The innovative drug sector in both A-shares and H-shares demonstrated renewed vigor during early trading on July 14th. HUABAO Pharmaceutical ETF (562050), heavily weighted towards A-share innovative drug stocks, and the fully invested HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection Trading Open Ended Index Securities Inves (ETF 520880), focused on Hong Kong-listed pharmaceuticals, both defied broader market trends to trade in positive territory.
The A-share pharmaceutical manufacturing segment experienced volatile gains. Leading innovative drug concept stock Kelun Pharmaceutical surged over 6%, while BeiGene and Zhejiang NHU Company Ltd. both rose more than 2%. The market's sole ETF tracking the pharmaceutical index, HUABAO Pharmaceutical ETF (562050), climbed over 1%, marking its fourth consecutive day of gains.
Notably, the HUABAO Pharmaceutical ETF (562050) achieved a record-high daily turnover of 562.7 million yuan yesterday, accompanied by net fund inflows, with nearly 300 million yuan added over the past two trading sessions.
The Hong Kong Stock Connect innovative drug sector initially dipped before recovering in early trading. The HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection Trading Open Ended Index Securities Inves (ETF 520880), which invests 100% in innovative drug R&D companies, turned positive during the session with an intraday amplitude approaching 3%. Major constituent stocks including Innovent Biologics, BeiGene, and Hansoh Pharmaceutical collectively rebounded over 1%.
On the news front, the newly revised National Reimbursement Drug List (NRDL) was recently released after an eight-year interval, showing a 14.1% increase in the number of chemical drugs and biological products included. The selection criteria saw a significant breakthrough, with several innovative drugs added to the list. In oncology, high-priced targeted therapies like osimertinib and olaparib were included. In immunology, biologics such as spartalizumab (from Conjupro) and telitacicept (from RemeGen) entered the directory (all having been included in the national medical insurance for less than 8 years). In the metabolic disease area, semaglutide made its first appearance.
The fund manager for the HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection ETF (520880), Feng Chencheng, pointed out that following this directory adjustment, certain innovative drugs are expected to gain volume expansion opportunities in primary care markets.
Regarding the outlook for innovative drugs, Feng Chencheng believes that the sustainability of the innovative drug sector's performance requires support from major industrial trends, which is contingent upon increased global recognition of clinical data from innovative drug companies. Valuation models depend on projected overseas sales. Therefore, beyond the disclosure of clinical data ahead of conferences like the WCLC (September) and ESMO (October), a key industry event to monitor within the year is the overall survival (OS) data from the global clinical trial of Kangfang's HARMi-3 study.
For investors looking to track the innovative drug rebound, two key instruments are highlighted:
HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection Trading Open Ended Index Securities Inves (ETF 520880): This ETF provides 100% exposure to innovative drug R&D companies. Its top ten holdings account for over 70% of the portfolio, highlighting strong concentration in industry leaders. The underlying assets are Hong Kong-listed stocks, offering high volatility and T+0 settlement.
HUABAO Pharmaceutical ETF (562050): This is the only ETF in the market tracking the pharmaceutical index, featuring a unique allocation of "75% innovative drugs + 25% traditional Chinese medicine." It combines the high-growth potential of innovative drugs with the high-dividend characteristics of traditional Chinese medicine stocks.
Data is sourced from the Shanghai, Shenzhen, and Hong Kong stock exchanges, China Securities Index Co., Ltd., Hang Seng Indexes Company, and PharmCube.
Note: ETF funds do not charge sales service fees. When subscribing for or redeeming fund units, the subscription/redemption agency may charge a commission of up to 0.5%, which includes relevant fees levied by stock exchanges and registration institutions. Please refer to each fund's legal documents for detailed fee structures.
Risk Disclosure: Constituent stocks of indices mentioned herein are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings information or trading动向 of any fund managed by the fund manager. The fund manager assesses the risk rating of the HUABAO Pharmaceutical ETF and its feeder fund as R3-Medium Risk, suitable for Balanced (C3) and above investors. The risk rating of the HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection ETF and its feeder fund is assessed as R4-Medium to High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors must take responsibility for any independent investment decisions. Furthermore, any views, analysis, or forecasts herein do not constitute investment advice of any kind to readers, and no liability is accepted for any direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not guarantee the performance of these funds. Past fund performance is not indicative of future results. Fund investment carries risks.