Significant policy tailwinds appear to be driving a strong rally in technology-focused exchange-traded funds today. The HUABAO SHANGHAI SCIENCE AND TECHNOLOGY INNOVATION BOARD ARTIFICIAL INTELLIGENCE TRADING OPEN ENDED INDEX SEC (ETF: 589520), which concentrates on China's domestic AI supply chain, surged rapidly, with its intraday price climbing over 3% and breaching its 20-day moving average. This marks a potential fourth consecutive day of gains from recent lows.
Among its constituent stocks, semiconductor leaders led the charge. VeriSilicon Microelectronics and Fudan Microelectronics Group rose more than 4%, while Hygon Information Technology and Cambricon Technologies gained over 2%. Software development leaders like Transsion and Kingsoft Office also advanced.
Policy Catalyst for AI Listings
The catalyst stems from a major regulatory announcement. On June 17, the Chairman of the China Securities Regulatory Commission (CSRC) stated at the 2026 Lujiazui Forum that reforms for the STAR and ChiNext boards would be deepened. For the STAR Board, two key reform measures will be expedited, one of which involves expanding the application of its fifth set of listing criteria to include the artificial intelligence sector. This move is designed to actively support high-quality large-scale AI model companies in going public.
On the same day, the Shanghai Stock Exchange released specific guidelines to facilitate the use of the fifth set of STAR Board listing standards for AI large model enterprises. This is intended to better support promising AI companies that have not yet generated significant revenue, thereby accelerating AI innovation and development. Market analysis suggests this provides greater regulatory certainty for companies like KNOWLEDGE ATLAS and MiniMax, which are reportedly preparing for domestic listings.
Domestic Demand and Industry Outlook
Adding to the sector's momentum, reports indicate ByteDance is increasing its procurement of domestic chips, highlighting a race among major internet firms to build computing power infrastructure. Analysts point out that domestic computing chip companies are entering a critical period for earnings realization. The continuous iteration of AI models, the large-scale construction of intelligent computing centers, and the widespread adoption of edge AI scenarios are collectively driving up domestic demand for AI computing power. This trend benefits domestic chip, CPU, and ODM manufacturers.
Further analysis suggests the AI industry is still in its early stages, with opportunities outweighing challenges. The emergence of new models and paradigms, such as video generation models, world models, and physical AI, continues at a rapid pace, with technological innovation expected to keep shortening model iteration cycles. Additionally, the performance gap between domestic and overseas AI models is narrowing. Domestic cloud service providers have more room to increase capital expenditures compared to their international counterparts. As the ecosystem for domestic models and chips matures, the domestic computing power sector is poised for significant growth.
Focus on Domestic AI Leadership
The HUABAO SHANGHAI SCIENCE AND TECHNOLOGY INNOVATION BOARD ARTIFICIAL INTELLIGENCE TRADING OPEN ENDED INDEX SEC (ETF: 589520) and its feeder funds provide targeted exposure to China's homegrown AI industry chain. Its portfolio includes leading domestic GPU manufacturers like Cambricon Technologies, top ASIC designers such as VeriSilicon Microelectronics, and prominent AI application firms like Kingsoft Office. Semiconductor stocks account for nearly half of the ETF's weight, offering strong growth potential, while software companies make up over 30%, positioning it to benefit from potential catch-up rallies in AI applications. The ETF is also a margin trading and securities lending instrument, serving as an efficient tool for gaining exposure to domestic computing power.