On July 17th, the AI industrial chain experienced a dramatic rollercoaster ride, with AI-hardware sectors such as semiconductors, memory, CPO, and optical communications plummeting. The largest and most liquid* Hong Kong Stock Connect Information Technology ETF, Huabao (159131), saw its on-exchange price fluctuate and decline throughout the day, closing down 7.24% and falling below its 200-day moving average. Capital flowed in on the dip, with a net subscription of 74 million fund units for the day.
Constituent stocks were almost entirely in the red. Zhipu AI led the decline, plunging over 28%, while shares like Kingboard Laminates Holdings, Biren Technology, Hua Hong Grace, and GigaDevice Semiconductor fell more than 10%. The largest constituent by weight, SMIC, dropped over 9%.
Addressing the recent sharp volatility in the tech sector, Dongxing Securities noted that while tech stocks have seen significant recent adjustments, raising market concerns about whether the tech bull market has ended, they believe the tech bull run is merely entering a mid-game consolidation phase. From a medium-term perspective, the tech bull market is far from over. However, it is undeniable that short-term market disturbances have increased, with the impact of escalating tensions in the Middle East being particularly noteworthy.
At the Sina Finance 2026 Global Capital Summit held on July 16th, Zhang Yidong, Executive Committee Member, Chief Economist, and Head of Equity Research at Haitong International, explicitly reassured the market, stating that the overall operation of the A-share and Hong Kong stock markets remains stable. He characterized the recent market volatility as a normal structural adjustment, not an inflection point, with ample overall safety margins. He predicted that TMT and advanced manufacturing sectors will replace traditional industries to become the core foundation of both markets, with the new momentum driven by technology being long-term and sustainable, not a flash in the pan. Based on the high growth momentum of the tech industry, Zhang Yidong forecasts a significant market rally ahead. The sustained high growth of domestic AI and other tech industries will simultaneously drive valuation recovery and profit improvement for tech sectors in both A-shares and Hong Kong stocks, potentially leading to a definitive "Davis Double" rally for the market.
The Hong Kong Stock Connect Information Technology ETF Huabao (159131) is a scarce "pure-blooded" hard tech play in the Hong Kong market, supporting T+0 trading. It is the first and largest ETF of its kind with the strongest liquidity, tracking the underlying index. Its feeder fund code is 026755. The underlying index, the China Connect Information Technology Composite Index, is composed of "85% hardware + 15% software," heavily weighted towards Hong Kong-listed "semiconductors + electronics + computer software." It covers 60 Hong Kong-listed hard tech companies, with the combined weight of the two wafer foundry giants, SMIC and Hua Hong Grace, exceeding 26%. The weight of domestic AI PC leader Lenovo Group exceeds 10%, and the combined weight of PCB leaders Kingboard Holdings and Kingboard Laminates Holdings exceeds 11%. These three represent the highest concentration in any index with linked products across the market. Furthermore, on June 15th, the index incorporated several new Hong Kong-listed hard tech players like Zhipu AI, Shenghong Technology, Tianshu Zhixin, and Biren Technology. The constituent stocks exclude large-cap internet companies like Alibaba, Tencent, and Meituan, resulting in higher sharpness and better capture of Hong Kong's AI-hardware market trends.
Recent market volatility may be significant, and short-term gains or losses do not predict future performance. Fund investments may incur losses. Investors must invest rationally based on their own financial situation and risk tolerance, paying high attention to position sizing and risk management.
Note: "First in the market" refers to the Hong Kong Stock Connect Information Technology ETF Huabao being the first ETF in the market to track the China Securities Hong Kong Stock Connect Information Technology Composite Index. As of June 30, 2026, the latest on-exchange size of the ETF was RMB 1.979 billion, the largest among the 8 ETFs tracking the same index. Its year-to-date average daily turnover was RMB 689 million, the highest among the 8 ETFs tracking the same index. The annual historical returns of the underlying index, the China Securities Hong Kong Stock Connect Information Technology Composite Index (HKD), for 2021-2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30% respectively; its annual volatility for 2021-2025 was: 4.13%, 4.63%, 4.00%, 5.49%, and 5.45% respectively. Past index performance does not indicate future results.
Fund Fee Information: Subscription and redemption agents for the Hong Kong Stock Connect Information Technology ETF Huabao 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.
The Hong Kong Stock Connect Information Technology ETF Huabao and its feeder fund passively track the China Securities Hong Kong Stock Connect Information Technology Composite Index, with a base date of November 14, 2014, and a release date of June 23, 2017. The index constituents mentioned in the material are for illustrative purposes only. Individual stock descriptions are not investment advice in any form and do not represent the holdings or trading动向 of any fund managed by the fund manager. This product is issued and managed by Huabao Fund. Selling agents do not bear responsibility for the investment or redemption 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 its future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Fund investment involves risk! The fund manager assesses this fund's risk等级 as R4 - Medium to High Risk, suitable for Aggressive (C4) and above investors. Selling agencies (including the fund manager's direct sales机构 and other selling agencies) evaluate the fund's risk according to relevant laws and regulations. Investors should promptly pay attention to the appropriateness opinions issued by selling agencies and base their decisions on the matching results. Appropriateness opinions from different selling agencies may not necessarily be consistent. The fund product risk等级 evaluation results issued by fund selling agencies shall not be lower than the risk等级 evaluation results made by the fund manager. There may be differences between the fund's risk-return characteristics as described in the fund contract and its risk等级 due to different considerations. Investors should understand the fund's risk-return situation and choose fund products prudently based on their own investment objectives, horizon, experience, and risk tolerance, bearing the 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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