The Huaxia (520910) Stock Connect Internet ETF, which falls into the lowest fee tier among similar products, rose with volatility in the early trading session and is currently up nearly 1.5%

On July 23, Hong Kong stock market gains expanded, with the Hang Seng Index rising nearly 1.5% and the Hang Seng Tech Index gaining close to 1%. In trading, the semiconductor sector strengthened, and Hong Kong-listed internet stocks climbed steadily in the morning session. The Huaxia Stock Connect Internet ETF (520910), which offers one of the lowest fee tiers among similar products, rose nearly 1.5%. As of July 22, the assets under management for the Huaxia Stock Connect Internet ETF (520910) reached 485 million yuan.

Guo Yuan International believes that the current internet sector is operating in a complex environment characterized by tightening liquidity and escalating geopolitical conflicts. Sector performance has diverged; influenced by oil price hikes driven by US-Iran tensions and inflation expectations fueled by AI industry demand, the market anticipates one interest rate hike by the Federal Reserve this year. This pushes up US Treasury yields, and elevated long-term rates continue to suppress valuations for growth stocks, intensifying short-term capital speculation. Meanwhile, the commercialization process of AI in China is accelerating, with breakthroughs in side-AI filings marking the formal establishment of a regulatory framework for side-AI. Continuous net inflows from Southbound Capital indicate enhanced confidence among domestic investors in allocating to leading Hong Kong internet companies. While the sector may remain volatile in the short term, valuation pressures on internet AI applications have eased, suggesting an improvement in future risk appetite. We recommend focusing on leading companies with strong core moats, clear AI monetization paths, and robust cash flows.

Public information shows that the Huaxia Stock Connect Internet ETF (520910) tracks the CSI Hong Kong Stock Connect Internet Index, precisely covering core internet areas such as e-commerce platforms, content ecosystems, social media, and software services. It has a high proportion of AI applications, aligning with the industrial deepening path of AI-driven upgrades to internet business models. Its constituent stocks include leading Hong Kong internet companies such as Alibaba, Tencent Holdings, Meituan, Xiaomi Group, and Kuaishou, which are expected to continue benefiting from the subsequent accelerated penetration of AI.