In recent years, we have witnessed a remarkable surge in China's technology sector, particularly in artificial intelligence (AI) and innovation-driven industries. A notable event occurred this past weekend when WeChat, typically recognized for its restrained growth, launched a gray testing phase for integrating DeepSeek—an advanced AI application. This collaboration represents a significant milestone as Tencent becomes one of the first major tech companies to harness this potent tool, which reflects the nation's eagerness to embrace the latest breakthroughs in technology.

Since the introduction of the concept index for DeepSeek, we have seen impressive growth, with figures from Wind showing an increase of over 45% between January 26 and February 17. This upward trend signifies a renewed optimism among investors, marking a notable resurgence for tech stocks in the market. The call for innovation as a driving force behind new qualitative productivity, outlined during the Central Economic Work Conference in late 2024, reinforces China's intent to build a modern industrial system rooted in technological advancements.

As the nation pivots towards a focus on hard technology, index funds such as the Huaxia Science and Technology Innovation Index ETF (subscription code: 589003)—the first of its kind to encompass essential sectors such as semiconductors, new energy, and information technology—serve as a critical investment vehicle for investors seeking to participate in the technological renaissance.

Launched in July 2019, the Science and Technology Innovation Board (STAR Market) was specifically designed to cater to the burgeoning needs of hard tech enterprises. It has prioritized support for the latest advancements across six high-tech industries, including cutting-edge information technology, high-end equipment, and biotechnology. However, challenges remain as individual investors face a formidable barrier to entry, with a high account threshold set at 500,000 yuan, making it difficult for small and medium-sized investors to gain direct access.

This is where exchange-traded funds (ETFs) shine, providing an essential pathway for investors wishing to engage with the STAR Market. Reports indicate that the STAR Market has become the segment with the highest proportion of index-based investments within the A-share market. Currently, series indices such as STAR 50, STAR 100, and STAR 200, targeting large-cap, mid-cap, and small-cap enterprises, respectively, along with the comprehensive STAR Index, enable diverse investment opportunities.

As of mid-February, the STAR Market boasts a remarkable total of 585 component stocks, of which 567 are included in the STAR Comprehensive Index. This index serves as a valuable resource for investors striving for broader market exposure, eliminating the hassle often found in lumping together multiple ETFs that may overlook thousands of smaller companies that present promising potential.

The STAR Comprehensive Index cleverly maintains a balanced distribution of constituent stocks while capturing leading enterprises in the sector. Notably, the index includes both sizable entities, such as SMIC with a market cap exceeding 800 billion yuan, and smaller firms with market caps under 90 million yuan. Companies with total market values below 100 billion yuan constitute over 70% of the index, highlighting the vast variety present within the technology domain.

This extensive market coverage ensures a more comprehensive reflection of the STAR Market's overall structure, diminishing the risk usually tied to concentrating investments in a narrow market scope. Additionally, the index's composition favors diversification, with the top five stocks accounting for merely 16.22% of the total weight of the index, while the top ten stocks represent only 23.34%. This contrasts sharply with many other benchmarks, which tend to exhibit more concentrated holdings and, as a result, greater volatility.

While the STAR 50 Index places significant weight on the semiconductor sector, both the STAR 100 and STAR 200 indices offer a wider spread across various industries, integrating contributions from pharmaceuticals and power equipment sectors. The STAR Comprehensive Index, however, makes a concerted effort to encompass nearly 97% of the listed companies on the STAR Market, integrating cutting-edge fields such as AI, robotics, and brain-computer interfaces into its fabric.

Through these efforts, the STAR Comprehensive Index does not overlook any breakthrough in niche areas within the hard tech space, demonstrating robust adaptability to shifting market environments. As of mid-February, the index encompasses 17 different first-level industries based on Shen Wan's classification. This includes traditional sectors such as electronics and machinery alongside emerging industries in environmental protection, non-ferrous metals, and agriculture. The rich diversity reflects strong market fundamentals and an expansive growth landscape.

As we forge ahead, the introduction of the STAR Comprehensive Index enhances market transparency and attractiveness while offering investors fine-tuned analytical tools. Prior to its debut, many small-cap stocks on the STAR Market were inadequately covered by mainstream indices, resulting in limited capital inflow and subsequently high valuations of large-cap stocks. Conversely, the current competitive landscape now emphasizes the value presented by the STAR Comprehensive Index for discerning investors.

The growing momentum behind the Chinese technology sector suggests a critical turning point. The Central Huijin Investment, referred to as the nation's "National Team," has notably increased its stake in broad-based ETFs, signaling solid confidence in the resilience of China's economic growth amidst a favorable allocation within the A-share market.

In January, major index providers, including Huaxia Fund, submitted applications for a series of STAR Comprehensive Index ETFs, and less than ten days later, these ETFs received official approval. This quick turnaround underscores the regulatory body's strong support for the STAR Comprehensive Index. Initial evaluations indicate that the STAR Comprehensive Index has exhibited commendable performance since its base date of December 31, 2019, with a near 20% return since then, reflecting its robustness against other key indices.

Moreover, as 2024 begins, the STAR Comprehensive Index has already outpaced other indices, supported by a concerted policy push for technological innovations. This trend has propelled the index over a dramatic 56% gain since the September 2023 policy shift, significantly outperforming peers such as the CSI 300 Index and the CSI 500 Index.

Among its constituents, five stocks have seen the most substantial increases, with companies like Cambricon Technologies soaring over 472% over the past year. In this context, missing out on STAR Comprehensive Index ETFs could mean forsaking significant future opportunities for investment in core assets.

The introduction of the STAR Comprehensive Index ETF (subscription code: 589003) not only reflects a responsive measure to the growing waves of engineering dividends, application scenarios, and capital support but also provides a convenient gateway for investors to become part of the nation's technological evolution.

As both hard technology and traditional industries converge, the STAR Comprehensive Index ETF transforms into an invaluable tool, seamlessly capturing the rise of new cycles within China's economic landscape. The recent successful launch of the first batch of STAR Comprehensive Index ETFs on February 17 marks another historic moment in the evolution of investment vehicles, rivaling the A500 ETF's buzz from last year.

Huaxia Fund has emerged as the leader in the ETF market, boasting a catalog of 95 ETFs and an impressive market share exceeding 17%. The firm has continuously dominated the ETF landscape, driven by its robust offerings across various sectors. The STAR Comprehensive Index ETF, managed under the experienced leadership of Sun Kuanzhi of Huaxia Fund, provides a compelling vehicle for investors eager to harness the potential rewards of the burgeoning hard technology era.

With its deep-rooted values and successful performance record, the STAR Comprehensive Index ETF (subscription code: 589003) stands as an essential instrument for investors looking to capitalize on the lucrative landscape of hard technology. The combination of skilled management and strategic positioning ushers in a new era where investments can be made efficiently, empowering investors to ride the waves of China's technological renaissance.

While the content of this discussion serves as a general overview and does not provide specific investment advice, it encapsulates a pivotal moment in time where ensuring savvy investments in technology could offer wealth-building opportunities for years to come.