Technology stocks in Hong Kong and China saw a substantial pullback today (June 23). In the Hong Kong market, shares of companies including Zhipu AI, Shenghong Technology, Montage Technology, and Kingboard Holdings fell by over 10%. The largest and most liquid* Southbound Connect Information Technology ETF, Hua Bao (159131), experienced a correction following its record high yesterday, with its on-market price currently down 5.75%. The premium widened, and the fund saw real-time subscriptions of 99 million units, resulting in net subscriptions of 64 million units.
Market Outlook and Strategy
Galaxy Securities noted that looking ahead to the second half of 2026, the Hong Kong market's status as a "value play" is a fact, its current "puzzling" state is the present reality, its "long runway" is the direction, and "building momentum" is the process. While a fundamental inflection point in revenue, profitability, and ROE has been confirmed, market confidence and capital flows have yet to align. Driven by favorable policies promoting technological innovation and domestic demand expansion, if Sino-US relations show significant improvement in the fourth quarter and the rebound in fundamentals is confirmed, the profitability of Hong Kong-listed companies is expected to see substantial improvement. The overall Hong Kong market may potentially witness a simultaneous upswing in earnings and valuations. In terms of allocation, technological innovation will be a major investment theme for Hong Kong stocks. As the AI thematic moves from pure hardware to areas like computing power leasing, cloud services, semiconductors, humanoid robotics, and MaaS services across the entire industry chain, Hong Kong's structural disadvantages may transform into relative advantages.
Recent Performance Highlights
Over the past six months, the underlying index of the Southbound Connect Information Technology ETF Hua Bao (159131), which focuses on Hong Kong's hard tech sector—the CSI Southbound Connect Information Technology Composite Index—has gained over 30%. This performance outpaced the Hang Seng Tech Index by 45%, the Southbound Connect Technology Index by 41%, and the Southbound Connect Internet Index by over 58%, demonstrating significantly sharper and more elastic returns.
Product Features and Composition
This ETF offers a rare, "pure-play" exposure to Hong Kong's hard tech sector and supports T+0 trading. As the first and largest ETF of its kind with the strongest liquidity, Hua Bao (159131) has an offshore feeder fund code 026755. Its underlying index is composed of "80% hardware + 20% software," heavily weighted towards Hong Kong's "semiconductor + electronics + computer software" sectors. It covers 60 Hong Kong-listed hard tech companies. The combined weight of the two wafer fabrication giants, SMIC and Huahong Semiconductor, exceeds 21%. The domestic AI PC leader, Lenovo Group, has a weight of 15.89%. The combined weight of PCB leaders Kingboard Holdings and Kingboard Laminates Holdings is over 10%. These three holdings represent the highest concentration among all market indices with linked products. Furthermore, the index recently included several newly-listed hard tech giants like Zhipu AI and Biren Technology. The index excludes large-cap internet companies such as Alibaba, Tencent, and Meituan, resulting in a sharper focus that is more conducive to capturing the AI hard tech thematic in Hong Kong stocks.
Important Disclaimers and Risk Information
*The description "largest and most liquid" refers to the fund's status among the eight ETFs tracking the CSI Southbound Connect Information Technology Composite Index as of June 16, 2026, based on its latest on-market size of 1.337 billion yuan and its year-to-date average daily turnover of 565 million yuan. The historical annual returns of the underlying CSI Southbound Connect Information Technology Composite Index (HKD) from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30% respectively. Past performance of an index is not indicative of its future results.
The ETF and its feeder fund passively track the CSI Southbound Connect Information Technology Composite Index. The index's base date is November 14, 2014, and its release date is June 23, 2017. The mention of index constituents is for illustrative purposes only; descriptions of individual stocks do not constitute investment advice of any form, nor do they represent the holdings or trading activities of any fund managed by the fund manager.
This product is issued and managed by Hua Bao Fund Management Co., Ltd. Distributors do not assume responsibility for the product's investment performance or redemption. Investors should carefully read the Fund Contract, Prospectus, Fund Product Summary, and other legal documents to understand the fund's risk-return characteristics and select a product 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 rating as R4 (Medium-High Risk), suitable for Aggressive (C4) and above investors. Distributors (including the fund manager's direct sales channels and other distributors) evaluate the fund's risk according to relevant laws and regulations. Investors should pay attention to the appropriateness opinions issued by distributors and base their decisions on the matching results. Appropriateness opinions from different distributors may not be consistent. The risk rating results provided by fund distributors shall not be lower than the risk rating assessment made by the fund manager. The description of the fund's risk-return characteristics in the fund contract and the fund's risk rating may differ due to different considerations. Investors should understand the fund's risk-return profile and choose fund products cautiously based on their 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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