This past weekend marked a significant turning point for Tencent's WeChat, a platform renowned for its restraint in the fast-evolving landscape of technologyThe platform began a grey test integrating with DeepSeek, a national-level AI application, making Tencent the first major tech company to adopt itThis partnership signifies not just a collaboration between a leading AI and social application, but an indication that we stand on the brink of a new technological revolution—peering into the boundless future ahead.

According to Wind data, the Wande DeepSeek concept index, released on January 26, showed a remarkable growth of over 45% by February 17, indicating a rejuvenation in tech stock investmentsIt heralds the arrival of a golden era for hard technology investment.

The Central Economic Work Conference scheduled for late 2024 emphasized the need for scientific and technological innovation to spearhead the development of new productive forces and to build a modern industrial systemInvestment vehicles like the ETF covering the scientific innovation index, such as the Huaxia fund, embody this strategy—they serve as a "ticket" for investors to dive deeper into the hard technology frontier.

The launch of the Sci-Tech Innovation Board (STAR Market) in July 2019 was a response to China's growing technological ambitions and strategic needsThis platform was designed to facilitate innovation among hard tech companies, focusing on six high-tech industries such as information technology, advanced manufacturing, and biomedicineHowever, a significant barrier exists for small to mid-sized investors: a staggering 500,000 RMB requirement to open an account on the STAR MarketConsequently, ETFs have emerged as invaluable tools; reports by Guojin Securities indicate that the STAR Market has become the most index-investment-friendly segment within the A-share market.

Currently, the STAR Market's range of indices includes the STAR 50, STAR 100, STAR 200, and the comprehensive index

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These categories focus on various firm sizes—large, mid, and small market cap companiesThe comprehensive index, alongside its other counterparts, boasts broader coverage—a total of 585 component stocks on the STAR market as of February 16, and the comprehensive index’s coverage includes an impressive 567 of these stocks, making it significantly more inclusive than the STAR 50, 100, or 200.

Before the establishment of the comprehensive index, investors seeking to gain exposure to the entire STAR Market often had to invest in multiple linked ETFs—an arduous process that frequently led to the omission of over 200 smaller-cap stocksThe balance introduced by the comprehensive index significantly enhances both convenience and thoroughness in investing.

The structure of the comprehensive index creates an equilibrium that accommodates top industry players while also diffusing market concentration, a crucial feature for adapting to various market conditions.

As of mid-February, the components within the comprehensive index include the heavyweight Semiconductor Manufacturing International Corporation (SMIC), valued over 800 billion yuan, as well as smaller firms with valuations below 900 million yuanUtilizing a broad market cap spectrum allows for a more representative reflection of the STAR Market's overall valuation structure, avoiding excessive risk concentrated in a single market cap segmentFurthermore, the cumulative weight of the top five stocks is around 16.22%, while the top ten stocks account for 23.34%, and the top 50 stakes still remain below 50%—a testament to risk mitigation in index returns compared to other major indices.

The composition of the STAR 50 index heavily favors semiconductors, while the STAR 100 and STAR 200 show more balanced exposures across various sectors such as biomedicine and electrical equipmentConversely, the comprehensive index encapsulates nearly 97% of listed companies on the STAR Market, extending to emerging technologies like AI, robotics, brain-computer interfaces, thus reflecting a well-rounded portfolio of technological innovation.

As we witness breakthroughs in sub-fields of hard technology, no significant development should be overlooked according to the comprehensive index's component selection methodology

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This robust framework comprises 17 principal sectors identified by Shenwan, not just electronics and pharmaceuticals, but also includes sectors like environmental protection and agriculture—demonstrating a rich diversity and defensiveness.

The introduction of the comprehensive index enhances both market transparency and attractiveness, while providing investors with nuanced analytical tools for market insightsPrior to the index, the under-documentation of smaller-cap STAR stocks hampered their investment potential and led to disproportionate valuations favoring larger companiesThus, the comprehensive index now stands as a beacon of value.

As the dawn of a new era approaches, the pressing question is how to effectively capture the next wave of innovative productivityHistorical trends show that when the market identifies a bottom, broad-based indices become the go-to devices for substantial capital inflowThis is attributed to the simplicity of index products, where ETFs can efficiently utilize investment capital, coupled with low holding costs, further cementing their appeal.

In the fourth quarter of last year, the Central Huijin Investment, known as the "national team", increased its stakes in broad-based ETFs, reflecting confidence in the resilience of China’s economic growth and the cost-effectiveness of A-sharesBy January 13, major index providers, including Huaxia Fund, submitted the first batch of 12 comprehensive index ETFs, with approvals arriving less than ten days later—a clear endorsement from regulatory bodies highlighting the urgency of these indices.

The comprehensive index started its base on December 31, 2019, at a base value of 1000 pointsWhen compared with other significant STAR market indices, it displays a more robust long-term performance, yielding nearly 20% since inceptionNotably, its performance since the shifts in policy since last September has been particularly stellar; as of February 17, the index surged over 56% since the event dubbed "9.24," far surpassing mainstream broad-based indices like the CSI 300 at 22.87% and the CSI 500 at 32.35%.

Some notable component stocks have thrived, with top gainers like Cambricon Technologies gaining more than 472% within a year

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Missing out on the comprehensive index ETF might translate to overlooking essential assets for the coming decadeOn the flip side, Huaheng Biology, among the top decliners at a drop of 57.38%, has shown a resurgence, rallying over 4% since the Year Start.

The comprehensive index has emerged as a flawless tool for investors focusing on cutting-edge technology alongside diversified sector engagement, especially as disruptive innovations like AI and quantum computing reshape investment landscapesIt might emulate the long bull run of the Nasdaq during the technology boom of the 1990s.

Furthermore, the comprehensive index ETF symbolizes a response to the trifold paradigm of "engineer dividends, application scenarios, and capital support," serving as an accessible entry point into the larger narrative of technological competition on the global stage.

The rise of hard technology and the transformation of traditional sectors converge through the lens of the comprehensive index ETF, poised to closely monitor the primary themes driving China's new cyclical ascent.

The spectacular launch of the first batch of comprehensive index ETFs on February 17 encapsulates a phenomenal event echoing last year’s A500 ETF releaseEach ETF had a cap of 2 billion RMB and was issued over a span of 5 to 12 days.

Huaxia Fund has emerged as the leading ETF manager with the highest number of ETFs in the market, boasting 95 products and an unmatched scale exceeding 666 billion RMB—a 17% market share, setting a clear precedent in the fields of technology and broad-based indices.

Thus, with Huaxia as the top choice for passive investment, it dominates the evolution of index investment paradigms in ChinaWith its equity ETFs securing the industry's top spot for 20 consecutive years, Huaxia stands as the only fund company to receive recognition as a "Passive Investment Golden Bull Fund Company" for eight straight yearsAs of September 2024, the scale of equity index products at Huaxia soared to 765.7 billion, with equity ETFs representing 675.3 billion—evidencing a remarkable growth of nearly 276.1 billion in just three quarters of 2024, with a market share surpassing 21%.

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