To The Moon

From its late-June peak to the July 17 low, the ChiNext Index experienced a maximum drawdown exceeding 20%. Then, on July 21, it staged a rapid afternoon rally, surging 7% in a single day. This short-term volatility is both an emotional release following overcrowded trading and a signal that the market is reassessing the long-term logic of the technology sector.

Against this backdrop, Zhongji Innolight Co.,Ltd. is set to list in Hong Kong on July 30. As of the end of June 2026, the company was simultaneously the largest constituent stock of both the ChiNext Index and the ChiNext 50 Index, making it a key entry point for observing ChiNext assets and the AI computing power supply chain.

Bull Markets Often See Sharp Declines: First, Distinguish Emotional Shocks from Trend Reversals

From late June to July 17, the ChiNext Index's decline lasted about three weeks, losing over 20% in a short period. The main causes were high congestion, coupled with external news disruptions like increased volatility in Korean stocks, Meta's sale of computing power, and delays in Kyber rack systems. This pattern is characteristic of a sharp decline after an emotional concentration.

In contrast, historical downturns that felt like a "bottomless pit" for investors were much longer-lasting. For example, the 2018 deleveraging bear market took over 170 trading days from peak to trough, while the sector rotation adjustment from 2021 to 2022 lasted over 180 trading days, with declines ranging from 34% to 55%.

Sharp declines in a bull market are often triggered by overcrowded trading, profit-taking, and external news shocks—they come quickly and go quickly. True trend reversals are typically accompanied by persistent downward revisions in earnings expectations, a clear weakening of the macroeconomic environment, and systemic tightening of liquidity.

Global investment in computing power infrastructure, data center upgrades, and high-speed interconnection demand is still advancing. The medium-to-long-term direction of the AI supply chain has not been simply invalidated by one sharp decline. The rapid rally of the ChiNext Index on July 21, accompanied by a significant volume surge in broad-based ETFs, suggests market debate is shifting from sentiment to fundamentals.

Therefore, rather than rushing to guess the market bottom, it is more prudent to assess whether the industrial logic has undergone a trend-based deterioration. The Hong Kong listing of Zhongji Innolight Co.,Ltd. conveniently provides a window to observe the fundamental base of the AI supply chain.

Zhongji Innolight's Hong Kong Listing Opens a New Window for Global Pricing

Optical modules are the high-speed interconnection link within AI computing power infrastructure. As computing clusters expand, data centers upgrade, and network transmission speeds increase, demand for high-speed optical modules like 800G and 1.6T has drawn attention. A company's ability to consistently secure orders in this process depends not only on technological R&D but also on customer certification, volume delivery, yield control, and global service capabilities.

As a global leader in optical modules, Zhongji Innolight Co.,Ltd.'s A+H listing has three main implications. First, the company gains a new financing platform to connect with international capital. Hong Kong listing proceeds can help support overseas production capacity, R&D investment, and global customer expansion, strengthening its capital power to compete in the international market.

Second, overseas investors can now participate more directly in pricing a Chinese AI hardware leader. Previously, international funds seeking to allocate to Zhongji Innolight Co.,Ltd. mainly did so indirectly via the A-share market or related offshore financial products. After the Hong Kong listing, global investors have a more direct trading and allocation channel. The IPO pricing, market performance, and trading activity of the H-shares will also serve as a benchmark for cornerstone investors like Temasek, BlackRock, and Tencent to evaluate the global competitiveness of Chinese optical communication companies.

Third, the price performance in the A and H markets will provide a new valuation reference. If the H-shares gain recognition from international capital, it may strengthen market confidence in the company's global client base, product competitiveness, and long-term profitability. Conversely, if the H-shares trade at a discount or perform weakly post-listing, it would remind investors that the Hong Kong market's valuation still comprehensively considers industry competition, capital expenditure cycles, and earnings delivery timelines.

Viewed over a longer timeframe, the fact that a company from China's AI computing power supply chain can enter the international capital market itself signifies that Chinese tech companies are being re-evaluated within the global competitive landscape. This point is more noteworthy than the short-term price action on the listing day.

How to Select ChiNext-Related ETFs?

Rather than betting on a single stock or a single trading day, a better approach is to diversify risk through index-based tools, participating in stages and controlling position sizes based on one's own investment horizon and risk tolerance.

As of June 30, Zhongji Innolight Co.,Ltd. was simultaneously the largest constituent stock of both the ChiNext Index and the ChiNext 50 Index. Its weight in the ChiNext 50 Index is 17.5%, the highest among all indices tracked by ETFs, indicating that AI computing power and high-speed interconnection have become a significant part of ChiNext assets. However, technology and growth sectors are sensitive to expectations and valuations. Volatility in overseas tech stocks, capital expenditure cycles, shifts in technological roadmaps, and industry competition can all lead to significant short-term swings. A high weight in a single leading stock can also amplify index volatility.

For investors seeking to cover the overall investment opportunities of the ChiNext board, the ChiNext ETF (159915) can be considered. According to Wind data as of July 27, this ETF has a scale exceeding RMB 60 billion and an average daily turnover of nearly RMB 5.5 billion year-to-date, both ranking first among ChiNext-related ETFs. For investors seeking more focused exposure to ChiNext leaders, the ChiNext 50 ETF (159369), which tracks the ChiNext 50 Index, is an option.

Off-exchange investors without a stock account can participate through the E Fund ChiNext ETF Linked Fund (A/C/Y: 110026/004744/022907) and the E Fund ChiNext 50 ETF Linked Fund (A/C: 026095/026096).

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