Chinese assets kicked off 2026 with a "red envelope" rally! On January 5, A-shares opened higher and continued climbing, with the ChiNext Index leading gains by 2.85%. The Shanghai Composite Index reclaimed the 4,000-point level, securing a 12-day winning streak—the longest such run since 1993—with heavy turnover exceeding 2.5 trillion yuan. The Hong Kong market had already set a positive tone during the New Year holiday, with the Hang Seng Index rising 2.76% on January 2 and the Hang Seng Tech Index jumping 4%. Today, Hong Kong stocks continued their upward trajectory.
In market action, Hong Kong Connect biotech stocks spearheaded a strong rebound in Hong Kong. The pure-play HK Connect Innovative Drug ETF (520880) staged a remarkable turnaround, surging 5.42% on robust volume exceeding 500 million yuan. The core AI tool for Hong Kong stocks, the HK Internet ETF (513770), gapped up sharply by 4.43%, reclaiming four key moving averages in one move. The market's first ETF focused on the "Hong Kong chip" sector, the HK Information Technology ETF (159131), rallied 3.63%.
Looking ahead for Hong Kong stocks, Galaxy Securities noted that against a backdrop of accommodative monetary policies domestically and internationally, both foreign capital and southbound funds are expected to maintain net inflow trends. Driven by favorable policies aimed at accelerating technological innovation, a new round of supply-side reforms, and expanding domestic demand, the profitability of Hong Kong-listed companies is expected to see substantial improvement. The market is poised for a scenario of rising earnings and valuations, with Hong Kong stocks overall anticipated to trend higher with volatility in 2026.* On the A-share front, the healthcare and pharmaceutical sectors performed notably well. The Medical ETF (512170) surged 5.29%, with its daily chart forming a long bullish candle that broke through five key moving averages. Within the tech rally, the "AI Twin Stars" delivered commendable performances. The STAR AI ETF Huabao (589520), which focuses on the domestic AI industry chain, climbed steadily throughout the day to close up 4.74%. The ChiNext AI ETF Huabao (159363), concentrating on leaders like CPO, gained over 3%, hitting a new record high since its listing!
Regarding the A-share outlook, CITIC Securities pointed out that A-shares have a high probability of continuing their upward trend and extending the spring rally. Structurally, on one hand, the moderately positive macro policy tone from the National Financial Work Conference and the boost to consumer sentiment from the 2026 national subsidy plan continue to create an environment for valuation repair in pro-cyclical sectors. On the other hand, technological innovation and developing new growth drivers remain focal points for high-quality domestic transformation under the 15th Five-Year Plan. Combined with a relatively loose overseas environment and a risk-on sentiment boost during a domestic data vacuum period, tech growth stocks are still expected to be the key factor leading a breakthrough in this current market uptrend.* [ETF Knowledge Hot Topic Review] focuses on the trading and fundamental situations of sector-themed ETFs like healthcare, Hong Kong information technology, and STAR Market AI. A return to peak performance! Pharmaceuticals surged wildly, with the Medical ETF and HK Connect Innovative Drug ETF both soaring over 5% in a rare move! Brain-computer interface concepts saw multiple 20% limit-ups, and the entire innovative drug industry chain rose across the board. A long-awaited joint breakout for A+H healthcare assets! The A-share medical sector mounted a strong counteroffensive, led by brain-computer interface concepts. Holdings within the Medical ETF (512170), such as Sanbo Brain Science, Meihao Medical, and Lepu Medical, all hit the 20% daily limit-up. The pharmaceutical sector was equally impressive, with innovative drug concept stock Zai Lab Limited soaring 12%, Chengdu Kanghong Pharmaceutical Group hitting the limit-up, and the sole Pharmaceutical ETF (562050) rising 2.98%. The largest Medical ETF (512170) by market size advanced steadily throughout the day, surging 5.29% on heavy volume to close at the day's high, marking its largest single-day gain since October 9, 2024. Its exceptionally long bullish candle broke through five moving averages consecutively! Turnover reached 1.166 billion yuan, a dramatic increase of over 211% compared to the previous session!
On the news front, Elon Musk stated on social media on December 31, 2025, that his brain-computer interface company Neuralink would begin "mass production" of its devices in 2026. CITIC Securities analysis indicated that China's brain-computer interface technology research progress is relatively leading globally, potentially nurturing world-leading BCI companies. Valuation increases for related listed companies in the secondary market could stimulate financing activity in the primary market, potentially creating resonance between capital and industrial development.* In the Hong Kong market, the healthcare sector led gains all day, with innovative drugs particularly strong. The pure-play (100%) HK Connect Innovative Drug ETF (520880) demonstrated high elasticity, jumping 5.42% to close at the day's high, recording its largest single-day gain since its listing in July 2025! Turnover was 509 million yuan, representing a volume increase of over 263% sequentially! Among its 37 covered innovative drug R&D listed companies, 35 ended higher. Duality Biologics - B led with an 11.81% gain. Weighted leaders performed strongly: RemeGen, Kelun-BTB Biotechnology - B rose nearly 8%, while Innovent Biologics and 3SBio Inc. both gained around 6%.
Regarding news, the latest data from the National Medical Products Administration showed that in 2025, China approved 76 innovative drugs for marketing, hitting a record high! China's innovative drug out-licensing deals achieved a major breakthrough, with total value exceeding $130 billion and the number of deals reaching over 150, both setting new historical records. Currently, China's pipeline of drugs under research accounts for 30% of the global share, ranking second in the world. The Hong Kong Connect healthcare sector also performed well, with concepts like brain-computer interface, internet healthcare, and CXO rising collectively. MicroPort NeuroTech surged 19.73%, BrainCo - B gained 15.74%, and the Hang Seng Hong Kong Stock Connect Healthcare Theme Index rose 3.66%. For investment tools, the T+0 instrument tracking this index—the HK Connect Healthcare ETF Huabao (159137)—is即将上市 soon and warrants attention. Regarding the future direction of A+H healthcare assets, Huafu Securities believes the long-term logic for pharmaceutical innovation remains intact. The post-New Year tech rally in Hong Kong is a good start and also suggests that innovative drugs and devices, being the segments with the strongest tech attributes within healthcare, are likely to present good opportunities in 2026. Industry trends indicate that the adjustment in the second half of 2025 may have built momentum for the 2026 uptrend.* Strategy-wise, the focus should remain on the innovation theme medium-to-long term, while observing consumer healthcare. In the short-to-medium term, the clearest strategy is to seek targets that may exceed 2025 earnings forecasts and those that could surprise positively at the potential JPM conference in mid-January 2026.
Hong Kong stocks staged a major counteroffensive! The market's first ETF focusing on the "Hong Kong chip" industry chain, the HK Information Technology ETF (159131), surged 3.63% on heavy volume. Can the 2026 Hong Kong tech bull run persist? During the New Year holiday, Hong Kong stocks率先 welcomed the new year with gains, particularly in the tech sector, where the Hang Seng Tech Index rose 4% and the HK Connect Information C index advanced 3.73%. Today, the market's first ETF focusing on the "Hong Kong chip" industry chain, the HK Information Technology ETF (159131), gapped up at the open and maintained high, narrow-range fluctuations throughout the day, closing up 3.63% on increased volume, with daily turnover reaching 81.3 million yuan.
Among its constituents, Nanjing Panda Electronics skyrocketed 40%. Iflytek Medical Technology, Shanghai Fudan Microelectronics, and Q Technology Holdings each gained over 9%. 4Paradigm and Yidu Tech rose over 4%. Huahong Semiconductor and Lenovo Holdings climbed over 3%, while SMIC gained nearly 2%.
On the news front, Hong Kong's hard tech sector is experiencing an IPO boom. Following the listing of "the first Hong Kong GPU stock" Biren Technology, Baidu's Kunlun Chip is reportedly initiating its Hong Kong IPO. Meanwhile, large model concept stocks Zhipu AI and MiniMax are scheduled to list on the Hong Kong Stock Exchange on January 8 and January 9, respectively, becoming the first important listings for domestic large models. Galaxy Securities predicts global semiconductor equipment sales will reach $133 billion in 2025, a 13.7% year-on-year increase. AI-related investments will drive the development of advanced logic, memory, and packaging technologies, bringing industrial chain benefits to domestic GPU companies.* Looking ahead to 2026, can the Hong Kong tech bull run continue? GF Securities points out that the current rise in Hong Kong assets has fundamental support. The growth of high-end manufacturing and technology is transitioning from "single-point breakthroughs" to "multi-point explosions." Hong Kong stocks are gradually shifting towards main tracks representing hard tech, such as AI applications, new energy, and semiconductors. As subsidies in areas like food delivery subside and AI-driven advertising and cloud services become new growth drivers, the Hong Kong market's rise may shift from being liquidity-driven to being driven by both earnings and liquidity. Once liquidity conditions reverse, with renewed inflows from global capital and the broadening of domestic liquidity channels, Hong Kong stocks could embark on a new upward cycle. Particular attention should be paid to the potential resonance between a liquidity reversal and the traditional spring rally, creating opportunities for upward beta.* A Western Securities research report notes that in 2026, we will witness the return of the US dollar index to a downward trend, the renminbi exchange rate returning to a medium-to-long term appreciation cycle, and the Chinese economy returning to a period of prosperity as a catching-up economy within the current Kondratiev wave cycle. As the offshore market for Chinese assets, Hong Kong stocks stand to benefit from valuation expansion driven by global liquidity easing during a weak US dollar cycle, earnings recovery driven by the repair of China's economic fundamentals, and the avoidance of friction costs associated with cross-border capital exchanging into RMB, potentially experiencing a "Davis Triple Play." Structurally, the report continues to be bullish on the continuation of the Hong Kong bull market led by technology in 2026!* From a valuation perspective, "Hong Kong chip" stocks offer compelling value. As of now, the underlying index of the HK Information Technology ETF (159131) has a latest P/E ratio of 35.09x, sitting at the 41.72% percentile over the past three years. This suggests over 55% potential upside to the peak seen earlier this year. Furthermore, its valuation attractiveness significantly outperforms major tech indices like the ChiNext Index (P/E 40.77x, 3-year percentile 88.64%) and the Nasdaq 100 (P/E 35.89x, 3-year percentile 66.67%).
Targeting the super-cycle for Hong Kong chips! A T+0 tradable ETF for the Hong Kong chip industry chain is here—the market's first ETF focusing on the "Hong Kong chip" industry chain, the HK Information Technology ETF (159131). Its underlying index is composed of "70% hardware + 30% software," heavily weighted towards Hong Kong's "semiconductors + electronics + computer software" sectors. It covers 42 Hong Kong-listed hard tech companies, with SMIC having a weight of 15.52%, Xiaomi Corporation - W at 14.04%, and Huahong Semiconductor at 6.20%. It excludes large-cap internet firms like Alibaba, Tencent, and Meituan, offering higher concentration and greater ease in capturing the Hong Kong AI hard tech trend. (Data as of January 2, 2026)
Note: "The market's first" refers to the first ETF tracking the CSI Hong Kong Stock Connect Information Technology Comprehensive Index. Tomorrow! The "Tech Super Bowl" Arrives! STAR AI ETF Huabao (589520) Jumps 4.7%! Domestic AI Firms Successively List in Hong Kong, Enhancing Self-Sufficiency A catch-up rally? The STAR AI ETF Huabao (589520), which focuses on the domestic AI industry chain, advanced strongly, with intraday gains reaching up to 4.91% before closing up 4.74%. This closing gain marked a new high since last August, and its intraday high price (0.620) also reached a new peak since last October. Notably, the ETF has risen in 6 out of the last 7 trading sessions, with its daily K-line potentially forming an "ascending staircase" pattern.
Among its constituents, Fudan Microelectronics led with a gain of over 12%. UCloud Technology rose more than 9%. Foxit Software, ScanTech, Montage Technology, and Transn Information each advanced over 8%. Among weighted stocks, Kingsoft Office gained over 6%, VeriSilicon Holdings rose more than 5%, and Cambricon Technologies climbed over 2%.
On the news front, the CES (Consumer Electronics Show), often called the "Super Bowl" of the tech world, will take place from January 6 to 9. As the annual premier tech showcase at the start of the year, CES has become a main stage for cutting-edge AI hardware concepts. Notably, AI glasses have been officially included in the "National Subsidy" catalog. Guolian Minsheng Securities, in a report dated December 31, 2025, titled "2026 National Subsidy Lands, Smart Glasses Become Core Policy Beneficiary," indicated that this signifies policy-level support and recognition for the smart glasses category. On the industry level, TrendForce recently revised its Q1 memory chip price increase expectations upwards, now forecasting DRAM and NAND contract prices to rise by 55-60% and 33-38% respectively, significantly higher than previous forecasts. Concurrently, reports suggest TSMC plans price hikes for its advanced processes, further strengthening expectations of an industry recovery. Regarding key individual stocks, the National Integrated Circuit Industry Investment Fund increased its stake in SMIC's H-shares from 4.79% to 9.25%, demonstrating continued strong national support for the industry. Meanwhile, leading domestic memory and GPU companies like Biren Technology have successively listed in Hong Kong, creating resonance between industrial capital and the secondary market. Huachuang Securities, in a January 5 report titled "Computer Industry Major Event Review: AI Application Opportunities from Model Listings," pointed out that the successive listings of Chinese large model companies in Hong Kong mark the formal establishment of a "technology-product-capital" closed loop. The resulting positive cycle of "funding-scenario-data" not only enhances the iteration efficiency of domestic models but also provides a longer supporting window for partners in chips, frameworks, and the application layer. This gives the Chinese AI industry, for the first time in the global race, a capital runway capable of self-sufficiency, rather than relying solely on subsidies or venture capital. [A Beacon of Domestic Substitution, Sci-Tech Self-Reliance] Against the backdrop of tech friction, the importance of information security and industrial security is highlighted. As a core technology, achieving autonomy and controllability in AI is crucial. The STAR AI ETF (589520) and its feeder funds focus on the domestic AI industry chain with strong characteristics of import substitution. Its top ten holdings account for over 70% of the portfolio, and the semiconductor sector, its largest holding industry, comprises over half, indicating high concentration and strong offensive potential. Additionally, this ETF is a margin trading target, serving as an efficient tool for a one-click allocation to domestic computing power. Source: SSE, SZSE, etc., as of January 5, 2026. Reminder: Recent market volatility may be significant; short-term gains/losses do not predict future performance. Investors must invest rationally based on their own financial situation and risk tolerance, paying close attention to position and risk management. *Institutional views referenced from: ① Galaxy Securities report dated Dec 31, 2025; ② CITIC Securities report dated Jan 4; ③ CITIC Securities report dated Dec 29, 2025; ④ Huafu Securities report dated Jan 4, 2026; ⑤ Galaxy Securities weekly semiconductor commentary; ⑥ GF Securities report on Hong Kong strategy; ⑦ Western Securities report on Hong Kong stocks. Risk Disclosure: The Medical ETF tracks the CSI Medical Index. The Pharmaceutical ETF tracks the CSI Pharmaceutical Index. The HK Connect Innovative Drug ETF tracks the Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index. The HK Connect Healthcare ETF tracks the CSI Hong Kong Stock Connect Healthcare Theme Index. The HK Information Technology ETF tracks the CSI Hong Kong Stock Connect Information Technology Comprehensive Index. The STAR AI ETF tracks the SSE STAR Market Artificial Intelligence Index. Index constituent stocks are adjusted according to the index methodology; past index performance does not indicate future results. Mentioned stocks are for illustrative purposes only and are not recommendations. Any information herein is for reference only; investors are responsible for their investment decisions. This content does not constitute investment advice. Investors should read the Fund Contract, Prospectus, and Key Facts Statement to understand the fund's risk/return profile and choose products suitable for their risk tolerance. Past performance is not indicative of future results. Based on the manager's assessment, risk ratings vary; suitability opinions should be obtained from sales institutions. Fund registration by the CSRC does not indicate assurance of value or returns. Fund investment involves risk.
