On August 28th, while hardware tech saw an early peak and pullback, AI applications showed vigorous activity and most internet leaders strengthened. The CSI Hong Kong Stock Connect Internet Index, which heavily weights internet leaders, closed up 0.6%, with both Tencent Holdings and Xiaomi Corporation rising over 1%.
Tencent's Hunyuan division launched and open-sourced its new generation large language model, Hy4 preview. This release significantly expands model size, context length, and data scale, solidifying its position in the top tier of open-source models. Just last month, Tencent had released the Hy3 official version. The WorkBuddy platform's monthly active users have now exceeded 20 million, showing a marked acceleration in foundation model iteration and commercial application progress.
Xiaomi recently unveiled three self-developed chips at once: the Xuanjie O3 (AI flagship SoC), Xuanjie O100 (high-bandwidth AI accelerator chip), and Xuanjie D100 (autonomous driving high-compute AI chip). This breaks past the boundaries of a single smartphone chip, constructing an AI computing foundation supporting the entire ecosystem of people, vehicles, and homes.
Elsewhere, the ongoing disclosure of interim results continues to validate the commercialization of AI applications, boosting sector sentiment. Meitu Inc. surged over 7% after its results, reporting an adjusted net profit attributable to shareholders of RMB 52 billion for the first half, a 39.5% year-over-year increase, with its AI productivity applications achieving an annual recurring revenue (ARR) of approximately RMB 620 million.
Bilibili Inc. W shares closed up 6% following earnings, with second-quarter adjusted net profit growing 25% year-over-year. Advertising has become the revenue growth engine, with AI advertising revenue increasing over 100% year-over-year.
Meituan was set to release its earnings after market close, with multiple institutions noting that the pace of food delivery subsidy rollback is exceeding expectations. This could help Meituan establish a competitive inflection point, driving accelerated profit recovery.
Adding to the momentum, SaaS concept stocks moved higher, with Kingdee International rising over 6%. Salesforce's better-than-expected earnings report has forcefully shattered the "AI devours software" panic narrative, proving that software companies can be beneficiaries, not victims, in the AI wave.
Data from the National Data Administration shows that daily domestic Token calls have exceeded 140 trillion, a more than 1,000-fold increase from the 100 billion at the start of 2024, and up over 40% from the 100 trillion seen at the end of 2025. Central Plains Securities notes that this substantial increase in daily Token call volume indicates China's AI applications have entered a phase of rapid growth. Model manufacturers continue intensive model iteration, enhancing capabilities in long-text processing, inference performance, Agent abilities, code generation, and multimodality. These improvements are accelerating the deployment of AI in marketing, multimodal content, and e-commerce, driving commercial monetization forward.
Southwest Securities believes that the AI hardware segment has now entered an earnings validation stage, and that applications will progressively become a key focus for the market. As model capabilities rise and corporate acceptance of AI tools grows, more commercial opportunities are expected to emerge in areas like office productivity, industry, and software services.
Related ETF: The Hong Kong Internet ETF Huabao (513770) passively tracks the CSI Hong Kong Stock Connect Internet Index. Its top holdings include tech giants like Alibaba and Tencent, along with various AI application companies. The top ten weights collectively exceed 80%, showcasing significant leadership advantages. It supports intraday T+0 trading and offers excellent liquidity. For off-market investors, feeder funds are available (Class A: 017125, Class C: 017126).
Reminder: Recent market volatility may be high, and short-term gains or losses do not predict future performance. Investors must make rational decisions based on their own capital situation and risk tolerance, paying close attention to position and risk management.
Data sources: Shanghai and Shenzhen Stock Exchanges, Wind, etc. The companies mentioned — Tencent Holdings, Xiaomi Corporation, Meitu Inc., Bilibili Inc., Meituan, and Kingdee International — are all constituent stocks of the CSI Hong Kong Stock Connect Internet Index, with weightings of 14.56%, 10.88%, 0.94%, 3.06%, 11.94%, and 1.85% respectively as of August 28, 2026.
Institutional viewpoints: From "AI Models Densely Updated, Capability Improvements Bring Application Opportunities" dated April 28, 2026; Southwest Securities, "AI Hardware Enters Earnings Validation Stage, Applications Will Gradually Become a Key Focus" dated August 26, 2026.
ETF fee description: When investors subscribe or redeem fund shares, the agency may charge a commission of no more than 0.5%, which includes fees charged by securities exchanges, registration agencies, etc. Feeder fund fee description: For the Huabao CSI Hong Kong Stock Connect Internet ETF feeder fund (Class A), the front-end subscription fee rate is RMB 1,000 per transaction for amounts over RMB 2 million, 0.6% for amounts between RMB 1 million and RMB 2 million, and 1% for amounts under RMB 1 million. The redemption fee is 1.5% for holdings of less than 7 days and 0% for holdings of 7 days or more. No sales service fee is charged. For the feeder fund (Class C), there is no subscription fee, the redemption fee is 1.5% for holdings of less than 7 days and 0% for holdings of 7 days or more, and the sales service fee is 0.3%.
Risk warning: The Hong Kong Internet ETF Huabao and its feeder funds passively track the CSI Hong Kong Stock Connect Internet Index. The index base date is December 30, 2016, and it was published on January 11, 2021. The return of the index over the past 5 full years: 2025, 27.02%; 2024, 23.04%; 2023, -24.74%; 2022, -23.01%; 2021, -36.61%. The volatility over the past 5 full years: 2025, 33.60%; 2024, 43.49%; 2023, 32.09%; 2022, 49.01%; 2021, 38.72%. Index constituents are adjusted according to the index compilation rules over time. Its back-tested historical performance does not predict future index performance. The index constituents mentioned are for display purposes only. The description of individual stocks does not constitute any form of investment advice and does not represent the holdings or trading activities of any fund under the manager. The risk level assessed by the fund manager is R4 - medium to high risk, suitable for aggressive investors (C4) and above. Any information in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are solely responsible for their own investment decisions. Additionally, any views, analyses, or forecasts herein do not constitute investment advice to readers of any form and do not assume any responsibility for direct or indirect losses resulting from the use of this content. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Past performance of a fund does not represent future performance. Fund investment involves risk. Investors should invest with caution.
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