Karlsson, who finished runner-up in Portugal last month, emulated his opening round performance enjoying a bogey free second round with six birdies on the way to a two-day total of 12-under-par 128 at the Hong Kong Golf Club.
Spaniard Miguel Angel Jimenez carded a 67 in lone second spot while Thailand's Thongchai Jaidee, a two time Asian number one, posted a similar score alongside American Bryan Saltus who leaped up to tied third place after a 65 five strokes off the pace. Canadian star Mike Weir also rose up to joint third position after a 64 in the US$2.25 million event co-sanctioned by the Asian Tour and European Tour.
"It is great to be in this position and I have played really well over the first two days. I have understood exactly what I need to do to have a good score around this golf course and then it is up to me to do it. So far I have done well. I used my driver only once today, at the sixth hole," said Karlsson.
The 38-year-old leader was three under after nine holes as he grabbed the top spot when he sunk three more birdies on the back nine that included a birdie on the final par four 18th hole.
"It is a course where if you are trying to overpower it, you are going to be in all sorts of trouble. My caddie (Gareth Lord) said to me, if I'm going to come with you to that course, we are going to change something radically and we have because he had a tough time the last time here - I had a bit of a bad temper here then. It is the same type of golf course that I have had problems with in the past and so it is good for me to be here and practice that type of golf and work on my patience a bit," admitted Karlsson.
After dropping a shot on the sixth hole, former winner Jimenez, who triumphed in 2004, bounced back on the way home when he fired four birdies.
"I always enjoy this golf course, it is a great old fashioned golf course where you have to be safe from the tee to allow you to have a chance for the green. You have to concentrate hard here and I like it. Of course, there is also the weather which is great, it is like Malaga!" said Jimenez.
Thailand's Thongchai, with eight wins on the Asian Tour, enjoyed his round of 67 that included four birdies against a lone bogey.
"The greens are really tricky but I'm enjoying myself out there. My plan is the same every day. The par threes here are very tricky and the fifth, eighth and ninth holes are really tough. But I'm happy as I birdied the ninth, which I think is one of the toughest holes here," said the Thai stalwart.
With six birdies against one dropped shot, Saltus, competing in his fourth year on the Asian Tour, is enjoying the ride playing on his favourite course in Asia.
"This is an old golf course. I like old courses. You don't just smoke drivers on every hole, that gets boring. Here, you have to ply your way around, move the ball left to right, back and fourth, high and low and set it up.
"I got this new three wood from Callaway. It is really good. I hit it 317 yards with that three wood followed by an eight iron into the ninth hole. It sure makes it easy," said Saltus, who birdied the ninth hole.
China' s top golfer Liang Wen-chong, who leads the Asian Tour's UBS Order of Merit race, improved with a 66 in tied 12th place alongside overnight leader Choi Kyung-ju of Korea who slipped with a 72.
South African Retief Goosen shot a 66 in joint 20th place while England's Nick Faldo was on the mark after a 71 in tied 63rd place. Defending champion Jose Manuel Lara carded a similar score but missed the cut after a 140 total in joint 74th position.
Leading second round scores
128 - Robert Karlsson (SWE) 64-64
132 - Miguel Angel Jimenez (ESP) 65-67
133 - Bryan Saltus (USA) 68-65, Graeme Mcdowell (NIR) 67-66, Barry Hume (SCO) 65-68, Martin Erlandsson (SWE) 68-65, Simon Dyson (ENG) 68-65, Mike Weir (CAN) 69-64, Jarmo Sandelin (SWE) 69-64, Thongchai Jaidee (THA) 66-67, Trevor Immelman (RSA) 71-62
134 - Garry Houston (WAL) 63-71, K J Choi (KOR) 62-72, Liang Wen-chong (CHN) 68-66, Jean-Francois Lucquin (FRA) 68-66, Shiv Kapur (IND) 67-67, Daniel Chopra (SWE) 66-68, Peter Hanson (SWE) 68-66, Scott Strange (AUS) 66-68
135 - Gary Orr (SCO) 67-68, Damien Mcgrane (IRL) 69-66, Soren Kjeldsen (DEN) 70-65, Retief Goosen (RSA) 69-66, Charlie Wi (KOR) 67-68, Keith Horne (RSA) 67-68
Chawalit Plaphol (THA) 67-68, Marcus Fraser (AUS) 67-68, Panuwat Muenlek (THA) 68-67, Fredrik Andersson Hed (SWE) 64-71, Christian Cevaer (FRA) 70-65, Kang Wook-soon (KOR) 65-70, Maarten Lafeber (NLD) 68-67