Core Viewpoint - The Hong Kong technology sector has entered a phase of consolidation after a strong rally, presenting a potential investment opportunity due to improving liquidity, industry catalysts, valuation advantages, and profit expectations [1] Group 1: Market Dynamics - The Federal Reserve's resumption of interest rate cuts has led to upward trends in both A-shares and H-shares, suggesting that foreign investors may benefit from increasing allocations to currently underweighted A-shares and H-shares [1] - The technology companies in Hong Kong are experiencing significant catalysts, particularly with a surge in AI capital expenditures [1] - There is a growing expectation of asset revaluation in China, with Hong Kong stocks showing a continued upward trend despite ongoing fluctuations, indicating that valuation levels remain relatively low [1] Group 2: Profit Expectations - Major Hong Kong indices are projected to achieve double-digit profit growth next year, with the Hang Seng Technology Index expected to show particularly strong growth [1] - The long-term high prosperity trend of the AI industry chain is anticipated to continue, with sustained high growth in AI-related business revenues [1] Group 3: Investment Tools - The Hang Seng Hong Kong Stock Connect Technology Theme Index, with its unique composition and constituent stocks, is identified as a key tool for capturing investment opportunities in the technology sector [1] - The index includes leading stocks from various sectors such as software services, semiconductors, and media, reflecting the overall development of the Hong Kong technology sector [2] Group 4: ETF Products - The Silverhua Hong Kong Technology 30 ETF and its associated funds are designed to track the Hang Seng Hong Kong Stock Connect Technology Theme Index, potentially enabling investors to capitalize on the growth of the Hong Kong technology sector in the AI era [2]

Core Viewpoint - The article emphasizes the transformation of traditional internet giants in the AI era, highlighting the benefits of the Hang Seng Hong Kong Stock Connect Technology Theme Index due to industry trends, capital inflows, and potential for price revaluation [1][2]. Group 1: AI Transformation of Internet Giants - Internet giants have accumulated vast user data, technological infrastructure, and industrial ecosystems, laying the foundation for AI development [1]. - The evolution path in the AI era includes a shift in technological focus, penetration of AI capabilities across the business chain, upgrading business models to expand technology-driven growth, and increasing capital expenditures and R&D investments [1]. Group 2: Core Value Analysis of Hong Kong Stock Technology Sector - The global AI computing industry chain is experiencing continuous growth, with the Hong Kong technology sector benefiting directly from the AI industry wave [1]. - Significant inflows of southbound capital are focusing on the AI industry chain, providing ample liquidity support for the Hong Kong technology sector [1]. - The current valuation of the Hang Seng Hong Kong Stock Connect Technology Theme Index is around the 70th percentile historically, indicating room for upward movement [1]. Group 3: Comparison of Mainstream Hong Kong Stock Connect Technology Indices - The Hang Seng Hong Kong Stock Connect Technology Theme Index leads in medium to long-term returns compared to other Hong Kong technology indices, exhibiting high earnings elasticity and a high-risk, high-reward profile [2]. - The index shows strong performance during market hotspots, with superior risk-adjusted returns [2]. - The concentration of industry distribution among constituent stocks is higher compared to other similar indices, with the top five constituent stocks holding a significant cumulative weight [2]. Group 4: Investment Value Analysis of the Hang Seng Hong Kong Stock Connect Technology Theme Index - The constituent stocks of the index are characterized by a clear technology focus, concentrating on leading hard technology companies [3]. - The index exhibits a concentrated weight distribution, reflecting a significant large-cap style [3].

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - Internet giants have deep roots and natural advantages in developing AI, with strategic transformations and capability upgrades in the AI era [2][5][8]. - The investment value of Hong Kong stocks in the technology sector has increased in the AI wave, benefiting from industry trends, capital allocation, and policy support [2][10]. - The Hang Seng SCHK Technology Index focuses on core Hong Kong technology assets, with strong performance and high investment value [23][32][34]. - The GF Hang Seng SCHK Technology Theme ETF closely tracks the Hang Seng SCHK Technology Index, aiming to achieve returns similar to the target index [49]. 3. Summary According to the Directory 3.1 Core Evolution: The AI Transformation Path of Internet Giants - **Internet Giants' Natural Advantages in AI Development**: Chinese internet giants have built competitive barriers with large user bases and ecosystems, accumulating vast user data and R & D foundations for AI development [5]. - **Evolution Path of Internet Giants in the AI Era**: They are shifting their technological focus to underlying technologies, upgrading business models, and increasing resource investment to seize the initiative in the AI track [8][9]. 3.2 Investment Logic: The Core Value of Hong Kong Technology Stocks in the AI Era - **Industry Trend Dividend**: The global AI computing power industry chain is booming, and the demand for domestic technological self - sufficiency is urgent. Hong Kong technology stocks, as the gathering place of domestic AI core assets, directly benefit from industry development [10]. - **Capital Allocation Support**: Southbound funds have a net inflow of over one trillion yuan this year, providing sufficient liquidity support for Hong Kong technology stocks [11]. - **Capital Market Boost for New Productivity**: The capital market supports new - quality productivity, and the growth potential of Hong Kong - connected technology stocks is worth attention [13]. - **Favorable Conditions and Challenges for Domestic AI Development**: China has made progress in model and application layout, has certain advantages in AI computing power and network infrastructure, and may benefit from policy support [15][19]. 3.3 Hang Seng SCHK Technology Index: Focusing on Core Hong Kong Technology Assets and Sharing New Economy Dividends - **Focus on Core Hong Kong Technology Assets**: The index is designed to reflect the overall performance of Hong Kong - listed companies engaged in technology - related businesses within the scope of the Hong Kong - Stock Connect [23]. - **Component Stocks Cover Core Technology Industries**: It has a distinct technology - dominated style, covering core technology fields, with high index sharpness and industry purity [26][32]. - **Small Drawdown and Quick Recovery**: Since its establishment, the index has had a relatively small drawdown and has significantly outperformed similar indices since "924", showing high investment value [34][37]. - **AI Breakthroughs of Leading Component Stocks**: Leading companies such as Alibaba - W, Tencent Holdings, and Xiaomi Group - W have made significant AI breakthroughs and technological practices [41][46][48]. 3.4 GF Hang Seng SCHK Technology Theme ETF (159262) The fund was established on June 26, 2025, and listed on July 7, 2025. Managed by Xia Haoyang, it has a management fee of 0.50% and a custody fee of 0.10%. It closely tracks the Hang Seng SCHK Technology Index to minimize tracking deviation and error [49].

Report Industry Investment Rating No relevant content provided. Core Views of the Report - AI era drives transformation of internet giants, with Chinese internet giants leveraging user base and ecosystem for AI development [4]. - Investment value of Hong Kong stock technology sector rises in the AI wave, benefiting from industry trends, capital inflows, and policy support [4]. - The Hang Seng SCHK Technology Index focuses on core Hong Kong stock technology assets, with high concentration and purity, showing strong rebound elasticity and trend - following ability [4]. - The GF Hang Seng SCHK Technology Theme ETF closely tracks the index, aiming for minimal tracking deviation and error [4]. Summary by Directory 1. Core Evolution: Internet Giants' AI Transformation Path - Internet giants have a solid foundation for AI development, with large - scale user bases, rich data resources, and strong engineering capabilities [8]. - The evolution path of internet giants includes technology shift, business model upgrade, and increased resource investment [11]. 2. Investment Logic: Core Value of Hong Kong Stock Technology in the AI Era - Industry trend: The Hong Kong stock technology sector benefits from the high - rising global AI computing power industry chain and the urgent domestic demand for technological self - sufficiency [14]. - Capital support: Southbound funds have a net inflow of over one trillion yuan this year, providing liquidity support for the Hong Kong stock technology sector [15]. - Capital market: Policies and the capital market support new - quality productivity, and the growth potential of the SCHK technology index is worth attention [17]. - Domestic AI development: There are favorable conditions such as multi - dimensional model and application layout, but there are also challenges like a gap in high - end chips [20]. 3. Hang Seng SCHK Technology Index: Focus on Core Hong Kong Stock Technology Assets and Share New Economy Dividends - Index overview: It is a free - float market - capitalization - weighted index aiming to reflect the performance of Hong Kong listed technology - related companies eligible for the SCHK [28]. - Component stocks: They cover core technology industries, with a distinct technology - dominant style. The index has high sharpness and purity, and leading stocks play a significant role [32][38]. - Performance: Since its establishment, the index has had a small drawdown and can quickly recover. It has significantly outperformed similar indices since "924" [41][44]. - Leading component stocks' AI breakthroughs: Alibaba is increasing AI investment with ASI as the ultimate goal; Tencent's advertising is boosted by AI; Xiaomi's Q2 revenue and profit reached new highs [50][54][56]. 4. GF Hang Seng SCHK Technology Theme ETF (159262) - The ETF was established on June 26, 2025, and listed on July 7, 2025. Managed by Xia Haoyang, it has a management fee of 0.50% and a custody fee of 0.10%, aiming to closely track the Hang Seng SCHK Technology Index [57].

Core Viewpoint - The Hong Kong stock market has experienced a significant rebound over the past year, particularly in the technology sector, with notable index performances [1][4]. Group 1: Index Performance - The Shanghai Composite Index increased by 42.77%, while the Hang Seng Technology Index rose by 73.68%, and the Hang Seng Hong Kong Stock Connect Technology Theme Index surged by 109.25% [1][4]. - Investors are eager to invest in Hong Kong technology through index products, but there are many similar-sounding indices with varying performances [4]. Group 2: Index Compilation - Differences in index compilation methodologies lead to varying characteristics among the indices. Most indices consist of 30 constituent stocks, except for the CSI Hong Kong Stock Connect Technology Index, which has 50 [5][6]. - The Hang Seng Hong Kong Stock Connect Technology Theme Index and the National Index have a higher individual stock weight limit of 15%, resulting in greater concentration of leading stocks [5][6]. Group 3: Industry Distribution - The Hang Seng Hong Kong Stock Connect Technology Theme Index excludes industries such as pharmaceuticals, automobiles, and home appliances, focusing more on pure technology sectors [5][7]. - The CSI and National indices include a broader range of industries, which affects the "purity" of the technology focus [5][9]. Group 4: Historical Performance - Over the past year, the Hang Seng Hong Kong Stock Connect Technology Theme Index achieved the highest increase of 109%, confirming that higher purity leads to better performance [12][15]. - Over three years, the Hang Seng Hong Kong Stock Connect Technology Theme Index has shown a cumulative increase of over 92%, with an annualized return of nearly 25% [15][16].

Group 1 - The core viewpoint highlights the strong performance of Hong Kong technology stocks, particularly the Hong Kong Stock Connect Technology ETF (159262), which saw a rise of over 2% and a trading volume exceeding 700 million yuan, leading in trading activity among similar products [1] - As of September 17, the Hong Kong Stock Connect Technology ETF (159262) has experienced 29 consecutive trading days without net outflows, with its latest scale exceeding 4.2 billion yuan and an average daily trading volume of over 350 million yuan in the past month, making it the leader in scale and liquidity among its peers [1] - The ETF tracks the Hang Seng Hong Kong Stock Connect Technology Theme Index, which has been refined in three ways: focusing on Hong Kong Stock Connect technology stocks, purifying the technology components by excluding sectors like automotive and home appliances, and increasing the individual stock weight limit to 15%, with the top ten constituent stocks accounting for nearly 80% [1] Group 2 - The Hang Seng Hong Kong Stock Connect Technology Theme Index has seen a remarkable increase of over 110% in the past year, attracting attention due to its high purity, sharpness, and high Sharpe ratio [1] - Looking ahead, CITIC Securities anticipates that the technology, consumer discretionary, and pharmaceutical sectors in Hong Kong will benefit from potential interest rate cuts by the Federal Reserve, with significant foreign capital allocation opportunities in the context of China's stable growth policies and improving fundamentals [2]

Group 1 - The core viewpoint indicates that the Hong Kong Stock Connect Technology ETF managed by Harvest has shown significant trading activity and liquidity, with a turnover rate of 20.96% and a transaction volume of 70.65 million yuan [3] - Over the past week, the Hong Kong Stock Connect Technology ETF has experienced a notable increase in scale, growing by 77.97 million yuan, which is the highest among comparable funds [3] - The latest share count for the Hong Kong Stock Connect Technology ETF reached 332 million, marking a new high since its inception [3] Group 2 - The fund has seen continuous net inflows over the past three days, with a peak single-day net inflow of 54.01 million yuan, totaling 84.38 million yuan [3] - The ETF closely tracks the Hang Seng Stock Connect Technology Index (HSSCITI), which reflects the performance of Hong Kong-listed companies related to technology that can be traded via the Stock Connect [3] - Market confidence in the Hong Kong technology sector is gradually returning, driven by strong performance from leading companies, expectations of interest rate cuts by the Federal Reserve, and accelerated commercialization of AI [3] Group 3 - According to Guotai Junan Securities, there is a historical alternating relationship between the ChiNext Index and the Hang Seng Technology Index, suggesting that the latter may experience a rebound as the difference in rolling returns narrows [3] - The current difference in returns between the ChiNext Index and the Hang Seng Technology Index stands at 18 percentage points, indicating potential for the latter to catch up [3] Group 4 - Shenwan Hongyuan Securities believes that the recent underperformance of the Hong Kong index is a temporary consolidation following a rapid increase, and that sectors with previously low earnings expectations are likely to regain market favor [4] - The current market environment is seen as an opportune moment for active investment in Hong Kong stocks, particularly in the internet and Hang Seng Technology Index sectors [4] Group 5 - As of July 31, 2025, the top ten weighted stocks in the Hang Seng Stock Connect Technology Index include Kuaishou-W, SMIC, Tencent Holdings, Alibaba-W, Xiaomi Group-W, Meituan-W, Lenovo Group, Kingdee International, Bilibili-W, and Sunny Optical Technology, collectively accounting for 74.94% of the index [6]

Core Viewpoint - The Hong Kong Stock Connect Technology ETF (159262) has shown significant growth, driven by a rebound in domestic chips and downstream applications, indicating a positive trend in the technology sector [1][3]. Group 1: ETF Performance - As of August 12, 2025, the Hong Kong Stock Connect Technology ETF has increased by 8.21% over the past month, ranking first among comparable funds [1]. - The ETF's latest scale reached 2.973 billion, marking a new high since its inception and leading among comparable funds [1]. - The ETF has seen a net inflow of 306 million over the past three days, with a peak single-day inflow of 273 million [1]. Group 2: Index Composition - The Hang Seng Hong Kong Stock Connect Technology Theme Index (HSSCITI) excludes sectors like pharmaceuticals, automobiles, and home appliances, focusing on the TMT industry for a purer technology attribute [2]. - The top ten weighted stocks in the HSSCITI account for 73.55% of the index, with major players including Kuaishou-W, SMIC, Tencent, Alibaba-W, and Xiaomi Group [2]. - Notably, the combined weight of AI leaders Xiaomi, Alibaba, and Tencent is nearly 30%, alongside core "hard technology" stocks like SMIC and Hua Hong Semiconductor, forming a concentrated group of technology leaders [2]. Group 3: Industry Trends - Recent developments in the Hong Kong technology sector show a collaborative growth across multiple fields, supported by government policies aimed at regulating competition and fostering emerging industries [3]. - The overall valuation of the Hong Kong internet social services sector is currently low, suggesting potential for upward movement, especially with rising AI capital expenditures and enhanced support for technological innovation [3].

Quantitative Models and Construction Methods - **Model Name**: Hang Seng Stock Connect Hong Kong Technology Theme Index (HSSCITI.HI) **Model Construction Idea**: The index focuses on the TMT (Technology, Media, and Telecommunications) sector, ensuring high "technology purity" by excluding industries such as pharmaceuticals, home appliances, and automobiles, which may dilute the thematic investment returns[2][28][29] **Model Construction Process**: 1. The index selects stocks listed in Hong Kong that qualify for Southbound trading under the Stock Connect program[34] 2. It focuses on companies in the technology sector, including software, hardware, semiconductors, and internet services, while excluding non-core technology industries[29][34] 3. The index uses free-float market capitalization weighting, with individual stock weight capped at 10%[34] 4. The index is rebalanced semi-annually to ensure alignment with its thematic focus[34] **Model Evaluation**: The index demonstrates a high level of thematic focus, capturing the growth potential of the TMT sector while avoiding the risks associated with unrelated industries[29][34] Model Backtesting Results - **Hang Seng Stock Connect Hong Kong Technology Theme Index**: - 1-year annualized return: 55.90% - 3-year annualized return: 8.83% - Comparative performance: Outperformed the Hang Seng Index, which had 1-year and 3-year annualized returns of 36.31% and 3.55%, respectively[43] Quantitative Factors and Construction Methods - **Factor Name**: Technology Sector Focus **Factor Construction Idea**: The factor emphasizes the concentration of investments in the TMT sector to maximize exposure to technology-driven growth opportunities[29][34] **Factor Construction Process**: 1. Stocks are selected based on their classification within technology-related industries such as software, hardware, and semiconductors[29][34] 2. Non-technology sectors like pharmaceuticals, home appliances, and automobiles are excluded to maintain thematic purity[29][34] 3. The weighting scheme ensures a balanced representation of sub-sectors within the TMT domain, with significant allocations to internet platforms, hardware, and software companies[29][33] **Factor Evaluation**: The factor effectively captures the growth dynamics of the technology sector while minimizing exposure to unrelated industries, enhancing the thematic investment appeal[29][34] Factor Backtesting Results - **Technology Sector Focus Factor**: - Sector allocation: Information Technology (66.55%), Consumer Discretionary (18.25%), Communication Services (15.20%)[33] - Sub-sector allocation: Hardware (27.35%), Software (25.75%), Semiconductors (13.45%), Media (14.42%)[31][33] - Top contributors: Internet platform companies (e.g., Tencent, Alibaba, Meituan) accounted for approximately 44% of the index weight[29][32]

Investment Rating - The report rates the Hong Kong Stock Connect Technology ETF (159262) as "Outperform" compared to the market [1]. Core Insights - The Hong Kong technology sector is positioned at the peak of the AI innovation wave, with the next 3-4 years expected to be a critical phase for the application and monetization of AI technologies [1]. - Historical trends from the US stock market indicate that during previous technology revolutions, the Nasdaq index significantly outperformed other periods, suggesting a similar pattern may emerge in the Hong Kong technology sector [1]. - The report highlights that the Hong Kong technology sector includes key players in AI, such as internet, consumer electronics, semiconductors, and software, all of which stand to benefit from AI advancements [1]. Summary by Sections 1. Technology Investment Trends - The AI technology cycle is entering a heated phase, with the current period being the third Kitchin cycle of the AI era, focusing on the development of large models [13][14]. - The internet sector is shifting from "traffic expansion" to "value cultivation," with significant growth potential in AI applications [20]. - Consumer electronics are set for a major upgrade driven by AI, with AI smartphones expected to increase from 18% of shipments in 2024 to 34% in 2025 [43]. - The semiconductor industry is experiencing rapid growth, with the global market projected to reach $635.1 billion in 2024, a 19.8% year-on-year increase [49][52]. - The software industry, particularly SaaS, is expected to grow significantly, with the market projected to reach approximately 703 billion RMB in 2024, reflecting a 26.6% year-on-year growth [57]. 2. Hang Seng Hong Kong Stock Connect Technology Index (HSSCITI) Analysis - The HSSCITI focuses on high liquidity technology stocks, covering major sectors such as internet, semiconductors, consumer electronics, and software [61][62]. - The index has shown superior performance with a cumulative price return of 9.6% from 2022 to present, outperforming other indices [70]. - The index's annualized alpha is approximately 3.6%, indicating strong excess return potential compared to the Hang Seng Index [78]. 3. Hong Kong Stock Connect Technology ETF (159262) Analysis - The ETF was launched on June 26, 2025, with a total size of 13.41 billion RMB, making it a significant player in the Hong Kong technology investment landscape [90]. - The fund manager, Xia Haoyang, has extensive experience in managing passive index funds, overseeing a total of 100 billion RMB in assets [91].