On May 26th, the Hong Kong internet sector experienced a V-shaped recovery. The Hong Kong Internet ETF Huabao (513770), a core tool for investing in Hong Kong AI stocks, saw its intraday price fall by up to 2.58%, touching a new low for the current correction cycle, before rebounding from the lows to briefly turn positive. It is currently down 0.26%. Xiaomi Corporation-W and Kuaishou-W rose over 1%, while Alibaba-W gained 0.7%.

Data shows that since the correction began on October 3rd, 2025, the CSI Hong Kong Stock Connect Internet Index has fallen by 37.53% cumulatively. The index's latest P/E ratio (TTM) is only 19.47 times, placing it at the 3.94th percentile over the past decade, indicating it is at a historically low level with high safety margins and attractive valuation.

On the news front, on May 25th, Alibaba's Damo Academy Xuantie team officially announced that its 9-series high-performance processors have fully completed adaptation for the Android 16 operating system. They have also released the "Xuantie Android Platform" to strategic clients. As the world's first RVA23-compatible RISC-V processor to successfully run the latest version of Android, the Xuantie 9 represents a milestone breakthrough, signifying that RISC-V has formally entered the stage of specification compatibility and productized delivery within the Android ecosystem.

CMSC pointed out that the AI industry trend remains clear. Capital expenditures, revenue guidance, and commercialization progress from leading companies like Alibaba and Tencent provide crucial valuation support for the tech sector. Hong Kong internet platforms possess advantages in user access, data accumulation, cloud services, payment ecosystems, and enterprise client bases. If AI can subsequently generate clearer revenue contributions in scenarios such as advertising, e-commerce, gaming, office software, cloud services, and enterprise services, the Hong Kong AI investment theme is expected to gradually shift from infrastructure mapping to profit realization at the application level.

Huatai Securities noted that event-driven shocks create short-term rebound opportunities. Short-term factors influencing the Hong Kong market include the hawkish tone of the new Federal Reserve Chair's inaugural speech, tightening overseas investment regulations, and renewed geopolitical tensions in the Middle East over the weekend, primarily impacting sentiment and driven by events. Looking ahead, the more important focal points for the third quarter are catalysts for recovery in Hong Kong stocks' profitability (recovery in major consumption) and valuation (progress in major companies' AI development). From a current short-term perspective, following the previous adjustment, market sentiment is nearing panic levels, downside risks have been somewhat released, and the attractiveness of allocation has increased.

Focus is on the value re-rating of Hong Kong internet leaders under the AI transformation. The Hong Kong Internet ETF Huabao (513770) and its feeder funds (Class A 017125; Class C 017126) passively track the CSI Hong Kong Stock Connect Internet Index. Its top ten holdings aggregate tech giants like Alibaba-W and Tencent Holdings, along with AI application companies across various sectors, showcasing significant leading advantages. It offers intraday T+0 trading with good liquidity.

Interested in Hong Kong tech but hoping to reduce volatility? Investors may also consider the market's first product of its kind—the Hong Kong Large-Cap 30 ETF Huabao (520560). It employs a "Tech + Dividend" barbell strategy, with its major holdings including high-volatility tech stocks like Alibaba, as well as stable, high-dividend stocks from sectors like banking and insurance, making it an ideal long-term core holding tool for Hong Kong market exposure.

Note: Recent market volatility may be significant. Short-term gains or losses do not predict future performance. Investors must make rational investment decisions based on their own financial situation and risk tolerance, paying high attention to position sizing and risk management.

ETF Fee-Related Information: When subscribing for or redeeming fund shares, subscription/redemption agents may charge a commission of up to 0.5%, which includes relevant fees charged by stock exchanges, registration institutions, etc. Feeder Fund Fee-Related Information: For the Huabao CSI Hong Kong Stock Connect Internet ETF Feeder Fund (Class A), the subscription fee (front-end load) is 1% for amounts below 1 million RMB, 0.6% for amounts between 1 million (inclusive) and 2 million RMB, and a flat fee of 1,000 RMB per transaction for amounts of 2 million RMB and above. The redemption fee is 1.5% for holdings under 7 days and 0% for holdings of 7 days (inclusive) or more. No sales service fee is charged. The Huabao CSI Hong Kong Stock Connect Internet ETF Feeder Fund (Class C) charges no subscription fee. The redemption fee is 1.5% for holdings under 7 days and 0% for holdings of 7 days (inclusive) or more. The sales service fee is 0.3%.

Risk Disclosure: The Hong Kong Internet ETF passively tracks the CSI Hong Kong Stock Connect Internet Index. The base date for this index is December 30, 2016, and it was published on January 11, 2021. The index constituents are adjusted according to its compilation rules. The index constituents mentioned are for illustrative purposes only; descriptions of individual stocks do not constitute any form of investment advice nor represent the holdings or trading动向 of any fund managed by the manager. The fund manager assesses this fund's risk等级 as R4 - Medium to High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, any form of表述, etc.) is for reference only. Investors are responsible for any independent investment decisions. Furthermore, any views, analysis, or forecasts herein do not constitute investment advice of any kind to readers, nor is there any liability for direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not guarantee this fund's performance. Past fund performance does not indicate future results. Fund investment carries risks; caution is advised when investing in funds.