Major A-share indices closed higher today (June 17), with the Shanghai Composite Index surpassing the 4100-point level. The ChiNext and Shenzhen Component indices gained over 1% on increased volume, with technology and growth stocks leading the market. The price of the hard-tech broad-based ETF covering leading growth companies from the ChiNext and STAR Market, HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (SSE: 588330), surged 3.26%, approaching its previous high. The combined turnover for the Shanghai, Shenzhen, and Beijing exchanges reached 3.11 trillion yuan, an increase of 27.8 billion yuan from the previous session.
Across the board, the semiconductor industry chain saw a strong rally. ACM Research Shanghai Inc (SSE: 688082) hit the 20% daily limit up. The price of the ETF that provides comprehensive exposure to the chip industry, HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (SSE: 589190), surged 5.98%, setting a new record high since its listing. With multiple themes like PCB, memory chips, and semiconductor equipment gaining momentum, HuaBao Technology ETF (SSE: 515000) and HuaBao Electronics ETF (SSE: 515260) both surged over 4%, each reaching new all-time highs.
The brokerage sector has attracted market attention with consecutive gains since last Friday, reigniting discussions about a potential catch-up rally. After three consecutive positive trading days, the price of the top-tier HuaBao Brokerage ETF (SSE: 512000), with assets under management exceeding 37.4 billion yuan, closed flat today following intraday fluctuations. Fund manager Feng Chencheng noted that a "dual divergence" (between market performance and trading activity, and between fundamentals and valuations) has created attractive valuations, suggesting the valuation recovery trend may continue.
Reaching New Peaks
HuaBao Electronics ETF (SSE: 515260) surged 4.45% to a new record high, driven by strength in PCB and glass substrate stocks. Six component stocks, including Shennan Circuits Co.,Ltd. (SZSE: 002916), hit the daily limit up, with many setting new records.
On the news front, CSRC Chairman Wu Qing stated at the 2026 Lujiazui Forum that reforms for the STAR Market and ChiNext Board will be deepened. For the STAR Market, two reform measures will be introduced, including expanding the application of the fifth set of listing standards to the AI field to actively support high-quality large AI model companies seeking listings. Additionally, a CCTV report highlighted that the explosive growth of AI is driving an exponential increase in demand for computing power, which is a crucial component of national comprehensive strength.
CITIC Securities believes the AI industry is still in its early stages, presenting more opportunities than challenges. New directions and paradigms, such as video generation models, world models, and physical AI, continue to emerge. Technological innovation will keep driving model iteration, with cycles expected to shorten further. Moreover, the gap between domestic and overseas models is narrowing. Compared to their international peers, domestic cloud service providers have more room to increase capital expenditures. As the ecosystem for domestic models and chips continues to improve, domestic computing power is expected to show greater growth potential.
Cao Xuchen, fund manager of the HuaBao ChiNext AI ETF (SZSE: 159363), pointed out that SK Hynix's shares hit a new high in afternoon trading, potentially due to ADR factors, breaking out of a consolidation range. This has led to a re-rating of the global memory industry's valuation, which may have contributed to the active performance of A-share semiconductor equipment stocks. If there is no negative news from the Federal Reserve's interest rate meeting tonight, the upward momentum in the tech sector could accelerate.
Key ETF Highlights
HuaBao Technology ETF (SSE: 515000) surged 4.52% to a new all-time high since its listing on August 16, 2019, demonstrating strong performance from its leading constituents. The rally was broad-based: PCB leader Shennan Circuits Co.,Ltd. hit the limit up to a new record; memory chip leader GigaDevice Semiconductor Inc (SSE: 603986) also hit the limit up to a new high; and semiconductor equipment stocks like ACM Research Shanghai Inc (20% limit up), Piotech Inc (SSE: 688072) (up over 12%), and Advanced Micro-Fabrication Equipment Inc (SSE: 688012) (up 10%) advanced significantly.
The technology sector, particularly electronics and communications, is benefiting from multiple catalysts. PCB price hikes, driven by converging demand from AI computing, optical modules, and automotive applications, are lifting profit margins. Expansion plans by major memory manufacturers confirm robust AI demand, with the price increase trend expected to persist. Upstream equipment and materials are also seeing sustained positive demand due to wafer fab capacity expansion, creating a virtuous cycle for the industry and boosting earnings potential for leading companies.
HuaBao Electronics ETF (SSE: 515260) gained 4.45%, marking its third consecutive positive day and reaching a record high since its July 31, 2020 listing. The electronics sector led the market, attracting significant net inflows of 79 billion yuan in main funds today. Over the past 5 and 20 days, the sector has drawn inflows of 185.6 billion yuan and 325.1 billion yuan respectively, ranking first among all primary sectors.
GigaDevice Semiconductor Inc and BOE Technology Group Co., Ltd. (SZSE: 000725) were the top two stocks by net main fund inflow, attracting 6.8 billion yuan and 4.2 billion yuan respectively. The ETF's underlying index includes several hot themes. In glass substrates, BOE Technology Group Co., Ltd. and TCL Technology Group Corporation (SZSE: 000100) hit the limit up following news of TSMC's development plans. In PCBs, Shennan Circuits Co.,Ltd. hit a new high and Avary Holding (Shenzhen) Co., Limited (SZSE: 002938) also reached the limit up, supported by expansion and price increase trends. In memory chips, GigaDevice Semiconductor Inc hit a new high, topping the fund inflow list as the price hike cycle continues. In semiconductor equipment, ACM Research Shanghai Inc surged by the 20% daily limit.
Brokerage Sector Outlook
The brokerage sector's rally paused today. The CSI All Share Securities Companies Index experienced volatility but managed a fourth consecutive gain. The price of the large-cap HuaBao Brokerage ETF (SSE: 512000) closed flat. Individual stock performance was mixed, with Huaan Securities Co., Ltd. (SSE: 600909) leading gains of over 4%.
Looking at recent performance, the sector has seen consecutive gains since last Friday, with increased volume attracting market attention and discussions about a potential catch-up play. Fund manager Feng Chencheng highlighted that since August of last year, the brokerage sector has exhibited a "dual divergence": a disconnect between its stock performance and high market trading activity, and a gap between improving industry fundamentals and depressed valuations.
Year-to-date, the securities companies index has fallen over 11%, underperforming the CSI 300 Index's 6.5% gain and the STAR 50 Index's over 36% surge. However, key market metrics remain strong. The average daily stock and fund trading volume for the first five months of the year stayed at a high level of 3.16 trillion yuan, up 95.2% year-over-year. Margin lending and securities lending balances reached 2.90 trillion yuan, up 59% over the past year. A-share IPO fundraising and the number of listings for the first five months increased by 76% and 52% respectively year-over-year. Brokerage business lines are expected to maintain robust performance in the first half.
New growth drivers are also emerging. Surging cross-border investment demand is boosting derivatives business overseas. Several leading brokerages have focused on expanding their international operations since 2025, utilizing leverage more effectively in overseas subsidiaries, which is expected to enhance revenue and ROE. Furthermore, large-scale tech company IPOs are boosting investment banking and capital market activities. Brokerages' deep investments in tech innovation industries may lead to unexpected profit contributions from investment gains. As more such cases materialize, the valuation of their equity investment businesses deserves attention.
Currently, the sector's valuation remains near historical lows. The price-to-book ratio for the securities companies index is around 1.28x, near the 17th percentile over the past decade. Leading brokerages generally offer around 10% ROE at approximately 1x P/B. With negative capital flow factors subsiding, the sector's investment appeal is becoming more pronounced. The fund manager believes that as market styles rebalance, the sector's high business growth, low valuation, reduced capital outflows, and new catalysts from tech investments and international business could support a continued valuation recovery, especially with Q2 net profit potentially reaching new highs.
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