To The Moon

The market extended its rally today (November 5), with all major A-share indices closing higher. Combined turnover across the Shanghai, Shenzhen, and Beijing exchanges reached 2.14 trillion yuan, up 83.1 billion yuan from the previous session. Hong Kong stocks staged a long-awaited breakout, with the Hang Seng Tech Index surging over 5%, while the Hang Seng Index and Hang Seng China Enterprises Index both climbed more than 3%. Internet leaders led the charge, with Alibaba Group Holding Ltd (HKEX: 09988) jumping over 8% and Tencent Holdings Ltd (HKEX: 00700) rising more than 7% to secure a fifth consecutive gain. The Huabao CSI Hong Kong Stock Connect Internet ETF (HKEX: 513770) gapped up sharply, with its underlying index surging 7.19%.

Behind the dramatic rally in Hong Kong internet stocks are two key factors. First, the sector represents a global valuation depression. As of the end of October, the CSI Hong Kong Stock Connect Internet Index had a price-to-earnings ratio (TTM) of only 18.48 times, sitting at the 2.32nd percentile since the index was launched—a historical bottom. Second, sentiment toward Hong Kong stocks had reached a historical freezing point, and positive catalysts could trigger a strong rebound. On the news front, Democrats achieved a sweeping victory in the U.S. midterm elections. Democrats regained control of both the Senate and the House of Representatives, which would reverse the deregulatory path dominated by Republicans over the past two years. The policy dividend for AI infrastructure investment may face reassessment, while sectors previously suppressed such as clean energy and healthcare are expected to receive stronger legislative support.

Possibly driven by the expectation that Democrats may push to restore new energy tax incentives and increase support for energy storage and grid investment, the underlying index of the Huabao ChiNext Battery ETF (SZSE: 158078)—the first listed ETF of its kind in China—surged as much as 8.44% intraday. The underlying index of the Huabao Energy Storage Battery ETF (SZSE: 159071), which focuses on energy storage, rose as much as 7.25%. The tracked index of the Huabao ChiNext New Energy ETF (SZSE: 159076), which provides one-click exposure to the core tracks of lithium batteries, solar power, and wind power, climbed as high as 7.23%. Democrats may similarly push to expand medical insurance coverage and strengthen drug price negotiations, which could improve demand for medical services. The underlying index of the Huabao Hang Seng Hong Kong Stock Connect Innovative Drug ETF (HKEX: 520880) continued its rally with a 4.18% gain, following yesterday's 6.87% advance. The underlying index of the Huabao Hang Seng Hong Kong Stock Connect Healthcare ETF (HKEX: 159137) surged 7.71% yesterday, marking its largest single-day gain in nearly a year, and added another 2.83% today.

With Trump's Republican Party losing control of both chambers, market "ceasefire" sentiment erupted, and geopolitical risks in the Middle East are expected to ease, which would push down energy prices and alleviate inflation expectations. Precious metals concept stocks rallied, with spot gold surging nearly 5% over two days and breaking above $4,100 per ounce. The tracked index of the Huabao Non-Ferrous Metals ETF (SZSE: 159876) rose 2.19%, securing a three-day winning streak, with increased capital attention. Orient Securities warned that sentiment could reverse at any time and investors should prepare for a counterattack. Once market sentiment reaches its nadir and rebounds, investors may focus on sectors expected to see positive year-on-year net profit growth in the third quarter of 2026 and continued upward momentum, or marginal improvement in prosperity next year. These mainly include pharmaceuticals (CXO, medical devices, etc.), shipping ports, chemical fibers, automation equipment, computer equipment, cosmetics, real estate, and food and beverages.

Hong Kong Internet ETFs Surge as Alibaba and Xiaomi Jump Over 8%, Tencent Extends Winning Streak

Hong Kong stocks staged a long-awaited breakout, with the Hang Seng Tech Index rising over 5%. Internet leaders led the charge, with NetEase surging 9%, Alibaba Group Holding Ltd (HKEX: 09988) and Xiaomi Corporation (HKEX: 01810) jumping over 8%, and Tencent Holdings Ltd (HKEX: 00700) rising over 7% for a fifth consecutive gain. Meituan-W gained over 6%, and the underlying index of the Huabao CSI Hong Kong Stock Connect Internet ETF (HKEX: 513770) closed up 7.2%. In addition, Kingdee International, Kingsoft Cloud, and Mobvista posted double-digit gains, with performance-driven effects standing out. Kingdee International's third-quarter report showed that net new ARR growth in Q3 alone accelerated significantly to 46.9%, with demand for enterprise cloud migration and AI transformation continuing to be released. Programmatic advertising leader AppLovin's third-quarter results far exceeded expectations, providing a positive read-across for Mobvista.

Overall, the sector's strong performance is related to multiple positive factors both domestically and internationally. In terms of the macroeconomic environment, the U.S. midterm elections have concluded, essentially eliminating阶段性 political uncertainty. Combined with rising expectations for de-escalation of geopolitical conflicts, risk appetite in global capital markets has clearly recovered. Overnight, Chinese concept stocks surged, with the Nasdaq Golden Dragon China Index closing up 3.49% and Alibaba rising nearly 5%. Within the sector, on one hand, Hong Kong internet valuations have been extremely compressed, with risks largely released. After prolonged adjustment, marginal improvements have significant catalytic momentum for the market. Since October 2025 (as of November 4, 2026), the sector has cumulatively retreated over 46%, with a PE (TTM) of only 19.67 times, sitting at the bottom range of the 8.81st percentile over the past five years—a valuation depression among major global markets. On the other hand, AI commercialization is accelerating, combined with improved earnings expectations for some leaders, providing fundamental support for sector recovery. Tencent Holdings Ltd (HKEX: 00700) released its strongest open-source model ever—the Hunyuan Hy4 official version—achieving significant performance breakthroughs, with WorkBuddy's domestic and international versions simultaneously integrating Hy4 on the same day. Catalysts are密集, including Apple's AI Siri in China deeply integrating Alibaba's Qianwen and Kling AI's post-investment valuation of $17.9 billion surpassing Kuaishou. Analysts believe that future performance may depend more on earnings improvement and valuation alignment. Internet leaders will密集 disclose third-quarter results starting from mid-to-late November, and institutions expect AI-related investments to reach a commercialization inflection point.

In terms of market logic, the emergence of AI Agents means the AI rally is spreading from hardware to software and application segments. Hong Kong internet companies have a full-chain industrial layout from large model training and cloud service support to various intelligent agent applications. Massive user scenarios and data resources determine that this sector will become the core carrier for future AI commercialization. Two main lines may deserve close attention: first, the earnings delivery line, focusing on improvements in revenue, gross profit, and cash flow; second, the technology catalyst and new application line, including world models, personal Agents, etc., with focus on product changes, business model formation, and expectation gaps. The Huabao CSI Hong Kong Stock Connect Internet ETF (HKEX: 513770) passively tracks the CSI Hong Kong Stock Connect Internet Index, heavily weighted in internet leaders. Its top two holdings, Tencent Holdings Ltd (HKEX: 00700) and Alibaba Group Holding Ltd (HKEX: 09988), together account for over 30% weight, with the top ten constituent stocks totaling over 80%, demonstrating significant leader advantages. It supports intraday T+0 trading with good liquidity. Off-exchange investors may consider feeder funds (Class A 017125, Class C 017126).

ChiNext Battery ETF Extends Aggressive Rally, Underlying Index Surges Over 8% Intraday; Huabao Fund: U.S. Midterms May Strengthen New Energy as the "Chosen" Sector

The battery sector's heat continues to soar. The underlying index of the Huabao ChiNext Battery ETF (SZSE: 158078)—the first listed ETF of its kind in China—surged over 8% intraday before paring gains in afternoon trading to close up 4.86%, strongly breaking above the 20-day moving average. The underlying index of the Huabao Energy Storage Battery ETF (SZSE: 159071), which focuses on energy storage, also closed up 4.2%. Pisen Energy and Chaopinsan led with gains exceeding 11%, while Haike Xinyuan and Tianhua New Energy rose over 8%, Xinzhoubang gained over 7%, and EVE Energy and Senior Technology Material rose over 5%.

On the news front, U.S. midterm election voting has concluded. Preliminary statistics from major institutions and mainstream media show that Democrats have regained control of both the Senate and the House of Representatives, with President Trump's Republican Party suffering a crushing defeat. Democrats have historically prioritized electric vehicles, energy storage, and clean energy, and the market may begin to bet on marginal improvements in new energy policy. Huabao Fund's latest assessment points out that after Democrats take both chambers, Trump's ability to advance the repeal of clean energy rules, funding, and tax credits will be constrained to some extent, and the largest external market has given expectations for demand recovery: 1) Policy "stopping the bleeding" and regulatory stability: the biggest benefit is not a surge in demand, but that expectations stop deteriorating. Clean energy tax credits, environmental appropriations, and grid and energy storage support become harder to cut further. The probability of further relaxation or repeal of emission standards, EV subsidy rules, grid interconnection, and energy storage safety standards declines, which is favorable for project financing expectations. 2) U.S. solar and storage demand expectations repair: Republicans, whose core direction is fossil energy, losing both chambers is sentiment-positive for the U.S. demand chain including modules, energy storage systems, inverters, and tracking brackets. Among A-shares, elasticity may lean more toward inverter/energy storage leaders, followed by battery and solar manufacturing. 3) Solar/storage tax credit repair expectations: Democrats and some Republican lawmakers have common ground on "lowering energy costs," and discussions about extending solar tax credits and stabilizing energy storage project rules are heating up.

How should investors view the market outlook? Huabao Fund points out that stabilizing the market's stop-loss sentiment requires finding the greatest common denominator of bullish and bearish forces—the optimal solution for short-to-medium-term balanced gaming. Based on market performance, fundamentals, and capital structure, the U.S. midterms may constitute a direct factor in strengthening new energy as the "chosen" sector. As a core pricing anchor for A-shares and a sector dominated by third-generation external demand in manufacturing, the core allocation rhythm for new energy requires attention to the elevation of systematic market valuations while also monitoring external factors—taking a long-term view. For investing in the battery industry chain, investors may consider the following two ETF products: Huabao ChiNext Battery ETF (SZSE: 158078): First listed in China! Its underlying index—the ChiNext Battery Index—gathers ChiNext battery leaders, with the top ten weights accounting for nearly 70% and "solid-state battery" exposure exceeding 82%. As a 20CM product, it has stronger offensive characteristics. Huabao Energy Storage Battery ETF (SZSE: 159071): Focused on energy storage with high "storage content"! Its underlying index—the Guozheng Energy Storage Battery Index—has over 80% allocated to power equipment, covering upstream and downstream related industries in new energy storage batteries. The top ten weights together exceed 60%.

Another Blockbuster BD Deal Worth $7 Billion! Hong Kong Stock Connect Innovative Drug Sector Surges, Multiple Stocks Jump Over 10%, BeiGene Hits 5-Year High, 520880 Underlying Index Extends Gains by 4.42%

The Hong Kong innovative drug chain continues its strong rally! The Huabao Hang Seng Hong Kong Stock Connect Innovative Drug ETF (HKEX: 520880)—with 100% innovative drug R&D targets—broke above its 20-day moving average, with its underlying index adding another 4.42% after surging 6.87% the previous day. The Huabao Hang Seng Hong Kong Stock Connect Healthcare ETF (HKEX: 159137), with high CXO exposure, recovered all moving averages, with its underlying index continuing to rise 2.83%. "520880" covers 50 innovative drug R&D companies listed in Hong Kong. Today, 48 stocks closed higher, with Yinnuo Pharmaceutical-B, Baoji Pharmaceutical-B, and Jinfang Pharmaceutical-B jumping over 10%. Weighted leaders collectively extended gains, with BeiGene closing up 7.34% to a 5-year high, Sino Biopharmaceutical surging 9.22%, and Akeso rising 6.48%.

After market close on November 4, Sino Biopharmaceutical and Boehringer Ingelheim reached a cooperation agreement covering six preclinical ADC and TCE projects, with a potential total value of up to $7 billion, including $358 million in upfront payments. This is its third outbound licensing deal this year, with the three deals totaling a potential $10.43 billion. At the industry level, the National Development and Reform Commission disclosed on November 3 that in the first three quarters of this year, innovative drug outbound technology licensing reached approximately $130 billion, already approaching the full-year level of 2025. U.S. midterm election positive expectations continue to ferment. If Democrats win congressional dominance, U.S. innovative drugs are expected to gradually shift from "price control suppression" to a dual driver of "volume expansion + pricing expectation repair." Upward revisions to U.S. market revenue and profit expectations are expected to further support MNCs' BD payment capacity and the valuation of Chinese innovative drug overseas assets. From a market perspective, with the U.S. midterm elections concluded, the liquidity environment for non-U.S. markets is expected to improve, and pressure on the denominator side for Hong Kong stocks may ease. Hong Kong Stock Connect innovative drugs are expected to benefit from improved liquidity. At the same time, with geopolitical premiums cooling and deficit expansion expectations converging, the market-priced interest rate center is declining, and innovative drugs, as rate-sensitive assets, offer attractive elasticity. Looking ahead, there are still many catalysts, with key nodes including the announcement of the new medical insurance and commercial insurance dual catalog in November, leaders' third-quarter reports, and key approval progress for drugs such as ivonescimab.

Zhang Fang, fund manager of the Huabao Hang Seng Hong Kong Stock Connect Healthcare ETF (HKEX: 159137), latest noted that focus should remain on innovative drugs and CXO directions. For full-chain innovative drug exposure, consider the T+0 trading tool: Huabao Hang Seng Hong Kong Stock Connect Innovative Drug ETF (HKEX: 520880): Its underlying index has 100% allocation to innovative drug R&D companies, with 70% of positions betting on innovative drug R&D leaders. Off-exchange feeder fund: 025221. Huabao Hang Seng Hong Kong Stock Connect Healthcare ETF (HKEX: 159137): Its underlying index is heavily weighted in the innovative drug industry chain, with approximately 50% CXO + 20% innovative drugs, of which the WuXi series accounts for over 40%. Off-exchange feeder fund: 026922.

Note ①: "First listed in China" refers to the Huabao ChiNext Battery ETF (SZSE: 158078) being the first listed ETF in the entire market tracking the ChiNext Battery Index. The product has a daily price limit of 20%; be aware of high volatility risk. The "solid-state battery content" statistical scope in this article refers to the common constituent weight of the ChiNext Battery Index and the Solid-State Battery Index (886032.TI), with data as of September 30, 2026. Note ②: Fee rates are detailed in each fund's legal documents. Data sourced from public information including the Shanghai, Hong Kong, and Shenzhen stock exchanges, as of November 5, 2026. Reminder: Recent market volatility may be significant, and short-term gains or losses do not predict future performance. Investors should invest rationally based on their own financial conditions and risk tolerance, paying close attention to position and risk management. *Institutional views reference source: Orient Securities' November 1 report titled "Liquidity Concerns Dominate, Sentiment May Reverse at Any Time, Prepare for a Counterattack." According to the fund manager's assessment, the Huabao Energy Storage Battery ETF and Huabao Non-Ferrous Metals ETF are rated R3-Medium Risk, suitable for balanced investors (C3) and above. The Huabao CSI Hong Kong Stock Connect Internet ETF, Huabao Hang Seng Hong Kong Stock Connect Innovative Drug ETF, Huabao Hang Seng Hong Kong Stock Connect Healthcare ETF, Huabao ChiNext New Energy ETF, and Huabao ChiNext Battery ETF are rated R4-Medium-High Risk, suitable for aggressive investors (C4) and above. Please refer to the sales institution for suitability matching opinions. Risk disclosure: The Huabao CSI Hong Kong Stock Connect Internet ETF and its feeder funds passively track the CSI Hong Kong Stock Connect Internet Index, which has a base date of December 30, 2016, and was published on January 11, 2021. The Huabao Hang Seng Hong Kong Stock Connect Innovative Drug ETF passively tracks the Hang Seng Hong Kong Stock Connect Innovative Drug Select Index, which has a base date of December 31, 2020, and was published on July 17, 2023. The Huabao Hang Seng Hong Kong Stock Connect Healthcare ETF passively tracks the CSI Hong Kong Stock Connect Healthcare Theme Index, which has a base date of December 31, 2018, and was published on July 21, 2022. The Huabao ChiNext Battery ETF passively tracks the Guozheng ChiNext Battery Index, which has a base date of June 29, 2018, and was published on June 27, 2025. The Huabao Energy Storage Battery ETF passively tracks the Guozheng Energy Storage Battery Index, which has a base date of December 31, 2014, and was published on February 16, 2015. The Huabao ChiNext New Energy ETF passively tracks the ChiNext New Energy Index, which has a base date of December 29, 2017, and was published on September 29, 2022. The Huabao Non-Ferrous Metals ETF passively tracks the CSI Non-Ferrous Metals Index, which has a base date of December 31, 2013, and was published on July 13, 2015. The constituent stocks of the indices are adjusted in a timely manner according to the index compilation rules, and their back-tested historical performance does not predict future index performance. Individual stocks mentioned in this article are only objectively listed as index constituents and do not constitute any individual stock recommendation, nor do they represent the fund manager or fund investment direction. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only, and investors must be responsible for their own investment decisions. Additionally, any views, analyses, and forecasts in this article do not constitute any form of investment advice to readers, and Huabao Fund shall not bear any direct or indirect liability arising from the use of the content of this article. Investors should carefully read the fund legal documents such as the "Fund Contract," "Prospectus," and "Fund Product Information Summary" to understand the risk-return characteristics of the fund and choose products suitable for their own risk tolerance. Past performance of a fund does not predict its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. Sales institutions (including the fund manager's direct sales institution and other sales institutions) conduct risk assessments of the above funds in accordance with relevant laws and regulations. Investors should promptly pay attention to the suitability opinions issued by the fund manager. The suitability opinions of different sales institutions may not necessarily be consistent, and the fund product risk rating evaluation results issued by fund sales institutions shall not be lower than the risk rating evaluation results made by the fund manager. There are differences between the fund risk-return characteristics in the fund contract and the fund risk rating due to different consideration factors. Investors should understand the risk-return situation of the fund and prudently select fund products based on their own investment objectives, duration, investment experience, and risk tolerance, and bear risks themselves. The registration of the above funds by the China Securities Regulatory Commission does not indicate that it makes any substantive judgment or guarantee on the investment value, market prospects, and returns of the funds. Fund investment involves risks.