On Monday (September 14th), A-shares opened lower, recovered, and then retreated again into a volatile downward trend with noticeably shrinking volume. Total turnover across both markets was a mere 1.63 trillion yuan, yet over 3,100 stocks advanced. In Hong Kong, the Hang Seng Index closed up 0.45%, while the Hang Seng Tech Index slipped 0.06%.
Capital flowed heavily into CXO and innovative drug sectors during the session. The benchmark index for the 100% innovative drug-focused HK Connect Innovative Drug ETF HuaBao (520880) climbed over 4% in the late trading session, while the benchmarks for the high-CXO-content HK Connect Medical ETF HuaBao (159137) and Medical ETF HuaBao (512170) rose against the trend by more than 3% and 2%, respectively.
Amid market pressure, long-term capital stepped in with active buying. The banking sector extended its gains, with Jiangsu Bank and Bank of Chengdu hitting new intraday highs, alongside synchronized strength from the big four state-owned banks. The benchmark index for the Bank ETF HuaBao (512800) closed up 0.83%, testing its yearly high once again.
The AI hardware segment broadly pulled back, pressured by "deceleration" commentary from Silicon Valley. Optical module leaders faced notable declines, and the benchmark for the high-"optical" ChiNext AI ETF HuaBao (159363) closed down 2%, though capital showed interest in bargain-hunting opportunities during the dip.
With the Federal Reserve's rate hike seemingly imminent, once the macro uncertainty clears, the valuation recovery and fundamental growth narrative for the non-ferrous metals sector could gradually return, potentially presenting opportunities in the Non-Ferrous Metals ETF HuaBao (159876).
Looking ahead, CITIC Securities noted that various volume-price sentiment indicators for the A-share market have returned to a subdued state. If the rate hike is symbolic and precautionary, the release of this risk should be viewed as a buying opportunity rather than a selling point. The Fed's September hike landing could be a signal that the adjustment since July is nearing its end. AI remains one of the few sectors capable of resisting rising rates, though sustained upward revisions in rate expectations could intensify the K-shaped divergence in the market.
On allocation, CITIC recommends maintaining an "AI + energy/chemicals" structure, with the AI narrative leaning back toward North American supply chains. Once the rate hike risk is priced in, technology opportunities are expected to concentrate in areas benefiting from increased manufacturing complexity (such as new optical communication technologies, PCB, advanced packaging) and those with volume growth logic (such as wafer fabrication and gas turbines). In non-tech sectors, the focus should remain on energy/chemicals and leading brokerages with overseas expansion potential, while conservative allocations could consider banks and coal.
This summary highlights trading and fundamental developments across banking, ChiNext AI, and non-ferrous metals themes.
Banking Continues Strong Performance: Jiangsu Bank and Bank of Chengdu Hit New Highs; Institutions Shift View to 'High-Certainty Equity Assets'
With A-shares consolidating on shrinking volume and all three major indices closing lower, the banking sector extended its rally. Over 90% of the 42 listed banks closed higher, with Rui Feng Bank rising over 2% and 19 stocks including Bank of Communications and ICBC gaining more than 1%. Jiangsu Bank and Bank of Chengdu hit new intraday highs, and the big four banks advanced in tandem. The Bank ETF HuaBao (512800) once again tested its yearly high, with its benchmark index closing up 0.83%.
The strength in banks is backed by aggressive buying from long-term capital. Mid-year reports show that multiple bank stocks saw significant increases in insurance capital holdings during Q2: Bank of China was added to by three insurance accounts, Postal Savings Bank welcomed two new insurance accounts among its top ten shareholders, China Construction Bank saw a new entry from China Life's traditional insurance account, and ICBC was also increased by the same account. China Life's traditional account also boosted positions in China CITIC Bank, Shanghai Pudong Development Bank, Jiangsu Bank, and Bank of Hangzhou during Q2.
Fundamental improvements on the margin underpin investor confidence. In the 2026 semi-annual reports, over 80% of the 42 listed A-share banks posted year-on-year growth in both operating revenue and net profit attributable to shareholders, with the breadth of earnings recovery significantly improving. On dividends, the six major state-owned banks have proposed interim cash dividends exceeding 200 billion yuan for 2026, and all have raised their interim payout ratios from 30% to 31% to further enhance shareholder returns.
CITIC Securities expects commercial bank net interest margins and asset quality to remain stable through Q3 and the full year, with a steady operating landscape and positive earnings trends. From a mid-term perspective, the banking sector is entering the tail end of the risk cycle, with ROE's first derivative already showing improvement. Industry ROE is expected to stabilize in the 8%-9% range this year and next, supporting valuation upgrades. The sector could be re-rated from "high-dividend defensive assets" to "high-certainty equity assets," sustaining an upward valuation trajectory and delivering full-year absolute returns.
Feng Chencheng, fund manager of the Bank ETF HuaBao (512800), also noted that with domestic long-term bond yields continuing to decline and long-dated liabilities facing an "asset shortage," banks' dividend yields, interim earnings growth, and absolute valuations provide compelling reasons for allocation capital to participate. He emphasized the importance of the low-positioning and long-term allocation-driven rally in the banking sector.
The Bank ETF HuaBao (512800) passively tracks the CSI Bank Index, with constituents covering all 42 A-share listed banks. Its top ten heavyweights include major-market-cap leaders such as China Merchants Bank, Agricultural Bank of China, and Bank of Communications, along with growth-oriented joint-stock and city/county banks like Industrial Bank, Jiangsu Bank, and Shanghai Pudong Development Bank, making it an efficient tool for capturing overall banking sector performance. Off-market investors can access the linked funds (Class A: 240019; Class C: 006697).
Zhongji Innolight and Eoptolink Weaken: Capital Seeks Entry Points in High-Optical ETFs; Optoelectronics Expo 'Shortages' and 'Expansion' Signals Affirm Sustained Industry Boom
AI hardware broadly pulled back, with optical module leaders facing notable pressure. Eoptolink fell 5%, Zhongji Innolight closed down 5.72%, and Tianfu Communication and Changxin Bochuang each declined over 1.5%. Capital showed a renewed willingness to position at lower levels via the ChiNext AI ETF HuaBao (159363), whose benchmark index fell 2% but attracted inflows during the dip.
The broad AI selloff appears linked to "deceleration" commentary from Silicon Valley, where several prominent AI leaders have recently expressed concerns about the rapid pace of AI development and called for a slowdown in development and stronger regulation. Sam Altman hinted that OpenAI and others may be close to an agreement to decelerate AI progress and jointly address safety risks, while Anthropic CEO Dario Amodei also urged more cautious development and a slower pace of model capability improvements.
However, industry-level momentum for optical modules and other compute hardware remains undiminished. Guosheng Securities' latest research from the Optoelectronics Expo shows record attendance, with NPO (near-package optics) display density and industrialization maturity exceeding expectations. Leading domestic cloud providers have completed sample validation and plan pilot deployments. The OCS ecosystem has expanded from a single Google player to a multi-polar landscape including Microsoft, Meta, OpenAI, and Nvidia. The buzzwords "shortage" and "expansion" coexist, with top vendors' orders booked through next year and inventories and prepayments rising in tandem.
Institutional outlooks remain optimistic. Guosheng noted that the mutually reinforcing expansion and demand at the industry level directly reflect the AI-driven prosperity cycle in optical communications. While short-term positioning and sentiment may waver, the long-term trend and industry fundamentals remain intact. Attention should stay on compute supply chain companies, including optical module leaders, as well as optical component frontrunners.
For investors seeking the high-"optical" theme and AI applications, the ChiNext AI ETF HuaBao (159363) and its off-market linked funds (Class A: 023407, Class C: 023408) offer exposure, with a heavy focus on optical module CPO leaders while covering AI applications. The benchmark index has over 35% combined weight in Zhongji Innolight, Eoptolink, and Tianfu Communication, positioning it as a core vehicle for AI compute demand.
This Week: Fed Rate Hike on the Horizon? Non-Ferrous Metals ETF Consolidates; HuaBao Funds Says New Phase May Emerge After Macro Disruptions Settle
With the market in consolidation and all three A-share indices in the red, the benchmark for the Non-Ferrous Metals ETF HuaBao (159876), which spans leading names across the sector, opened lower but trended higher in early trading, briefly turning positive with a 0.18% gain before retreating with the broader market. It closed down 0.62%, currently trading below all major moving averages.
Among constituents, Youyan New Materials led gains with a 3% rise, Jintian Co. and Yunnan Germanium each gained over 2%, while Zhangyuan Tungsten, Xiamen Tungsten, and Sinomine Resource followed suit. On the downside, copper leaders dragged on the index: Hailiang Co. fell over 4%, and Baiyin Nonferrous and North Copper each dropped more than 3%.
On the macro front, after last Friday's (September 11th) stronger-than-expected US CPI report, traders are largely pricing in a rate hike at the Fed's September meeting, which would be the first in over three years. The rate decision is scheduled for 2:00 AM Beijing time on Thursday, September 17th, followed by a press conference with Fed Chair Warsh at 2:30 AM.
Historical rate hike cycles offer lessons. CICC believes that large, sustained hikes raise financing costs and tighten liquidity, which can have long-term impacts on the economy and markets, citing the 2022 cycle driven by the Russia-Ukraine conflict and high oil prices, which saw 525bp of hikes over 16 months. In contrast, small, precautionary hikes have limited disruption, as rate hike expectations get priced in early and the realization amounts to a clearing of bad news, referencing the 1997 cycle when inflation was rising but not out of control and growth remained robustly supported by tech trends, an environment similar to today's.
Can the Fed sustain large, consecutive hikes? CICC suggests the foundation for such a path does not currently exist, unless oil prices spiral out of control, keeping the median above $95 or higher and preventing CPI from falling. Conversely, the K-shaped US economy and the suppressing effect of high rates on traditional demand mean the US fundamentals may not withstand prolonged hikes.
Beyond the pace of hikes, geopolitical conflicts are also disturbing inflation and policy expectations. Everbright Futures noted that the probability of a hike is now near 90%, with market pricing already full, diminishing the impact of the September decision itself. The key will be whether the policy statement adopts a strongly hawkish tone. Escalating Middle East tensions, from "limited strikes" to "direct military confrontation," have cut daily transits through the Strait of Hormuz to fewer than 10 vessels, fueling US inflation and placing the Fed in a dilemma where fighting inflation requires hikes that worsen recession risks-an opportunity for gold to rebound. Combined with the US midterm elections in November, gold's safe-haven and inflation-hedging attributes could gradually gain traction.
HuaBao Funds views the current market volatility as stemming from capital waiting on the sidelines and sentiment-driven positioning ahead of key events, rather than a collapse in industry fundamentals. It advises maintaining rationality, avoiding emotional trading, and patiently waiting for macro disruptions to fully play out. After the Fed's September meeting and before the US midterm elections in November, the valuation recovery and fundamental growth narrative for the non-ferrous metals sector could gradually return. While short-term pullbacks may firm up sector bottoms, the mid-to-long-term allocation value appears attractive.
The Non-Ferrous Metals ETF HuaBao (159876) and its linked funds (Class A: 017140, Class C: 017141) provide comprehensive coverage of copper, aluminum, rare earths, gold, lithium, tungsten, molybdenum, and tin leaders, with heavyweights including Zijin Mining, CMOC, China Northern Rare Earth, and Aluminum Corporation of China. According to 2026 interim results, all 60 constituents were profitable, with nearly half reporting net profit growth exceeding 100% year-on-year, offering solid fundamental support. With significantly more constituents than comparable indices (typically 30-50 stocks), it also captures semi-conductor and new materials exposure, making it an efficient tool for investors bullish on both technology and non-ferrous metals to gain sector beta in a single trade.
Note: The individual stocks mentioned above are constituents of the Non-Ferrous Metals ETF HuaBao (159876) benchmark index. As of the end of August, their weightings were: Youyan New Materials 1.31%; Jintian Co. 0.50%; Yunnan Germanium 2.25%; Zhangyuan Tungsten 0.66%; Xiamen Tungsten 2.56%; Sinomine Resource 1.66%; Hailiang Co. 1.15%; Baiyin Nonferrous 0.87%; North Copper 0.62%; Zijin Mining 11.14%; CMOC 7.12%; China Northern Rare Earth 4.40%; Aluminum Corporation of China 3.31%. The index constituents are shown for illustrative purposes only and do not constitute investment advice or reflect the holdings or trading activities of any fund under management.
Fee details are available in each fund's legal documents. Data sourced from Shanghai/Shenzhen/Hong Kong exchanges, CSI Index, Guozheng Index, Hang Seng Index Company, etc., as of September 14, 2026.
Reminder: Recent market volatility may be significant, and short-term performance does not predict future results. Investors should make rational investment decisions based on their own capital conditions and risk tolerance, with strict attention to position sizing and risk management.
Institutional reference sources include CITIC Securities' "Strategic Focus | Awaiting the Rate Hike Landing"; CITIC Securities' September 14 report "Financial Quality Improvement, Sustainable Sector Returns"; Guosheng Securities' "Optoelectronics Expo Insights: Seeing the Mountain for What It Is"; CICC's September 14 release "What Happens If There's a Rate Hike?"; and Everbright Futures' September 14 release "Gold Volatility Intensifies: Is the Super Central Bank Week a Turning Point?"
Based on the fund manager's assessment, the ChiNext AI ETF HuaBao, HK Connect Innovative Drug ETF HuaBao, and HK Connect Medical ETF HuaBao carry a risk rating of R4 (medium-high risk), suitable for aggressive investors (C4) and above. Other funds mentioned carry a risk rating of R3 (medium risk), suitable for balanced investors (C3) and above. Suitability opinions should be referenced from sales institutions.
Risk disclosure: The Bank ETF HuaBao passively tracks the CSI Bank Index, with a base date of December 31, 2004, and a launch date of July 15, 2013. The index's returns over the past five complete years were: 2025, 6.79%; 2024, 34.71%; 2023, -7.27%; 2022, -8.78%; 2021, -4.41%. Its volatilities were: 2025, 14.03%; 2024, 19.34%; 2023, 13.41%; 2022, 18.56%; 2021, 18.63%. The ChiNext AI ETF HuaBao passively tracks the ChiNext AI Index, with a base date of December 28, 2018, and a launch date of July 11, 2024. The Non-Ferrous Metals ETF HuaBao passively tracks the CSI Non-Ferrous Metals Index, with a base date of December 31, 2013, and a launch date of July 13, 2015. Index constituent composition adjusts according to index methodology, and backtested historical performance does not indicate future performance. Stocks mentioned are solely objective displays of index constituents and do not constitute stock recommendations or represent fund manager or fund investment directions. Any information in this article (including but not limited to stocks, commentary, forecasts, charts, indicators, theories, or any form of expression) is for reference only, and investors are solely responsible for their own investment decisions. Moreover, any views, analyses, or forecasts herein do not constitute investment advice to readers and shall not be held liable for any direct or indirect losses arising from the use of this content. Investors should carefully read fund legal documents such as the Fund Contract, Prospectus, and Fund Product Summary to understand risk-return characteristics and select products suited to their risk tolerance. Past performance does not indicate future results, and the performance of other funds managed by the fund manager does not guarantee the performance of this fund. Sales institutions (including direct sales and other channels) conduct risk assessments per relevant regulations, and investors should promptly review the fund manager's suitability opinions. Suitability opinions from sales institutions do not necessarily align, and sales institution risk ratings shall not be lower than the fund manager's assessment. Differences exist between fund contract risk-return characteristics and risk rating due to varying considerations. Investors should understand fund risk-return profiles, consider their own investment objectives, horizons, experience, and risk tolerance, and bear their own risks. CSRC registration of the above funds does not signify substantive judgments or guarantees regarding investment value, market prospects, or returns. Invest in funds cautiously.