On the afternoon of May 21st, the A-share and H-share chip and semiconductor sectors, along with the computing hardware industry chain, experienced significant declines. The largest and most liquid* ETF tracking Hong Kong Connect technology stocks, Huabao HK Connect Information Technology ETF (159131), initially surged over 2% in the morning session but reversed course in the afternoon, closing down 1.66% with an intraday amplitude of 4.26% and a daily turnover of 8.75 billion yuan.
How should the market view the sharp decline in chip stocks going forward? China Securities (CSC) noted that the current market divergence is superficial, with a style rotation being the underlying trend. The medium-term rebound trend remains intact, and the current consolidation phase is seen as building momentum for the next move. Subsequent funds may continue to focus on high-growth areas such as semiconductors and the AI sector, although high-flying themes still face adjustment pressures. In terms of strategy, it is advisable to avoid stocks that have already seen significant gains and are ripe for profit-taking. Instead, attention could be paid to established themes like semiconductors, advanced packaging, and AI equipment during pullbacks to capture structural opportunities, while being mindful of position sizing and avoiding excessive leverage.
Huaxi Securities pointed out that China's AI chip market is undergoing a historic shift in power dynamics. According to the latest forecasts from institutions including Bernstein Research, Nvidia's share of the Chinese AI chip market has plummeted from an absolute monopoly position of 95% three years ago to just 8% today. In stark contrast, the market share of domestic AI accelerator cards has surged past 60%, marking the first time domestic products have captured over sixty percent of the market. This signifies that domestic GPUs have officially shed the "follower" label and are reshaping the competitive landscape.
Ping An Securities highlighted that SMIC and Hua Hong Semiconductor released their Q1 2026 results, indicating a robust performance in the foundry sector. According to a SEMI report, the global semiconductor materials market sales in 2025 grew by 6.8% year-on-year to reach $73.2 billion. Both wafer fabrication materials and packaging materials segments showed growth, reflecting increased process complexity, demand for advanced nodes, and continued investment in high-performance computing and high-bandwidth memory manufacturing.
Since rebounding from its low on March 31st, the underlying index of the Huabao HK Connect Information Technology ETF (159131) – the CSI Hong Kong Connect Information Technology Composite Index – has accumulated a gain of 26.32%. In comparison, the Hang Seng Tech Index and the Hong Kong Connect Tech Index rose by only 3.92% and 1.91%, respectively, over the same period, demonstrating significantly sharper performance and greater elasticity. Statistical Period: March 31, 2026 - May 20, 2026. The annual historical returns for the Hong Kong Connect Information C Index from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30%, respectively. Past index performance is not indicative of future results.
Supports T+0 Trading! Targeting the Hong Kong Stock Super Cycle in Chips – the Huabao HK Connect Information Technology ETF (159131) is the first of its kind in the market, the largest, and the most liquid* ETF of its category. Its feeder fund code is 026755. The underlying index is composed of "70% hardware + 30% software," heavily weighted towards Hong Kong-listed "semiconductor + electronics + computer software" stocks. It covers 52 Hong Kong-listed hard-tech companies, with a storage chip weighting exceeding 26%. Key holdings include SMIC with a weight of 14.21%, Xiaomi Group-W at 10.31%, Lenovo Group at 9.33%, and Hua Hong Semiconductor at 8.82%. The index excludes large-cap internet companies like Alibaba, Tencent, and Meituan, offering sharper focus and greater potential to capture trends in Hong Kong's AI and hard-tech sector. (Data as of May 5, 2026)
Data Source: China Securities Index Co., Ltd., Shanghai and Shenzhen Stock Exchanges. Note: "First in the market" refers to the Huabao HK Connect Information Technology ETF being the first ETF to track the CSI Hong Kong Connect Information Technology Composite Index. As of May 19, 2026, the latest on-exchange size of the Huabao HK Connect Information Technology ETF is 7.75 billion yuan, making it the largest among the 7 ETFs currently tracking the CSI Hong Kong Connect Information Technology Composite Index. The ETF's average daily turnover year-to-date is 1.66 billion yuan. The annual historical returns for the underlying index, the CSI Hong Kong 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 is not indicative of future results. Fund Fee Description: Agencies handling subscriptions and redemptions for the Huabao HK Information Technology ETF may charge a commission of up to 0.5%. On-exchange trading fees are subject to the rates charged by the securities firm. No sales service fee is charged. * Institutional views referenced from: Huaxi Securities report "Apple Loses Chip Pricing Privilege! AI Servers Compete for Chips, 2026 DRAM Prices May Surge 194%"; Ping An Securities report "Foundry Sector Thriving, Focus on Domestic Substitution Industry Chain Opportunities." Risk Disclosure: The Huabao HK Connect Information Technology ETF and its feeder fund passively track the CSI Hong Kong Connect Information Technology Composite Index. The index base date is November 14, 2014, and its release date is June 23, 2017. The index constituents mentioned in this material are for illustrative purposes only. Descriptions of individual stocks do not constitute any form of investment advice and do not represent the holdings or trading intentions of any fund managed by the fund manager. This product is issued and managed by Huabao Fund Management Co., Ltd. Distributing institutions do not bear responsibility for the investment, redemption, or risk management 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 products 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 level as R4 - Medium to High Risk, suitable for investors with an Aggressive (C4) or higher risk profile. Sales 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 promptly pay attention to the suitability assessment opinions issued by sales institutions and base their decisions on the matching results. Suitability opinions from different sales institutions may not be consistent. The fund product risk rating results issued by fund sales institutions shall not be lower than the risk rating results determined by the fund manager. There may be differences between the fund's risk-return characteristics as described in the fund contract and its risk rating due to different considerations in the assessment. Investors should understand the fund's risk-return profile and make careful choices based on their investment objectives, horizon, experience, and risk tolerance, bearing the associated 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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