As we move deeper into the third quarter of 2026, the global technology sector is undergoing a subtle yet significant transformation. The AI-driven rally is shifting from a hardware-dominated narrative, fueled by industry momentum, toward a more balanced dynamic between hardware and software. During the first half of the year, AI hardware attracted massive capital inflows thanks to strong earnings visibility and solid pricing power, which effectively siphoned liquidity away from software, resulting in a clear "hardware up, software down" pattern. However, since July, profit-taking has emerged in hardware due to elevated valuations after a substantial run-up, with funds rotating back into software—a segment that has corrected sufficiently and holds catch-up potential. This "high-to-low switch" is now a defining feature of the market.

With consensus around the AI trade weakening, the ability to select and rotate between sub-sectors has become increasingly critical for investors. In this context, the Fullgoal Hong Kong Stock Connect Technology Hybrid Fund (Class A: 027236; Class C: 027237), which is set to close its subscription on August 27th, is drawing attention. The fund is helmed by Zhao Nianshen, a seasoned overseas investment professional, who leverages a mature cross-market industrial research framework and stock-picking system to uncover opportunities within the Hong Kong tech sector, aiming to deliver long-term alpha.

A Distinctive Value-Growth Approach with Proven Cross-Border Expertise

The fund's designated manager, Zhao Nianshen, is a portfolio manager in Fullgoal Fund's overseas equity investment division. With 12 years of securities industry experience and nearly six years in fund management, Zhao's career began at Fidelity International (Hong Kong) before he joined Fullgoal in June 2017. He currently manages the Fullgoal Minyu Shanghai-Hong Kong-Shenzhen Select and Fullgoal Global Technology & Internet funds, overseeing portfolios that span Hong Kong, US, Japanese, and Korean markets—a testament to his extensive cross-border investment experience. His professional training at foreign institutions, which emphasizes fundamental research, combined with Fullgoal's Hong Kong team's consistent GARP (Growth at a Reasonable Price) philosophy, has shaped his distinctive value-growth investment style. Zhao believes that growth and value are not opposing forces; investing in growth requires not only assessing a company's growth potential and velocity but also scrutinizing whether fundamentals align with valuations. He evaluates industry trends to determine whether narrative shifts translate into real demand, and whether that demand converts into tangible corporate earnings and cash flow, thereby calculating the long-term investment space. Only then, considering current market pricing, does he decide on participation. In practice, he internalizes the GARP strategy as a "price discipline"—no matter how strong the fundamentals, he insists on assessing whether long-term growth potential is already priced in, aiming to buy the highest possible growth at a reasonable price.

His track record underscores the efficacy of this methodology. Take the Fullgoal Global Technology & Internet Fund, which he manages: as of June 30, 2026, the Class A shares delivered net asset value growth of 73.34% over the past six months, 114.28% over the past year, and 208.17% over the past three years. Over the same periods, the performance benchmark returned -21.74%, -15.38%, and 6.25%, respectively, highlighting exceptional excess returns. According to Galaxy Securities data as of July 31, 2026, the fund's Class A shares ranked in the top five among its peers for both the one-year and three-year periods, showcasing robust cross-market investment capability. Data sources: Fund net value growth rates, benchmark returns, and excess returns are from fund periodic reports, covering the period from June 20, 2018 to June 30, 2026. Peer rankings of 4/78 (1-year) and 3/62 (3-year) are based on QDII equity funds (Class A) as of July 31, 2026. These evaluations are based on historical performance and do not constitute future investment advice. Past performance is not indicative of future results.

Note: The performance benchmark for the Fullgoal Global Technology & Internet Equity (QDII) fund was changed on June 1, 2026, from "CSI Overseas China Internet Index Return ×80% + CSI Internet Index Return ×10% + ChinaBond Composite All-Value Index Return ×10%" to "CSI Overseas China Internet Index (USD) Return ×55% + NASDAQ 100 Index Return ×30% + CSI Internet Index Return ×5% + ChinaBond Treasury Total Return All-Value (1-3 Year) Index Return ×10%." The Fund's Class A shares were established on June 20, 2018. For the five full fiscal years (2021-2025), the net value growth rates (and benchmark returns) were -12.85% (-41.85%), -18.52% (-8.42%), 14.72% (-4.67%), 19.86% (15.41%), and 43.04% (20.67%), based on periodic reports as of December 31, 2025. Class C shares were established on September 18, 2024, with a one-year (2025) net value growth rate (and benchmark return) of 42.95% (20.67%), per periodic reports as of December 31, 2025. Class D shares, established on December 2, 2025, are not listed due to their short history. Manager changes during this period: Zhang Feng (July 13, 2011-December 5, 2018), Zhang Kangkang (June 19, 2018-January 10, 2020), Zhang Feng (June 21, 2019-January 13, 2022), Ning Jun (January 22, 2020-November 13, 2025), and Zhao Nianshen (since March 7, 2025). Another fund managed by Zhao is the Fullgoal Minyu Jinbu Shanghai-Hong Kong-Shenzhen Growth Select, whose benchmark is Hang Seng Composite Index Return (after FX adjustment) ×70% + CSI 300 Index Return ×10% + ChinaBond Composite All-Value (Total) Index ×20%. Its Class A shares, established May 21, 2019, posted net value growth rates (and benchmark returns) of -4.35% (-12.67%), -17.75% (-8.76%), -23.38% (-9.3%), 20.62% (16.11%), and 32.42% (20.93%) for 2021-2025, per periodic reports as of December 31, 2025. Class C shares, established March 8, 2021, showed growth rates (and benchmark returns) of -18.08% (-8.76%), -23.7% (-9.3%), 20.25% (16.11%), and 31.87% (20.93%) for 2022-2025. Manager changes: Zhang Feng (May 21, 2019-December 12, 2025) and Zhao Nianshen (since August 31, 2020). Fund returns do not represent actual investor returns, and net asset value per share reflects only the net assets per share. Historical performance is not a guarantee of future results.

The Long AI Cycle Persists, Offering Broad Scope for Active Management

Currently, AI remains in a long-term upward cycle, but the phase of highest consensus and most crowded positioning has passed; not all segments will deliver equal returns. The next phase of tech investing requires a renewed balance among industry trends, earnings delivery, and valuations. On the hardware side, the sector remains in a high-growth phase of the cycle, but with capital expenditure growth decelerating at the margin, greater attention must be paid to supply-demand dynamics in specific sub-segments and shifts in demand growth. Meanwhile, cloud providers and software companies are likely to see easing earnings pressures, thanks to maturing open-source models and declining inference costs. Given this, Zhao Nianshen indicated that his positioning strategy for the new fund's next phase would involve continuously comparing AI hardware, cloud platforms, and software within a unified framework of earnings, valuation, and risk compensation, making investment decisions based on fundamentals. This description of the manager's investment philosophy does not represent the future operations or performance of the new fund.

Moreover, low valuations, returning capital flows, and an expanding roster of eligible stocks provide fertile ground for actively managed Hong Kong tech products. On one hand, the valuation of the Hong Kong tech sector is currently at a relatively low level. After the second quarter's shift from rate-cut to rate-hike expectations, the market may have moved past its most pessimistic phase, leaving limited room for further valuation compression. On the other hand, both domestic and international capital are returning, leading to marginal improvements in Hong Kong market liquidity. According to Guosen Securities data, foreign capital saw a net inflow of approximately HK$49.4 billion into Hong Kong stocks in the second quarter of 2026—the first quarterly inflow since 2024—while southbound capital has also resumed net inflows since June. Equally noteworthy is the inclusion of high-quality targets in the Stock Connect program. Historically, Hong Kong tech was dominated by internet platforms, leaning toward "soft tech." However, as A-share hard-tech leaders accelerate their "A+H" listings and are progressively added to the Stock Connect, the number and quality of AI core hardware targets—such as computing chips, optical modules, storage, and semiconductor equipment—are rising simultaneously. Hong Kong tech is gradually forming a comprehensive industrial mapping with balanced development across "hardware, internet, and software," providing active managers with a richer stock-picking universe.

Given the current market environment, the broad-based rally in AI investments has temporarily concluded, making industry-specific and earnings-specific divergence the key to capturing opportunities. For investors looking to seize the opportunities presented by the AI industry cycle, the Fullgoal Hong Kong Stock Connect Technology Hybrid Fund (Class A: 027236; Class C: 027237) may be worth attention. Risk disclaimer: This article is promotional content and does not constitute investment advice. It does not represent a forecast of market or industry trends, nor does it constitute any investment action or recommendation. It also does not indicate the fund's future specific operations or asset allocation. Funds involve risks, and investment should be undertaken with caution. Past performance and net value levels do not indicate future performance, and the performance of other funds managed by the fund manager does not guarantee the performance of this fund. Investors should make investment decisions prudently based on their own risk tolerance. This product is issued and managed by Fullgoal Fund Management Co., Ltd.; distributors do not bear responsibility for investment or redemption. The fund may invest in stocks eligible for the Stock Connect, and will bear specific risks arising from differences in the investment environment, targets, market systems, and trading rules under the Stock Connect mechanism. The fund manager commits to managing and using fund assets with integrity, diligence, and responsibility, but does not guarantee profitability or minimum returns. Investors should carefully read the fund's contract, prospectus, and product data summary, as well as other legal documents and risk disclosure statements, before making investment decisions. Fees: Class A and C subscription fees are 0.80% for amounts under RMB 10 million, and RMB 1,000 per transaction for amounts of RMB 10 million or above. Class C charges no subscription fee but has an annual sales service fee of 0.40%. Redemption fees are 1.50% for holding periods under 7 days, 1.00% for 7 to 30 days, 0.50% for 30 to 180 days, and 0% for periods of 180 days or more.