On August 28, hard-tech shares pulled back from early highs while AI application stocks showed renewed vigor, with most major internet names climbing. The CSI Hong Kong Connect Internet Index, which heavily weights leading internet firms, rose 0.6% for the session as TENCENT and XIAOMI-W each advanced more than 1%.
The positive sentiment was fueled in part by TENCENT's release and open-sourcing of its next-generation large language model, Hunyuan Hy4 preview. The new model features significant expansions in model size, context window length, and data scale, cementing its position in the top tier of open-source models. This comes just a month after the company unveiled and open-sourced the Hunyuan Hy3 official version, with its WorkBuddy product surpassing 20 million monthly active users. The acceleration in both base model iteration and application commercialization is becoming increasingly evident.
Meanwhile, XIAOMI-W recently unveiled three self-developed chips in a single announcement: the Xuanjie O3 (an AI flagship SoC), the Xuanjie O100 (a high-bandwidth AI accelerator), and the Xuanjie D100 (a high-compute AI chip for autonomous driving). This move breaks beyond the boundaries of a single smartphone chip business, establishing an AI computing foundation that supports the company's entire "human-vehicle-home" ecosystem.
Elsewhere in the market, the ongoing release of interim earnings reports continues to validate the commercialization of AI applications, boosting sentiment across the sector. MEITU jumped more than 7% following its results, reporting adjusted net profit attributable to shareholders of RMB 5.2 billion for the first half, up 39.5% year-over-year, with annual recurring revenue (ARR) from its AI productivity applications reaching approximately RMB 620 million.
BILIBILI-W closed 6% higher after its earnings release, with second-quarter adjusted net profit climbing 25% year-over-year. Advertising emerged as the key revenue growth engine, with AI-related advertising revenue surging more than 100% compared to the same period last year.
Investors also looked ahead to MEITUAN-W's earnings report due after the market close. Multiple institutions noted that the pace of food delivery subsidy rollbacks has exceeded expectations, suggesting the company may be establishing a competitive inflection point that could drive accelerated earnings recovery.
In addition, SaaS concept stocks moved sharply higher, with KINGDEE INT'L rising over 6%. Salesforce's better-than-expected earnings powerfully dismantled the "AI eats software" narrative, demonstrating that software companies can emerge as beneficiaries rather than victims of the AI wave.
The National Data Administration reported that daily token call volume in China has exceeded 140 trillion, representing a more than 1,000-fold increase from the 100 billion recorded at the start of 2024, and a more than 40% rise from the 100 trillion figure at the end of 2025. Analysts at Zhongyuan Securities noted that this dramatic surge in daily token usage indicates domestic AI applications have entered a phase of rapid growth. Model developers continue to maintain a dense cadence of model iterations, with enhanced capabilities in long-text processing, inference performance, Agent functionality, code generation, and multimodality, accelerating the deployment of AI in marketing, multimodal content creation, and e-commerce while pushing commercialization forward.
Southwest Securities believes the AI hardware segment has now entered an earnings verification phase, and application-side opportunities will gradually become a key market focus. As model capabilities improve and enterprise acceptance of AI tools rises, more commercialization opportunities are expected to emerge across office productivity, industrial, and software service sectors.
The Hong Kong Internet ETF Huabao (513770) passively tracks the CSI Hong Kong Connect Internet Index, with top holdings including major tech giants such as Alibaba-W and TENCENT, alongside various AI application companies across sectors. The top ten weights collectively account for over 80% of the index, offering significant exposure to leading names. The fund supports intraday T+0 trading with strong liquidity. Investors outside the exchange can access feeder funds (Class A: 017125, Class C: 017126).
Please note that recent market volatility may be significant, and short-term gains or losses do not predict future performance. Investors should make decisions based on their own financial circumstances and risk tolerance, paying close attention to position sizing and risk management. Data sources include Shanghai and Shenzhen stock exchanges and Wind. The companies mentioned—TENCENT, XIAOMI-W, MEITU, BILIBILI-W, MEITUAN-W, and KINGDEE INT'L—are all constituents of the CSI Hong Kong Connect Internet Index, with weights of 14.56%, 10.88%, 0.94%, 3.06%, 11.94%, and 1.85% respectively as of August 28, 2026. Institutional views are sourced from the April 28, 2026 report "AI Models See Dense Updates with Capability Gains Bringing Application Opportunities" and Southwest Securities' August 26, 2026 report "AI Hardware Enters Earnings Verification Phase; Application Side to Become Key Focus."
Fee disclosures are as follows: For subscription and redemption of fund shares, agent institutions may charge commissions of up to 0.5%, which includes fees levied by stock exchanges and registration institutions. For the feeder fund, Class A shares carry a subscription fee (front-end) of RMB 1,000 per transaction for amounts above RMB 2 million, 0.6% for amounts between RMB 1 million (inclusive) and RMB 2 million, and 1% for amounts below RMB 1 million. Redemption fees are 1.5% for holdings of less than 7 days and 0% for holdings of 7 days or more, with no sales service fee. Class C shares charge no subscription fee, with redemption fees of 1.5% for holdings under 7 days and 0% for 7 days or more, plus a sales service fee of 0.3%.
Risk disclosure: The Hong Kong Internet ETF Huabao and its feeder funds passively track the CSI Hong Kong Connect Internet Index, which has a base date of December 30, 2016, and was published on January 11, 2021. The index's returns over the past five complete years were: 27.02% in 2025, 23.04% in 2024, -24.74% in 2023, -23.01% in 2022, and -36.61% in 2021. Volatility over the same periods was 33.60% in 2025, 43.49% in 2024, 32.09% in 2023, 49.01% in 2022, and 38.72% in 2021. Index constituent composition adjusts according to index methodology, and backtested historical performance does not indicate future index returns. The index constituents shown herein are for illustrative purposes only, and individual stock descriptions do not constitute investment advice in any form, nor do they represent holdings or trading activities of any fund under the fund manager's management. The fund manager has assessed this fund's risk level as R4 (medium-high risk), suitable for aggressive investors (C4) and above. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, or any form of expression) is for reference only. Investors must bear full responsibility for their own investment decisions. Furthermore, any views, analyses, or predictions in this article do not constitute investment advice to readers of any form, and the author assumes no responsibility for any direct or indirect losses arising from the use of this content. Performance of other funds managed by the fund manager does not guarantee the performance of this fund. Past performance does not represent future results. Fund investment involves risk, and investors should invest with caution.
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