On August 20, Hong Kong-listed hard tech stocks staged a broad recovery, with 41 of the 67 constituent stocks in the benchmark index tracked by the Huabao HK Stock Connect Information Technology ETF (159131) closing in positive territory. Hizhi Technology Group and Xunfei Healthcare Technology led the gains with increases exceeding 10%, followed by AsiaInfo Technologies up over 8%, while Kingsoft Cloud, Kingdee International, and Meinfu each climbed more than 7%. Multiple other stocks, including SG Micro and Novero, advanced by over 6%.

On the news front, China's two major wafer foundries—Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor—are experiencing severe capacity constraints. During their latest earnings calls last week, SMIC and Hua Hong reported capacity utilization rates of 93.7% and 102.8%, respectively, underscoring the extreme tightness in their production capacity. Reports indicate that as demand for mature-node chips supporting AI processors continues to exceed expectations, SMIC is considering additional equipment investments at its existing wafer fabs. Meanwhile, Hua Hong is advancing multiple capacity-related projects, including the Wuxi Fab 9B initiative and the acquisition of HLMC's Fab 5.

According to reports, the Fab 9B project entails a total planned investment of 3.8 billion yuan and is slated for completion by January 2027. The facility is designed to establish a 12-inch specialty process production line with a monthly capacity of 55,000 wafers. Soochow Securities noted that overseas equipment leaders are maintaining relatively stable capacity expansion, with new supply release cycles extending over a longer horizon. Major overseas equipment manufacturers have largely established mature global production footprints, and their latest expansion rounds predominantly involve expanding existing bases, constructing new cleanrooms, or adding new plants. These projects typically require 2-3 years for construction and capacity ramp-up, leaving limited short-term supply elasticity—a favorable environment for domestic semiconductor equipment makers to accelerate market share gains.

Hong Kong's scarce "pure-play" hard tech exposure! Supporting T+0 trading, the Huabao HK Stock Connect Information Technology ETF (159131) tracks the CSI HK Stock Connect Information Technology Index, which is composed of approximately 80% hardware and 20% software. The index heavily weights Hong Kong-listed semiconductor, electronics, and computer software companies, encompassing 67 hard tech firms, including the "wafer foundry duo" of SMIC and Hua Hong, "domestic AI PC leader" Lenovo Group, and the "domestic large model duo" Zhipu and Minimax. Notably, on August 17, the index underwent a rebalance that added Luxshare Precision, Sunshine Global, Minimax, Nexchip, SG Micro, Anker Innovations, and other hard tech sub-sector leaders. The index excludes large-cap internet companies such as Alibaba, Tencent, and Meituan, making it more targeted at capturing the AI hard tech trend in Hong Kong. Additionally, investors without securities accounts can access the market through the off-market feeder fund (026755) for one-stop allocation to Hong Kong hard tech stocks.

Recent market volatility may be elevated, and short-term gains or losses do not predict future performance. Fund investments may incur losses. Investors are urged to invest rationally based on their own capital positions and risk tolerance, with close attention to position sizing and risk management.

Data sources include the China Securities Index Company and Shanghai/Shenzhen stock exchanges. Reference institutional opinion comes from Soochow Securities dated August 19, 2026, titled "Semiconductor Equipment: Overseas Suppliers' Supply Expansion Remains Stable, Domestic Equipment Poised to Accelerate Share Gains."

Regarding ETF-related fee disclosures: When subscribing or redeeming fund shares, authorized agents may charge commissions at a rate not exceeding 0.5%. On-exchange trading fees are subject to actual charges by securities firms, and no sales service fee is levied. For the Huabao CSI HK Stock Connect Information Technology ETF feeder fund, subscription fees are 0.30% for amounts below 1 million yuan, 0.20% for 1 million to 2 million yuan, and 1,000 yuan per transaction for amounts of 2 million yuan or above. Redemption fees for retail investors are 1.50% within 7 days and 0.00% for 7 days or longer. For institutional investors, redemption fees are 1.50% within 7 days, 1.00% from 7 to 30 days, 0.50% from 30 to 180 days, and 0.00% for 180 days or longer; no sales service fee applies.

Individual stock disclosures: Index constituents shown here are for illustrative purposes only. Any mention of specific stocks does not constitute investment advice of any form, nor does it represent the holdings or trading activity of any fund under the manager's purview. As of August 17, 2026, the index constituents and their weights are as follows: Lenovo Group 16.625%, SMIC 15.178%, Xiaomi-W 13.851%, Hua Hong 7.598%, ASMPT 4.227%, SenseTime-W 3.575%, Sunny Optical 3.125%, Kingboard Laminates 2.755%, AAC Technologies 2.438%, Kingboard Holdings 2.358%, UBTECH Robotics 2.222%, Kingsoft 1.998%, Kingdee International 1.956%, BYD Electronic 1.507%, Victory Giant 1.37%, Zhipu 1.204%, Legend Holdings 1.022%, Luxshare Precision 1.009%, Meitu 0.999%, Montage Technology 0.978%, Kingsoft Cloud 0.945%, FIT HON TENG 0.831%, GigaDevice 0.765%, Fanshi Intelligent 0.731%, Chinasoft International 0.663%, VTECH Holdings 0.642%, GaoWei Electronics 0.552%, Fudan Microelectronics 0.544%, TravelSky Technology 0.541%, Meinfu 0.519%, Iluvatar CoreX 0.492%, Fubao Group 0.425%, Sunshine Global 0.425%, FIH Mobile 0.398%, Lens Technology 0.393%, JF Wealth Holdings 0.368%, Nexchip 0.346%, Innoscience 0.334%, Biren Technology 0.329%, Huaqin Technology 0.306%, SG Micro 0.272%, Lingyi iTech 0.262%, Anker Innovations 0.248%, Minimax-W 0.242%, Guanghe Technology 0.238%, Q Technology 0.232%, SICC 0.224%, Yidu Tech 0.219%, Will Semiconductor 0.169%, AsiaInfo Technologies 0.147%, Novero 0.144%, DuoDuo Points 0.13%, Fortior 0.126%, JD Industrial 0.122%, 51 World 0.1%, Ming Yuan Cloud 0.086%, DEEP 0.077%, Wolong Electric 0.073%, Longcheer 0.07%, Hizhi Technology Group 0.069%, Nations Technologies 0.063%, Nanjing Panda Electronics 0.057%, Jushuitan 0.038%, Minglue Technology-W 0.02%, Xunfei Healthcare Technology 0.017%, Unisound 0.009%, Jiankang Zhilu 0.002%.

Risk warnings: The Huabao HK Stock Connect Information Technology ETF passively tracks the CSI HK Stock Connect Information Technology Composite Index, which has a base date of November 14, 2014, and was published on June 23, 2017. Index constituent composition is adjusted periodically according to index methodology, and back-tested historical performance does not predict future index returns. The annual historical returns of the CSI HK Stock Connect Information Technology Composite Index (HKD) for 2021-2025 were -9.54%, -34.47%, -0.25%, 21.58%, and 39.30%, respectively; annual volatility for the same period was 4.13%, 4.63%, 4.00%, 5.49%, and 5.45%. Past index performance does not guarantee future results. According to the fund manager's assessment, the Huabao HK Stock Connect Information Technology ETF carries a risk rating of R4 (medium-high risk), suitable for aggressive (C4) and above investors; suitability matching opinions are subject to sales institution confirmation. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are solely responsible for their own investment decisions. Furthermore, any views, analyses, or forecasts herein do not constitute investment advice to readers of any form, and no liability is assumed for direct or indirect losses arising from the use of this content. Fund investments carry risks; past performance of a fund does not represent its future performance, and the performance of other funds managed by the same manager does not constitute a guarantee of fund performance. Investors should invest cautiously. MACD golden cross signals have formed—these stocks are showing strong momentum!