Today saw all three major Hong Kong stock indices move into positive territory, with the Hang Seng Tech Index closing up over 3% and demonstrating strong performance throughout the session. Market confidence received a boost from favorable developments regarding the national drug reimbursement list, leading to a broad-based surge in the innovation pharmaceuticals sector. Meanwhile, intensive signals of price increases in the semiconductor silicon wafer industry spurred notable strength in related semiconductor equipment ETFs.

At the close, the Hang Seng Index was up 1.57% at 23,026.68 points, with a total turnover of HK$315.379 billion. The Hang Seng Tech Index rose 3.23% to 4,393.01 points. Among prominent Hong Kong-listed ETFs by size, the Tracker Fund (02800) closed up 1.39% at HK$23.4. The CSOP 2x Long Samsung ETF (07747) fell 10.41% to HK$158, while the CSOP 2x Long SK Hynix ETF (07709) declined 6.5% to HK$146.8.

Sector Performance Highlights

Innovation Pharma Sector Rally

Positive news regarding the national drug reimbursement list bolstered market sentiment, leading to a full-scale rally in the innovation pharmaceuticals sector today. By the close, the Huatai Bairui Innovation Pharma ETF (517120) surged 9.43% to 0.673 yuan. The GF Innovation Pharma ETF (515120) gained 8.87% to 0.614 yuan, and the HUATAI BAIRUI HANG SENG INNOVATION DRUG TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (QDII) (520500) advanced 8.76% to 1.279 yuan.

On June 29th, the National Healthcare Security Administration announced that 557 drugs passed the preliminary review for the national reimbursement drug list, and 54 drugs passed the initial review for the commercial insurance innovation drug catalog. This marks the entry into a substantive phase of dual "national insurance + commercial insurance" catalog negotiations, with newly introduced mechanisms such as pre-application and an 8-year price protection period also being implemented concurrently.

Analysis from Zhongtai Securities points out that the normalization of the pre-application system for the dual 2026 national and commercial insurance catalogs means drug candidates in mid-to-late stage clinical trials can queue up for national insurance inclusion in advance. Concurrently, rising R&D investment from overseas biotech firms is expected to continue driving steady growth in clinical orders for CROs and pilot-scale orders for CDMOs.

Zhongtai Securities believes that despite the current complex and volatile market conditions, with particularly noticeable capital flow disturbances, the underlying trend of low stock prices coupled with continuously improving fundamentals in the pharmaceutical sector remains unchanged. The widening gap between stock prices and fundamentals will eventually correct. The firm is firmly optimistic about the bottoming-out recovery opportunity in the healthcare sector at current levels, advising investors to gradually focus on Q2 2026 earnings, seize the opportunity for active positioning at the bottom, and specifically highlight CXO and upstream segments with sustained positive Q2 2026 earnings, as well as bottom-fishing opportunities in innovation pharma.

Semiconductor Equipment Strength

Robust earnings from Micron Technology (MU) have lifted valuations across the global memory sector. The spillover of demand for AI chips across the entire industry chain has contributed to the notable strength in related semiconductor equipment ETFs. At the close, the Huatai Bairui STAR Semiconductor Equipment ETF (588710) jumped 10.57% to 4.102 yuan. The ChinaAMC STAR Semiconductor ETF (588170) rose 9.66% to 3.961 yuan, and the Guotai Semiconductor Equipment ETF (159516) gained 9.02% to 1.921 yuan.

The strong financial report from Micron Technology has boosted valuations for the global memory segment. Concurrently, intensive signals of price increases are being released in the semiconductor silicon wafer industry. Suppliers such as GlobalWafers, Hejing Technology, and Formosa Sumco Technology have already issued clear price hike signals. Price increases have been initiated for 6-inch wafers, demand for 8-inch products continues to heat up, and price negotiations are underway for 12-inch products.

Furthermore, SEMI recently revised its forecast upwards, significantly increasing its 2026 growth expectation for the global front-end semiconductor equipment market size from the previous 16.5% to 23.5%, with the projected market value raised from $133 billion to $152.2 billion.

Huatai Securities noted that last week, the A-share market's focus shifted upwards, led by growth stocks, with the AI industry chain experiencing extreme moves driven by policy catalysts, though surface-level crowding is already at high levels. The K-shaped recovery is expected to continue in the short term; weaker domestic demand, in fact, opens up room for expectations of stronger policy support. The resonance with the AI industry cycle remains strong, and the uptrend may not necessarily break down. However, market sentiment has not fully retreated and lacks hedging, leading to an accumulation of fragility.

China Galaxy Securities pointed out that as the window for interim report earnings approaches, attention should be paid to potential earnings surprises in memory and semiconductor equipment. Based on industry progress, focus should also be on materials and equipment benefiting from the memory capacity expansion trend.

Institutional Perspectives

An analyst from Guolian An Fund, Gao Shi, expressed the view that with the interim earnings season approaching, coupled with the market's high focus on new hard-tech listings, short-term market fluctuations may increase. However, in segments with solid fundamentals such as memory, equipment, and upstream materials, significant short-term pullbacks could present attractive opportunities to add positions.

Gao Shi emphasized that the semiconductor equipment upcycle has transitioned from early policy-driven expansion to enterprise-led capacity expansion. The two major computing power carriers, logic chips and memory chips, are continuing large-scale capital expenditures, suggesting equipment demand will remain elevated for the next two to three years. Combined with the gradual technological catch-up of domestic equipment manufacturers to overseas leaders and the ongoing release of domestic substitution benefits, the long-term growth potential is substantial. For remaining allocation, it is advisable to selectively position in downstream high-growth supporting equipment such as optical modules and high-end PCBs, aiming to capture earnings realization opportunities through rotation among targets.