On August 18, Hong Kong stocks opened higher in early trading, with Hong Kong's tech duo - technology/internet and innovative pharmaceuticals - once again strengthening together. As of press time, the rising force in innovative pharmaceuticals - Hong Kong Stock Connect Innovative Pharma ETF (520880) - gained over 2% in intraday trading; the Hong Kong Internet ETF (513770), which holds heavy positions in leading Hong Kong internet stocks, rose 1.54% intraday.

ASCENTAGE PHARMA GROUP-B once surged as much as 9%, hitting a record high. On the news front, the company's self-developed Lixitinib for treating intermediate-to-high-risk MDS Phase III clinical study received approval from the US FDA and European EMA. Additionally, heavyweight stocks strengthened collectively, with Simcere Pharmaceutical rising nearly 5%, Innovent Biologics up over 4%, and Zai Lab gaining over 3%.

Leading technology stocks continued their active performance, with Meituan-W and Alibaba-W rising over 1%, followed by Xiaomi Group-W and Bilibili-W.

Zhongtai Securities pointed out that the Hong Kong stock market is expected to continue benefiting from the acceleration of AI commercialization and sustained southbound capital inflows, with current Hong Kong stock valuation repair showing clear signs. AI technology and new consumption sectors have significant growth potential, and southbound capital's marginal pricing power for Hong Kong stocks is strengthening, particularly in a low interest rate environment, which will attract more capital allocation to Hong Kong stocks. In the medium to long term, Hong Kong stocks' valuation advantages and industrial transformation and upgrade trends remain promising, with technology and consumption sectors expected to continue rising supported by both policy and capital.

Haitong International noted that looking ahead to the second half of the year, Hong Kong stocks' bull run continues upward. Although Hong Kong stocks have performed weakly since late June, with Fed rate cuts potentially approaching, the sustained pressure on the Hong Kong dollar exchange rate may be reversed, and the exchange rate's suppressive effect on Hong Kong stocks will also weaken. Drawing from historical periods when Hong Kong stocks outperformed, this round of strong Hong Kong stock performance stems from Hong Kong assets being more scarce, attracting continuous inflows of incremental capital. Hong Kong's technology and consumer assets are more correlated with current AI applications, new consumption and other industrial trends, with better fundamentals and still offering scarcity compared to A-shares, expected to continue attracting southbound capital inflows. With AI applications accelerating deployment, Hong Kong technology stocks that fully benefit from the AI cycle are the main theme.

The Hong Kong Internet ETF (513770) and its feeder funds (Class A 017125; Class C 017126) passively track the CSI Hong Kong Stock Connect Internet Index, becoming core Hong Kong AI targets through heavy positions in leading Hong Kong internet stocks. Data shows that from the beginning of the year to the end of July, the CSI Hong Kong Stock Connect Internet Index accumulated gains of over 35%, significantly outperforming the Hang Seng Tech Index during the same period, showing outstanding upside elasticity.

Note: The CSI Hong Kong Stock Connect Internet Index's gains/losses in the past 5 complete years were: 2020, 109.31%; 2021, -36.61%; 2022, -23.01%; 2023, -24.74%; 2024, 23.04%. Index constituent adjustments are made according to index compilation rules, and historical backtesting performance does not predict future index performance.

According to the fund's second-quarter report, as of the end of Q2, the Hong Kong Internet ETF (513770)'s top 4 holdings were Xiaomi Group-W, Tencent Holdings, Alibaba-W, and Meituan-W, with a combined weight of 54.74%, while the top 10 holdings had a combined weight exceeding 72%.

As of the end of July, the Hong Kong Internet ETF (513770) had fund assets exceeding 7.4 billion yuan, with average daily trading volume of 593 million yuan year-to-date, supporting intraday T+0 trading without QDII quota restrictions, offering excellent liquidity!

The Hong Kong Stock Connect Innovative Pharma ETF (520880) passively tracks the Hang Seng Hong Kong Stock Connect Innovative Pharma Select Index, being the first ETF in the market to track this index. The Hang Seng Hong Kong Stock Connect Innovative Pharma Select Index precisely focuses on the innovative pharmaceutical industry chain, with constituents mainly being innovative drug R&D companies, high concentration of heavyweight stocks, and prominent leading advantages.

Note: The above individual stocks are all among the top 15 weighted stocks in the Hang Seng Hong Kong Stock Connect Innovative Pharma Select Index, shown for display purposes only. Individual stock descriptions do not constitute any form of investment advice, nor represent holding information and trading movements of any funds under the manager.

Year-to-date through July 31, the Hang Seng Hong Kong Stock Connect Innovative Pharma Select Index accumulated gains of 101.58%, leading various innovative pharmaceutical indices, outperforming the Hang Seng Index (23.50%) and Hang Seng Tech Index (22.05%) by 78.08 and 79.53 percentage points respectively, showing outstanding excess performance.

The Hang Seng Hong Kong Stock Connect Innovative Pharma Select Index has a base date of 2020.12.31 and was published on 2023.7.17. Since publication, the index's complete annual gains/losses were: 2021, -22.72%; 2022, -16.48%; 2023, -19.76%; 2024, -14.16%. Index constituent adjustments are made according to index compilation rules, and historical backtesting performance does not predict future index performance.

Reminder: Market volatility may be significant recently, and short-term gains/losses do not predict future performance. Investors must invest rationally based on their own financial situation and risk tolerance, paying high attention to position and risk management.

Data source: Shanghai and Shenzhen Stock Exchanges, etc.

Risk Warning: The Hong Kong Internet ETF passively tracks the CSI Hong Kong Stock Connect Internet Index, which has a base date of 2016.12.30 and was published on 2021.1.11. Index constituent adjustments are made according to index compilation rules. Individual stocks mentioned in the text are for display purposes only and do not constitute any form of investment advice, nor represent holding information and trading movements of any funds under the manager. The fund manager assesses this fund's risk level as R4 - medium-high risk, suitable for aggressive (C4) and above investors. Any information appearing in this article (including but not limited to individual stocks, comments, predictions, charts, indicators, theories, any forms of expression, etc.) is for reference only, and investors must bear responsibility for any independent investment decisions. Additionally, any views, analyses, and predictions in this article do not constitute any form of investment advice to readers, nor bear any responsibility for direct or indirect losses caused by using this article's content. The performance of other funds managed by the fund manager does not guarantee this fund's performance, past fund performance does not represent future performance, fund investment involves risks, and fund investment requires caution.

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