China's three major stock indices advanced collectively today, with the Shanghai Composite Index reclaiming the 4000-point level. At market close, the Shanghai Composite Index rose 1.28%, the Shenzhen Component Index gained 3.02%, and the ChiNext Index jumped 3.93%. Combined trading volume across the Shanghai, Shenzhen, and Beijing markets exceeded 2.66 trillion yuan.
The technology sector led the charge, with the chip and semiconductor industry staging a powerful comeback. HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (ASX: 589190), which offers comprehensive exposure to the chip industry with a focus on core constituents, saw its on-exchange price surge 5.25%. Hua Bao Electronic ETF (ASX: 515260), which aggregates leading companies in the electronics sector, closed up 5.32%. Hua Bao New Materials ETF (ASX: 516360), covering popular segments like semiconductor materials, electronic chemicals, and lithium batteries, finished 5.93% higher. The co-packaged optics segment also regained strength, with the leading ChiNext Artificial Intelligence ETF Hua Bao (ASX: 159363) in terms of scale and liquidity climbing 4.72%.
In the Hong Kong market, AI hardware sectors including chips, semiconductors, PCBs, and AI PCs made a strong return. The largest and most liquid* Hong Kong Stock Connect Information Technology ETF Hua Bao (ASX: 159131) saw heavy volume and closed up 5.77%, decisively breaking above its 5-day, 10-day, and 20-day moving averages.
Market Analysis and Outlook
One securities firm noted that the market had undergone a thorough correction previously, limiting further downside for indices. The impact of new productive forces on the economy has now surpassed that of the real estate sector, and the shift in China's economic drivers continues to accelerate. Technology stocks, despite recent adjustments, are still supported by positive industry trends. Therefore, investors may not need to panic excessively and could consider accumulating positions during dips.
Another securities firm indicated that the A-share market entered a consolidation phase in mid-May, having already priced in risks related to global liquidity tightening ahead of time. Overseas tech stocks reflected this later than A-shares. Subsequently, the A-share market may operate relatively stably amidst global market fluctuations. By late June, as external factors suppressing risk appetite are gradually resolved and mid-year performance forecasts for A-shares are disclosed, high-growth sectors with solid earnings support and clear industry trends are expected to attract renewed capital allocation.
Focus on Key Sector ETFs
Hardware Leads Global Rally
The Hong Kong Stock Connect Information Technology ETF Hua Bao (ASX: 159131), with an 80% hardware focus, surged 5.77% on heavy volume, continuing to outperform the Hang Seng Tech Index. As AI hardware sectors like chips, semiconductors, PCBs, and AI PCs regained dominance, the underlying Hong Kong Stock Connect Information Technology Index rose over 3%, significantly outperforming the Hang Seng Tech Index's gain of 0.55%. The ETF, which is the largest and most liquid* in its category, gapped higher at the open, briefly retreated, then rallied again before midday, strengthening further in the afternoon to close up 5.77% and reclaim key moving averages, with daily turnover exceeding 2.3 billion yuan.
Among its constituents, PCB giant Kingboard Holdings led gains, soaring over 26%. Guanghe Technology rose more than 15%, Kingboard Laminates gained over 12%, ASMPT advanced nearly 10%, and AI PC concept stock Lenovo Group climbed over 6%.
Several factors may have contributed to today's surge in Hong Kong's hard tech stocks. First, a global hardware rally saw the Philadelphia Semiconductor Index jump 5.6% overnight, and South Korea's KOSPI index暴涨 8% today, with improved external sentiment potentially boosting Hong Kong shares. Second, an AI hardware price surge is underway, with global printed circuit board prices rising sharply recently due to Middle East geopolitical conflicts disrupting key raw material supplies. Analysts note that PCB is one of the steepest value-add segments in AI hardware. Third, industry fundamentals remain robust, with forecasts predicting significant global semiconductor growth driven by memory chips.
Over the past six months, the underlying index for the ETF, which focuses on Hong Kong's hard tech, has gained over 19%, outperforming the Hang Seng Tech Index by 35%, the Hong Kong Stock Connect Tech Index by 33%, and the Hong Kong Stock Connect Internet Index by over 47%, demonstrating significant sharpness and elasticity.
The ETF supports T+0 trading and is the first, largest, and most liquid product tracking its index. Its underlying index is composed of 80% hardware and 20% software, heavily weighted towards Hong Kong-listed semiconductor, electronics, and computer software companies. It covers 52 hard tech firms, with top weights in leading foundries and the domestic AI PC leader Lenovo Group. The index excludes large-cap internet firms like Alibaba, Tencent, and Meituan, offering higher sharpness to capture Hong Kong's AI hardware trends.
Chip Sector Recovers Losses Rapidly
The chip and semiconductor sector rebounded strongly. HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (ASX: 589190), offering full-chain exposure to the chip industry with a hardcore constituent focus, gapped higher and extended gains, rallying again in the afternoon to close up 5.25%, quickly recovering the previous day's losses.
Semiconductor materials led gains, with silicon wafer concept stocks soaring. Shanghai Sinyang Semiconductor Materials and Fulltech Precision hit the 20% daily limit. Youyan Silicon rose over 17% intraday to a record high, while Tianyue Advanced gained over 12%. Semiconductor silicon wafers are酝酿 a new round of price hikes, with analysis suggesting price increases are formally extending from wafer fabs downstream to materials. Analog chip stocks also rose, with Jiehua Technology hitting the 20% limit and Southchip Semiconductor Technology advancing over 11%. Among heavyweight leaders, SMIC rose over 4%, Hygon Information Technology gained over 3%, and Cambricon Technologies increased more than 1%.
The chip industry's renewed upward momentum is driven in the short term by a strong overseas映射, with the Philadelphia Semiconductor Index surging 5.61% overnight and memory chips leading a South Korean market rebound today. Additionally, industry giants have voiced support for chip demand, with comments from leaders at Nvidia and Tesla highlighting strong future needs and current manufacturing bottlenecks.
From a medium to long-term perspective, the supply-demand imbalance in the chip market driven by AI is becoming increasingly pronounced, sustaining high industry景气. Forecasts project substantial global semiconductor growth, primarily driven by memory chips.
Securities analysis indicates the global semiconductor supply chain is entering an expansion cycle. Domestic wafer fabs are accelerating capacity expansion and supporting the local supply chain for security considerations. Significant breakthroughs in国产化 have been achieved in areas like etching, thin-film deposition, and CMP, with progress expected in other segments. The independent controllability sector has shown growth momentum following corporate earnings reports and is poised for a new uptrend as advanced memory and process wafer fabs expand.
For exposure to the chip industry's potential 'super cycle,' the ETF and its联接 funds passively track the SSE Sci-Tech Innovation Board Chip Index. It provides balanced, full-chain exposure while allocating over 90% weight to core areas like integrated circuits and semiconductor equipment, offering high hard tech content and strong offensive characteristics.
AI Computing Power Stages a Comeback
AI computing power staged a strong rebound, with the co-packaged optics segment regaining strength. The创业板 Artificial Intelligence Index, with over 50% exposure to optical modules and CPO, led gains among all AI indices. Most constituents rose, led by Sun Telecom up 18%. Linktel Technologies and Longchip Borch gained over 12%, Eoptolink Technology rose over 8%, TFC Optical Communication advanced over 4%, and Zhongji Innolight increased over 2%.
Among popular ETFs, the leading ChiNext Artificial Intelligence ETF Hua Bao (ASX: 159363) in scale and liquidity surged 4.72%, reclaiming its 20-day and 10-day moving averages. Daily turnover exceeded 1.5 billion yuan, maintaining leading交投 activity among AI-themed ETFs.
Multiple developments continue to validate robust AI computing power demand, with 'pick-and-shovel' providers like optical module companies poised to benefit. TSMC reaffirmed its 2026 capital expenditure guidance, validating long-term high demand for AI computing infrastructure, which drives increasing配套 ratios for optical modules and GPUs. Google and Nvidia listing Intel as a backup chip supplier, alongside Google's large TPU orders, validates strong demand for cloud-customized computing paths, whose cluster deployments will simultaneously boost demand for 800G/1.6T optical modules. A 550% surge in optical fiber preform prices validates tight demand for physical interconnects between computing power units, with underlying optical components becoming a new bottleneck in computing power construction.
Current analysis suggests that, based on fundamentals, confidence in optical communication investment should remain firm. Among optical module manufacturers, leading companies with strong material supply chain capabilities are expected to demonstrate strong earnings兑现 ability and high certainty this year and next, and are also likely to benefit率先 from scale-up optical interconnection scenarios.
For one-click exposure to optical modules and AI application opportunities, the leading ETF in its category by scale and liquidity is worth attention, along with its场外联接 funds. Its underlying index currently has over 50% exposure to optical modules, significant weight in key leaders, and allocates roughly 30% to AI applications, representing not just computing power核心 but also AI applications.
It is noteworthy that, as of the latest data, the ETF's规模 reached 7.507 billion yuan, ranking first in the dual-creation AI赛道 across the market. Its average daily turnover over the past six months exceeded 800 million yuan, also leading in交投 within the AI赛道.
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