Hong Kong's hard technology sector continued its strong upward momentum in early trading today (July 10). Kingboard Laminates Holdings Ltd surged over 7%, Hua Hong Semiconductor Ltd rose more than 6%, while Kingboard Holdings Ltd, Montage Technology Co., Ltd., and Lenovo Group Ltd all gained over 5%. Following two consecutive days of significant increases, the largest and most liquid* Hong Kong Stock Connect Information Technology ETF, Huabao (159131), gapped up at the open and surged another 3%, currently trading up 2.92% with a real-time turnover of 3.59 billion yuan.

On the news front, an index constituent, Gigadevice Semiconductor Inc. (GIGADEVICE), announced its preliminary results for the first half of 2026 after market close on July 9. Revenue is estimated at approximately 11.5 billion yuan, representing a 177% year-on-year increase. Net profit attributable to shareholders is estimated to be around 6.9 billion yuan, skyrocketing by 1099% year-on-year. Adjusted net profit is estimated at about 4.85 billion yuan, up 791% year-on-year.

A Shift in Market Dynamics

A Datong Securities research report points out that while the market is far from entering a phase of systemic risk release, it has clearly moved past the "blind buying of AI hardware" stage of rapid growth. The market is now transitioning into a verification period focused on "careful selection to see who can truly profit from AI." Subsequent market movements will depend more heavily on the actual performance delivery of related companies. Divergence and rotation between sectors may intensify, with continued optimism for the core AI computing hardware direction where earnings may exceed expectations.

Exposure to Pure-Play Hard Tech

This ETF offers a rare "pure-blood" hard technology play in the Hong Kong market and supports T+0 trading. As the first of its kind in the market, the largest and most liquid Hong Kong Stock Connect Information Technology ETF, Huabao (159131) (with its feeder fund code 026755), tracks an underlying index composed of "80% hardware + 20% software." It is heavily weighted towards Hong Kong-listed "semiconductor + electronics + computer software" stocks, covering 60 hard tech companies. Within the index, the combined weight of the two wafer foundry giants, SMIC and Hua Hong Semiconductor Ltd, exceeds 26%. The leading domestic AI PC manufacturer, Lenovo Group Ltd, has a weight exceeding 10%, while the combined weight of PCB leaders Kingboard Holdings Ltd and Kingboard Laminates Holdings Ltd is over 11%. These weightings are the highest among all market indices with linked products. Furthermore, the index recently included several new Hong Kong hard tech entrants on June 15, such as Zhipu AI, Biren Technology, and Shenghong Technology. The index excludes large-cap internet enterprises like Alibaba, Tencent, and Meituan, offering a sharper focus and making it more effective for capturing the AI hard tech trend in Hong Kong.

*Note: "The first in the market" refers to Huabao's Hong Kong Stock Connect Information Technology ETF being the first ETF to track the CSI Hong Kong Stock Connect Information Technology Composite Index. As of June 30, 2026, the latest on-exchange size of this ETF was 19.79 billion yuan, making it the largest among the 8 ETFs tracking the same index. Its year-to-date average daily turnover is 6.89 billion yuan, the highest among those 8 ETFs. The historical annual returns of the underlying index, the CSI Hong Kong Stock Connect Information Technology Composite Index (HKD), for 2021-2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30% respectively. Its annualized volatility for those years was: 4.13%, 4.63%, 4.00%, 5.49%, and 5.45% respectively. Past index performance is not indicative of future results. Recent market volatility may be significant, and short-term price movements do not predict future performance. Fund investments may incur losses. Investors must make rational investment decisions based on their own financial situation and risk tolerance, paying high attention to position sizing and risk management.

A golden cross signal has formed on the MACD indicator, and these stocks are performing well.