Recently, the technology sector underwent a six-week adjustment, and we previously anticipated a potential bottom in mid-to-late November. Our current views are as follows: 1. The low points for bottom-tier sectors are largely clear, making it a good time to gradually focus on broad tech ETFs. 2. Whether relatively high-valuation sectors face a correction risk remains uncertain amid ongoing market fluctuations. 3. The core direction for the next upward cycle is unclear, but we believe the main opportunities lie in undervalued stocks rather than high-valuation ones (though the latter may rebound faster in the short term, their major uptrend has likely passed).
Following our November 12 commentary, we reviewed the A-share and U.S. markets since then: 1. Overseas, due to cooling expectations for a December rate cut, stocks like NVIDIA (AI computing), Tesla (robotics, autonomous driving), and Kioxia (memory) have seen broad declines since November 11, with even Alphabet (AI models) facing volatile trends. 2. Against geopolitical tensions and tightening global liquidity expectations, China’s tech sector shows "top-tier stocks consolidating while bottom-tier stocks oversold." Specifically: - Strong fundamentals-driven stocks like InnoLight are heavily favored, while second-tier players like Shannon Semi (memory) and Foxconn Industrial (servers) have started declining. - Weaker sectors (robotics, edge chips, Hang Seng Tech) are oversold due to risk-off selling. - New themes like Alphabet’s TPU computing, commercial aerospace, and semiconductor equipment are trading on marginal news.
Current tech sector outlook: We believe the recent rebound is liquidity-driven with limited industry logic, suggesting a broad rebound without clear sector leadership. Drawing parallels to April’s rebound pattern, early-stage rebounds favor previous high-expectation sectors (e.g., overseas AI computing, ChiNext AI ETFs), but mid-cycle leadership often shifts. From a valuation perspective: 1. High-valuation stocks like InnoLight remain resilient, while others (e.g., Foxconn Industrial) hover near September levels. 2. Undervalued sectors (edge chips, domestic robotics, fintech) have retreated to early-May levels, with some (e.g., analog chips) hitting April lows, indicating deep adjustments.
Key takeaways: 1. Alphabet’s AI-chip combo is strong with favorable 2025 logic, but driving further significant gains (20–30%) for its near-$4T market cap solely on AI models remains challenging. The AI race remains unsettled. 2. Alphabet’s v6p chips lag NVIDIA’s B200 in cost-performance, and its v7p/v8e timeline aligns with NVIDIA’s Rubin series, suggesting limited near-term disruption potential. 3. If TPU disrupts NVIDIA, ChiNext AI ETFs may decline, implying volatility through H1 2026—pending further observation.
ETF strategy recommendations: With U.S. stocks showing signs of a bottom rebound (despite potential volatility), we believe the major downtrend may be over, making broad tech ETFs attractive. Meanwhile, China’s high-valuation sectors hold support levels, while low-valuation sectors are oversold. Overall, we see a favorable "buying opportunity" and maintain two views: 1. Optical module-focused ChiNext AI ETF (159363) acts as a growth-sector enhancer. 2. Prioritize undervalued ETFs: - Hang Seng IT ETF (159131) - Fintech ETF (159851, sentiment gauge) - Auto 50 ETF (520780, robotics transition) - STAR AI ETF (589520, likely slower rebound) - Hang Seng Internet ETF (513770, cyclical) - Electronics ETF (515260)
Caution: Recent volatility may persist, and short-term performance doesn’t predict future returns. Investors should assess risk tolerance and manage positions prudently.
Risk disclosure: The mentioned funds are issued/managed by HuaBao Fund. Distributors bear no investment or risk management responsibility. Risk ratings: - Hang Seng IT, Auto 50, Internet, ChiNext AI, and STAR AI ETFs: R4 (high risk, C4+ investors). - Fintech and Electronics ETFs: R3 (medium risk, C3+ investors). Index components adjust per rules; past performance ≠ future results. Investors should review fund documents and assess suitability independently. Regulatory approval ≠ endorsement. All information is for reference only; investment decisions carry inherent risks.
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