The Sci-Tech Innovation Board chip sector staged a V-shaped rebound on July 8th. The low-fee* HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (589190) opened slightly higher, experienced a pullback, then stabilized and surged, with its intraday gain reaching over 5%. It is currently up more than 2%, aiming for a third consecutive day of gains. Among the constituents, Zhongke Feice led the gains, rising over 15%. Hua Hong Grace Semiconductor Limited surged more than 16% during the session, hitting a new historical high. SMIC gained nearly 6%, while Cambricon rose over 3%.
Recent Market Activity
The Sci-Tech chip sector has seen increased volatility recently, with capital actively seeking opportunities for allocation. Data from the Shanghai Stock Exchange shows that the HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (589190) has seen net inflows for 10 consecutive days, with a total net increase in holdings exceeding 572 million yuan.
Industry News and Analysis
On the news front, global foundries are projecting strong performance. TSMC is scheduled to announce its Q2 results in mid-July. A Citi report noted that TSMC might further raise its 2026 revenue growth forecast during the upcoming earnings call, primarily driven by sustained demand for advanced chips and improved long-term visibility. Additionally, reports suggest Samsung Foundry may achieve its first monthly profit in three years as early as June.
Furthermore, Goldman Sachs released research stating that the enhanced capabilities of major market models, including Meituan's recently launched LongCat2.0, will drive demand for AI chips and data center power management chips. The proliferation of generative AI is expected to continue fueling related demand, from which Hua Hong is positioned to benefit.
Galaxy Securities indicated that with the interim earnings season approaching, opportunities for outperformance in memory and semiconductor equipment should be monitored. Additionally, based on industry progress, materials and equipment benefiting from memory capacity expansion deserve attention. The firm is optimistic about potential earnings and valuation upgrades for wafer fabs.
About the Fund
To position for the chip industry's potential "super cycle," the high-beta 20% daily limit-change stocks are a key focus. Public information shows that the HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (589190) and its feeder fund track the SSE STAR Market Chip Index. While providing balanced exposure across the chip industry chain, it has a weighting of over 90% in core areas like integrated circuits and semiconductor equipment, reflecting its high hard-tech content and strong growth potential.
Public data indicates the HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (589190) has a management fee of 0.3%, a custody fee of 0.08%, and a total expense ratio of 0.38%, which is considered low among ETFs tracking the same underlying index.
Important Disclosures
The HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND passively tracks the SSE STAR Market Chip Index. The index base date is December 31, 2019, and its release date was June 13, 2022. This product is issued and managed by Huabao Fund. Distributing institutions do not assume responsibility for the product's investment, redemption, or risk management. Investors should carefully read the Fund Contract, Prospectus, Fund Product Key Facts Statement, and other legal documents to understand the fund's risk-return profile and choose products suitable for their own risk tolerance. The fund manager assesses this fund's risk rating as R4 (Medium-High Risk), suitable for investors with a suitability rating of C4 or above. The performance of other funds managed by the fund manager does not guarantee this fund's performance. Past performance of the fund does not indicate its future results. Funds carry risks, and investment requires caution. Sales agencies (including the fund manager's direct sales channels and other sales agencies) assess this fund's risk according to relevant laws and regulations. Investors should promptly pay attention to the appropriateness opinions issued by the fund manager. Appropriateness opinions from different sales agencies may not necessarily be consistent. The fund product risk rating results issued by fund sales agencies shall not be lower than the risk rating results made by the fund manager. The description of the fund's risk-return characteristics in the Fund Contract and its risk rating may differ due to different considerations. Investors should understand the fund's risk-return situation and, based on their own investment objectives, horizon, experience, and risk tolerance, carefully select fund products and bear 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, and investment requires caution.
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