The technology sector of the A-share market has demonstrated remarkable resilience this week, showing strength that is nearly unparalleled globally, even as overseas markets experienced adjustments in the preceding days. Regarding this trend, Cao Xuchen, the fund manager of the popular ChiNext Artificial Intelligence ETF Hua Bao (159363), suggests that the overall A-share market is currently in a state of deep contention due to a lack of synchronized movement with overseas markets. This makes short-term strength difficult to predict and could potentially sow the seeds for future risk, such as a scenario where A-shares undergo position consolidation even when overseas markets are rising.
After the market close on June 24th (Eastern Time), leading memory chip manufacturer Micron Technology released its financial results for the third quarter of fiscal year 2026 (ending May 28, 2026). The report revealed quarterly revenue of $41.5 billion, a sequential increase of 74%, with a gross margin reaching 84.9%. The company's guidance for the fourth quarter projects revenue of $50 billion and a gross margin of 86%.
Micron Technology also disclosed details regarding its Strategic Customer Agreements (SCAs): (1) Quantity: 16 SCAs have been signed, involving 4 hyperscale customers, 3 medium-sized customers, and multiple automotive clients. (2) Coverage: These agreements currently cover 20% of DRAM production and 33% of NAND production, with a future target of moving over 50% of output into the SCA framework. (3) Term: The contracts are Take-or-Pay agreements spanning 2026 to 2030. (4) Pricing: The price ceiling is based on Q2 2026 market prices, with a price floor designed to guarantee a gross margin higher than any peak in Micron Technology's historical cycles.
Micron Technology's assessment of supply and demand indicates that tight conditions are expected to persist beyond 2027. Its capital expenditure for fiscal year 2026 is $27 billion (excluding subsidies), with approximately $10 billion earmarked for Q4 FY2026. Capital expenditure for each quarter of fiscal year 2027 is projected to exceed that of Q4 FY2026, and the company has already entered into a multi-year EUV procurement agreement with ASML.
Fund Manager Cao Xuchen expressed that while short-term fundamental risks have subsided and the A-share tech landscape has become complex due to market contention, the broader outlook for the third quarter remains positive. Since April this year, the primary driver behind the rise in global memory stock prices has been the increasing proportion of SCA-related revenue, as these agreements provide a guarantee for 2027-2028 performance. The degree of this guarantee is linked to the rising coverage rate of SCAs. Therefore, the essence of this quarter's earnings beat lies in the SCA coverage reaching 50%, which represents a strong safeguard for future 2027-2028 earnings. For a cyclical industry like memory, a major positive catalyst is an unexpectedly prolonged cycle duration, with SCAs serving as its core guarantee. The next phase of trading may involve the market pricing in an increase in SCA coverage from 50% to over 70%, a process that would entail a re-rating or valuation uplift. From the perspective of the earnings calendar, the next quarterly report is due around September 25th. At that point, the market's cyclical assessment of memory sector companies, which have already seen gains, is likely to become significantly more stringent, given that memory is the absolute core component in this round of AI computing power investment. Consequently, while AI computing companies might report their best Q2 earnings, there could be issues with overly high expectations for Q3 results. This dynamic aligns precisely with Cao's positive view on the technology sector's performance from June to September. Specifically, the market rhythm might follow a pattern of "consolidation in June, gains in July-August, a wait-and-see approach in September, and a potential pullback in October." Cao Xuchen advises investors to focus on the ChiNext Artificial Intelligence ETF Hua Bao (159363) and the Hong Kong Stock Connect Information Technology ETF Hua Bao (159131).
The underlying index for the ChiNext Artificial Intelligence ETF Hua Bao (159363)—the largest and most liquid AI-themed ETF in terms of AUM across the market, along with its feeder funds (Class A: 023407, Class C: 023408)—is the ChiNext AI Index, which has a high exposure of approximately 50% to optical modules. It holds significant weight in stocks like Eoptolink Technology Inc., Zhongji Innolight Co., Ltd., and TFC Optical Communication. Additionally, about 30% of its portfolio is allocated to AI applications, making it representative of not just computing power but also AI application plays. As of June 24, 2026, the ChiNext Artificial Intelligence ETF Hua Bao (159363) reached a record-high fund size of 8.15 billion yuan, ranking first in AUM among all dual-board (ChiNext & STAR Market) AI-themed ETFs. Its average daily turnover over the past six months exceeded 900 million yuan, also leading in trading activity among all AI-themed ETFs.
The underlying index for the Hong Kong Stock Connect Information Technology ETF Hua Bao (159131)—the first of its kind and the largest and most liquid in its category, along with its feeder fund (026755)—is the CSI Hong Kong Stock Connect Information Technology Composite Index. This "Hong Kong Hard Tech" index is composed of "80% hardware + 20% software," heavily weighted in Hong Kong-listed semiconductors, electronics, and computer software. It covers 60 Hong Kong hard tech companies. The combined weight of the two wafer foundry giants, SMIC and Huahong Grace Semiconductor Manufacturing Corporation, exceeds 24%. The weight of domestic AI PC leader Lenovo Group is over 11%, and the combined weight of PCB leaders Kingboard Holdings Limited and Kingboard Laminates Holdings Ltd. is also over 11%. These three segments represent the highest exposure among all indices with linked products in the market. Furthermore, the index recently added several new Hong Kong-listed hard tech heavyweights like Zhipu AI and Biren Technology, each valued in the hundreds of billions. The index components do not include large-cap internet companies like Alibaba, Tencent, or Meituan, giving it a sharper focus and making it more effective for capturing Hong Kong's AI hard tech trends. The ETF supports T+0 trading.
Additional Notes: As of June 24, 2026, the ChiNext Artificial Intelligence ETF Hua Bao (159363) had a latest size of 8.15 billion yuan, with an average daily turnover exceeding 900 million yuan over the past six months. Its size and trading volume rank first among 30 ETFs tracking the ChiNext AI Index, the STAR Market AI Index, and the Sci-Tech Innovation Board & ChiNext AI Index. The designation "first of its kind" refers to the Hong Kong Stock Connect Information Technology ETF Hua Bao being the first ETF in the market to track the CSI Hong Kong Stock Connect Information Technology Composite Index. As of June 24, 2026, the on-exchange size of the Hong Kong Stock Connect Information Technology ETF Hua Bao was 1.642 billion yuan. Its average daily turnover year-to-date has exceeded 600 million yuan, making it the largest and most liquid among the 8 ETFs currently tracking the CSI Hong Kong Stock Connect Information Technology Composite Index.
Important Reminder: Recent market volatility may be significant. Short-term gains or losses are not indicative of future performance. Investors must make rational investment decisions based on their own financial situation and risk tolerance, paying close attention to position sizing and risk management.
Data sources include the Shanghai and Shenzhen Stock Exchanges, China Securities Index Co., Ltd., Wind, etc.
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 rates actually charged by securities firms, and no sales service fee is levied. For feeder fund fee rates, please refer to the relevant fund legal documents.
Risk Disclosure: The ChiNext Artificial Intelligence ETF Hua Bao tracks the ChiNext Artificial Intelligence Index. The base date for this index is December 28, 2018, and its release date is July 11, 2024. The annual performance of the ChiNext Artificial Intelligence Index from 2021 to 2025 was: 17.57%, -34.52%, 47.83%, 38.44%, and 106.35%, respectively. The Hong Kong Stock Connect Information Technology ETF Hua Bao passively tracks the CSI Hong Kong Stock Connect Information Technology Composite Index. The base date for this index is November 14, 2014, and its release date is June 23, 2017. The annual historical returns (in HKD) of the CSI Hong Kong Stock Connect Information Technology Composite Index from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30%, respectively. The above funds are issued and managed by Hua Bao Fund Management Co., Ltd. Distributors do not bear the investment or redemption liability for the products. Investors should carefully read the Fund Contract, Prospectus, Fund Product Key Facts Statement, and other fund legal documents to understand the risk-return characteristics of the funds and choose products suitable for their own risk tolerance. The composition of index constituents is adjusted according to the index methodology rules, and its back-tested historical performance does not predict future index performance. The index constituents mentioned in this article are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form and do not represent the holdings information or trading动向 of any fund managed by the asset manager. The fund manager assesses the risk rating of the ChiNext Artificial Intelligence ETF Hua Bao and the Hong Kong Stock Connect Information Technology ETF Hua Bao as R4 (Medium-High Risk), suitable for Aggressive (C4) and above investors. The appropriateness matching opinion is subject to the sales institution. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are responsible for any independent investment decisions. Furthermore, any views, analysis, or forecasts in this article do not constitute investment advice of any kind to the reader, nor shall they bear any responsibility for direct or indirect losses arising from the use of this content. Fund investment carries risks. The past performance of a fund is not indicative of its future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Invest in funds with caution.
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