.S. stocks. Considering that the overall market rise since Q3 has accumulated considerable profit-taking positions, market volatility may intensify under short-term risk disturbances. Subsequent negotiation progress between China and the U.S. may become a core factor affecting market trends, with the APEC meeting at the end of October and November 1 being two key nodes.
Referring to the experience of U.S. tariff abuse in April this year, the probability of Trump's threatened 100% tariff on China actually being implemented is relatively small. Moreover, current market confidence in AI industry trends is stronger, and the medium to long-term upward logic remains valid. Therefore, if the market shows significant overselling, it would present a good opportunity for investors to enter at low levels.
In summary, in an environment of declining dollar index, friendly policies, and AI empowerment, Hong Kong stocks as a global valuation trough have considerable upward potential in the medium to long term. Allocating through tools like the Hong Kong Large Cap 30 ETF tracking the Hang Seng China (Hong Kong Listed) 30 Index and the corresponding off-exchange index fund - Hong Kong Large Cap LOF Fund (Class A 501301; Class C 006355) can both capture the elastic opportunities of Chinese technology leaders and rely on high-dividend leaders to build solid asset foundations, making it an effective strategy for participating in current Hong Kong stock trends.
Special reminder: Recent market volatility may be significant, and short-term gains and losses do not indicate future performance. Investors must invest rationally based on their financial situation and risk tolerance, paying high attention to position and risk management.
Data sources: Shanghai and Shenzhen Stock Exchanges, Hong Kong Stock Exchange, etc.
Risk warning: The Hong Kong Large Cap 30 ETF (520560) and Hong Kong Large Cap LOF Fund (Class A 501301; Class C 006355) track the Hang Seng China (Hong Kong Listed) 30 Index. The index base date is January 3, 2000, published on January 20, 2003. Historical annual returns for 2020-2024 were: -3.49%, -15.96%, -17.21%, -12.68%, and 31.08% respectively. Index constituent composition is adjusted according to index compilation rules, and historical backtesting performance does not indicate future index performance.
These fund products are issued and managed by Huabao Fund. Distribution agencies do not assume responsibility for product investment, redemption, and risk management. Investors should carefully read legal documents including the Fund Contract, Prospectus, and Fund Product Summary to understand risk-return characteristics and choose products appropriate for their risk tolerance. The fund manager rates Hong Kong Large Cap 30 ETF (520560) as R4-medium-high risk, suitable for aggressive (C4) and above investors. The fund manager rates Hong Kong Large Cap LOF Fund (Class A 501301; Class C 006355) as R3-medium risk, suitable for balanced (C3) and above investors. Suitability matching opinions are subject to sales institutions.
Sales institutions conduct risk assessments according to relevant laws and regulations. Investors should pay attention to suitability opinions issued by fund managers. Different sales institutions' suitability opinions may not necessarily be consistent, and risk level assessments by fund sales institutions shall not be lower than those made by fund managers. Differences exist between fund risk-return characteristics in fund contracts and fund risk levels due to different consideration factors.
Investors should understand fund risk-return situations and prudently select fund products based on their investment objectives, terms, experience, and risk tolerance, bearing risks themselves. CSRC registration of these funds does not indicate substantive judgment or guarantee of investment value, market prospects, or returns. Performance of other funds managed by the fund manager does not constitute performance guarantees. Past fund performance does not predict future performance. Fund investment requires caution!
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