To The Moon

Major Hong Kong stock indices closed higher on Monday, with the Hang Seng Tech Index rebounding intraday to gain nearly 3% at one point. ETFs related to South Korea's export sector rallied following better-than-expected data, while ETFs tracking the ChiNext 50 index underperformed throughout the session.

The Hang Seng Index rose 0.86% to close at 25,398.18, with a total turnover of HK$330.937 billion. The Hang Seng Tech Index gained 1.65% to finish at 4,964.92.

Among the largest Hong Kong-listed ETFs by size, Tracker Fund (02800) closed up 1.10% at HK$25.68. CSOP Hang Seng China Enterprises Index Daily (2x) Leveraged Product (02828) rose 1.09% to HK$87.32. CSOP Hang Seng TECH Index Daily (2x) Leveraged Product (07709) surged 4.83% to HK$144.3.

**Sector Performance**

**1. South Korean Export Data Boosts Related ETFs**

ETFs linked to South Korea rallied after the country's Ministry of Trade, Industry and Energy reported that May exports surged 53.2% year-over-year to $87.75 billion, a record high for a single month. Semiconductor exports soared 169.4% to $37.16 billion, also setting a monthly record.

The strong data indicates the South Korean economy continues to strengthen, rebounding robustly in early 2024 after a contraction in late 2023. First-quarter GDP grew 1.7% quarter-over-quarter, the fastest pace since 2020, driven by semiconductor exports and corporate investment.

From an industry perspective, Goldman Sachs research suggests that the supply-demand balance for traditional DRAM, NAND, and HBM memory is expected to tighten further from 2026 to 2027, with the tightness likely persisting into 2028. This environment is seen as supportive for higher profitability among memory chip makers in the coming years. Goldman Sachs believes the market has yet to fully price in the durability of the current memory upcycle, as evidenced by most memory stocks still trading at low-to-mid single-digit P/E multiples.

**2. ChiNext 50 Index Under Pressure, Related ETFs Weaken**

ETFs tracking the ChiNext 50 index underperformed as the index itself led declines in the A-share market, falling 5.00% to close at 1,663.69 points. Total turnover for its constituent stocks was approximately 149.9 billion yuan, with semiconductor stocks among the biggest decliners.

Pu Zulin, Chief Macro Analyst at Zhenxin Futures, views the recent sell-off as more of a valuation correction and portfolio rebalancing within overheated sectors rather than a sign of systemic risk. He notes that the previous rapid gains in AI, semiconductors, and computing-related stocks led to crowded positioning and stretched valuations. At this stage, regulatory focus has shifted towards risk prevention and volatility reduction, prompting a shift in market sentiment from chasing gains to profit-taking. Recent disclosures of share sale plans by the National Integrated Circuit Industry Investment Fund and other industry capital regarding certain semiconductor holdings have further reinforced this profit-taking sentiment. Additionally, sustained redemptions from broad-based ETFs and a slowdown in incremental passive fund inflows have shifted the market's focus from sentiment-driven valuation expansion to reassessing stock valuations relative to fundamentals.

**Institutional View**

Fullgoal Fund's market outlook suggests that while volatility in the tech sector has increased recently, liquidity-driven disturbances may not be the core concern during a phase of strong fundamental profit drivers. The firm expects tech growth, particularly AI-led sectors driving this profit cycle, to remain a key medium-term theme.

**ETF Developments**

1. Bosera Grain Industry ETF (159031) debuted, closing up 1.74% at 0.996 yuan with a turnover of 36.428 million yuan. The fund tracks the CNI Grain Industry Index, covering companies involved in grain cultivation, processing, agricultural supplies, and related segments of the grain industry chain.

2. Harvest Cloud Computing ETF (517130) debuted, edging up 0.1% to close at 0.994 yuan with a turnover of 104 million yuan. The fund tracks the CSI Shanghai-Hong Kong-Shenzhen Cloud Computing Industry Index, investing in leading companies in cloud computing infrastructure, services, and applications across the three markets.

3. GF China Connect Information Technology ETF (520700) debuted, gaining 0.2% to close at 1.016 yuan with a turnover of 116 million yuan. The fund tracks the CSI China Connect Information Technology Composite Index, covering blue-chip tech, semiconductor, and consumer electronics stocks such as SMIC (09981) and Lenovo Group (00992).