Hong Kong stocks opened lower on August 19, but a notable turnaround unfolded as heavyweight internet names clawed back losses. The Huabao Hong Kong Internet ETF (513770), which tracks leading internet stocks, initially dipped over 1% before staging a resilient recovery, now trading up 0.55% against the broader market's weakness.

Leading the charge, Xiaomi-W (01810.HK) surged more than 6% following its earnings release, while Meituan-W (03690.HK) gained over 2% and Tencent Holdings (00700.HK) advanced nearly 1% in sympathy.

On August 18, Xiaomi unveiled its second-quarter 2026 results, reporting quarterly revenue of RMB 108.9 billion, a 9.9% sequential increase from the first quarter's RMB 99.1 billion, once again surpassing the RMB 100 billion threshold. Adjusted net profit came in at RMB 6.2 billion, up 2.4% quarter-on-quarter. Despite headwinds from sharply rising costs of core components like memory chips, Xiaomi delivered a solid earnings report with clear sequential improvement.

Notably, the company's innovative business segments—particularly automotive and AI—generated RMB 24.9 billion in Q2 revenue, achieving double-digit growth on both a year-on-year and quarter-on-quarter basis. These emerging verticals are rapidly establishing themselves as new growth engines and critical pillars for future expansion. In the second quarter of 2026, Xiaomi delivered 104,199 new vehicles, representing a 28.2% increase year-on-year.

Xiaomi also intensified its research and development efforts, pushing quarterly R&D spending to RMB 9.2 billion, up 18.9% year-on-year, bringing the first-half total to RMB 18.2 billion. This sustained, high-intensity investment in foundational technologies is driving core capabilities in chips, AI, operating systems, and robotics into a dense phase of commercialization. In June, Xiaomi launched its iMo-V2.5-Pro-UltraSpeed model, becoming the world's first trillion-parameter model to exceed 1,000 tokens per second on general-purpose GPUs. By July, MiMo-V2.5 had secured the top spot on OpenRouter's global weekly and monthly rankings for model usage.

Everbright Securities expressed optimism about Xiaomi's long-term value as a global hardcore technology leader, citing its AI commercialization momentum and ecosystem synergies.

Huayuan Securities noted that leading internet platforms continue to intensify AI investments while advancing exploration of new AI-powered products. The competitive advantages of top-tier companies are evident in their resilient fundamental performance, while their R&D and deployment of underlying AI technologies, along with the execution of AI application products, remain central to both industrial development and market trading dynamics. The brokerage recommends sustained attention to the strategic value of proactive organizational restructuring among leading companies, as well as their medium-to-long-term narratives and execution progress in AI.

Goldman Sachs issued a research note advising investors to build positions in Hong Kong-listed internet and soft tech stocks in tranches. The investment bank highlighted that valuations for these sectors are at cyclical troughs, while subsidy-related losses in food delivery and on-demand services are gradually narrowing. Meanwhile, AI monetization trends—spanning cloud computing, agentic AI, and token consumption—are gaining momentum, making the sector's tactical investment appeal increasingly compelling. The report emphasizes the potential for value re-rating of Hong Kong internet leaders amid the AI transformation.

The Huabao Hong Kong Internet ETF (513770) and its feeder funds (Class A: 017125; Class C: 017126) passively track the CSI Hong Kong Stock Connect Internet Index. Its top ten holdings feature tech giants including Alibaba-W (09988.HK) and Tencent Holdings (00700.HK), alongside various AI application companies, offering significant leader advantages with same-day T+0 trading and strong liquidity.

For investors seeking Hong Kong tech exposure with reduced volatility, the Huabao Hong Kong Large Cap 30 ETF (520560)—the first of its kind in the market—employs a "tech plus dividend" barbell strategy. Its heavy positions include high-growth tech names like Alibaba alongside stable, high-yield dividend payers in banking and insurance, positioning it as an ideal long-term allocation tool for Hong Kong equities.

Investors should note that recent market volatility may be elevated, and short-term performance does not predict future results. Please make investment decisions based on your own financial situation and risk tolerance, with careful attention to position sizing and risk management. Data sources include Shanghai and Shenzhen stock exchanges. Fee disclosures apply to ETF subscriptions and redemptions, and all investments carry risks requiring due diligence.