On the afternoon of May 28, Hong Kong hard tech stocks experienced a sharp pullback followed by a rapid surge. Semiconductor Manufacturing International Corporation (SMIC) rose over 5%, and Hua Hong Semiconductor surged 12%, continuing to set new post-listing highs. Driven by these two major wafer foundries, the HK Connect Information C Index climbed more than 1%, significantly outperforming the Hang Seng Tech Index. The largest and most liquid* HK Connect Information Technology ETF Hua Bao (159131) of its kind rose 2.28% intraday, with real-time turnover exceeding 2 billion yuan. Notably, funds have continuously poured in over the past two days, totaling 4.3 billion yuan.

Great Wall Securities research notes that the dual drivers of memory capacity expansion and domestic substitution are ushering in a period of high prosperity for equipment and materials, with the local capacity expansion of ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Corp. (YMTC) driving opportunities in the domestic supply chain. Shortages in the memory industry are expected to persist until 2027, and the upward trend in memory contract prices is also likely to continue, with earnings of companies in the industrial chain expected to maintain high growth.

Soochow Securities believes the crowding-out effect from AI is reshaping the supply side, creating a structural mismatch in memory supply and demand. The massive demand for AI computing power is not only driving an explosion in HBM demand but is also severely squeezing the effective supply of traditional DRAM due to its extremely high wafer consumption. Simultaneously, the transition of NAND manufacturers to higher-layer QLC production has led to a structural tightening of overall capacity. Under the dual pressures of strong AI demand pull and controlled traditional capacity expansion, the overall supply-demand tightness for memory chips may persist for several years.

Since rebounding from its low on March 31, the underlying index of the HK Connect Information Technology ETF Hua Bao (159131) — the CSI HK Connect Information Technology Composite Index — has accumulated gains of over 40%. In the same period, the Hang Seng Tech Index and the HK Connect Tech Index rose by 5.48% and 3.17% respectively, highlighting the former's sharper performance and greater elasticity.

Statistical period: March 31, 2026 to May 27, 2026. The annual historical returns for the HK Connect Information C Index from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30% respectively. Past index performance is not indicative of future results.

T+0 trading is supported! Targeting the Hong Kong stock chip supercycle, the HK Connect Information Technology ETF Hua Bao (159131) is the first of its kind in the market, the largest, and the most liquid. Its offshore feeder fund code is 026755. The underlying index is composed of "70% hardware + 30% software," heavily weighted towards Hong Kong-listed "semiconductors + electronics + computer software," covering 52 Hong Kong hard tech companies. The memory chip weighting exceeds 26%, with SMIC and Hua Hong Semiconductor together accounting for over 23% of the index weight, making it the index with the highest weighting in advanced wafer manufacturing in the market. The index components do not include large-cap internet companies like Alibaba, Tencent, or Meituan, resulting in higher sharpness and making it easier to capture the Hong Kong AI hard tech market trend.

Data sources: China Securities Index Co., Ltd., Shanghai and Shenzhen Stock Exchanges.

Note: "First in the market" refers to the HK Connect Information Technology ETF Hua Bao being the first ETF to track the CSI HK Connect Information Technology Composite Index. As of May 25, 2026, the latest on-exchange size of the HK Connect Information Technology ETF Hua Bao is 1.19 billion yuan, making it the largest among the 7 ETFs currently tracking the CSI HK Connect Information Technology Composite Index. The ETF's average daily turnover this year has been 300 million yuan. The annual historical returns of the underlying index, the CSI HK Connect Information Technology Composite Index (HKD), from 2021 to 2025 were: -9.54%, -34.47%, -0.25%, 21.58%, and 39.30% respectively. Past index performance is not indicative of future results.

Fund fee explanation: Subscription and redemption agents for the HK Connect Information Technology ETF Hua Bao may charge a commission of up to 0.5%. On-exchange trading fees are subject to the actual charges by securities firms. No sales service fee is charged.

Risk Disclosure: The HK Connect Information Technology ETF Hua Bao and its feeder fund passively track the CSI HK Connect Information Technology Composite Index. The base date of this index is November 14, 2014, and it was published on June 23, 2017. The index constituents mentioned in the material are for illustrative purposes only. Descriptions of individual stocks do not constitute any form of investment advice and do not represent the holdings or trading动向 of any fund managed by the fund manager. This product is issued and managed by Hua Bao Fund Management Co., Ltd. Selling agencies do not bear responsibility for the product's investment, redemption, and risk management. Investors should carefully read the Fund Contract, Prospectus, Fund Product Key Facts Statement, and other legal fund documents to understand the fund's risk-return characteristics and choose a product suitable for their own risk tolerance. Past fund performance does not predict its future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Fund investment involves risks! The fund manager assesses this fund's risk等级 as R4 - Medium to High Risk, suitable for Aggressive (C4) and above investors. Selling agencies (including the fund manager's direct sales机构 and other selling agencies) assess the fund's risk according to relevant laws and regulations. Investors should pay timely attention to the appropriateness opinions issued by selling agencies and base their decisions on the matching results. Appropriateness opinions from different selling agencies may not necessarily be consistent, and the fund product risk等级 evaluation results issued by fund selling agencies shall not be lower than the risk等级 evaluation result made by the fund manager. The description of the fund's risk-return characteristics in the fund contract and the fund's risk等级 may differ due to different considerations. Investors should understand the fund's risk-return situation and结合自身 investment objectives, horizon, experience, and risk tolerance to谨慎 choose fund products and bear the risks themselves. The China Securities Regulatory Commission's registration of this fund does not indicate a substantive judgment or guarantee of its investment value, market prospects, or returns. Funds carry risks; investment requires caution.