Market sentiment has been repeatedly disrupted by geopolitical tensions. The ceasefire between the U.S. and Iran faces new uncertainties, halting the rebound in Hong Kong stocks on April 9. The Hang Seng Index fell 0.54%, while the Hang Seng Tech Index dropped 2.06%.
The pharmaceutical sector initially showed strength during the morning session but eventually succumbed to selling pressure, following the broader market downward. The Hong Kong Stock Connect Innovative Drug ETF Hua Bao (520880), which focuses entirely on innovative drug R&D, rose as much as 1.32% before reversing gains and closing down 1.32%, marking two consecutive days of decline. Trading volume surged to 570 million yuan. Meanwhile, the Hong Kong Stock Connect Healthcare ETF Hua Bao (159137), representing core healthcare assets, retreated 0.96%.
Notably, during the decline of 520880, intraday premiums were frequently observed. Combined with significantly increased trading volume, this suggests active buying interest, indicating potential capital inflows during the dip.
Within the Hong Kong Stock Connect innovative drug sector, declines in heavyweight leaders such as Akeso, Innovent Biologics, and CSPC Pharmaceutical Group were the main drags. However, there were still bright spots: GenFleet Therapeutics-B announced that GFH375 received its second Breakthrough Therapy designation, surging over 11% intraday. Haixi New Drug HXP056 advanced smoothly in clinical trials, rising 9.17%. Baiji Pharma-B's recombinant human hyaluronidase KJ017 received approval for market launch, closing up 6.88%.
Reflecting on recent trends, the innovative drug sector in Hong Kong saw strong gains before the Qingming Festival, with the Hong Kong Stock Connect Innovative Drug ETF Hua Bao (520880) recording a single-day increase of nearly 7%. Post-holiday, market sentiment cooled significantly, with 520880 retreating below the half-year moving average. How should current opportunities be viewed? The Dongwu Securities healthcare team suggests that April and May may represent a golden allocation period for innovative drugs.
On the policy front, innovative drugs received another major boost. The State Council's "Several Opinions on Improving the Drug Price Formation Mechanism" (State Council Document No. 9, 2026) has been officially implemented.
Dongwu Securities interprets the document as establishing market-driven principles for drug pricing. Innovative drugs can be priced reasonably to match high investment and risk, with adjustments possible based on real-world studies. This shift returns pricing power to the market, promotes diversified payment mechanisms, and significantly raises the commercial potential for innovative drugs in China.
Additionally, on April 7, Beijing introduced the "Several Measures to Support High-Quality Development of Innovative Pharmaceuticals (2026)." This marks the third consecutive year Beijing has issued such policies since 2024. The 2026 version offers more specific and stronger solutions to core challenges, including breakthroughs in cutting-edge technologies, relaxed hospital admission assessments, and shortened approval timelines.
Fundamentally, recent annual reports from innovative drug companies show robust sales growth and optimistic guidance for 2026. Industry performance has exceeded expectations since the start of the year. The upcoming April to June period will be a critical window for key data disclosures, including but not limited to Phase III results for Akeso's AK112H6, Kelun-Biotech's SKB264, as well as updates from Hengrui Pharmaceuticals, Baili Pharmaceutical, and Innovent Biologics.
The 2026 American Association for Cancer Research (AACR) Annual Meeting, scheduled for April 17-22, is one of the most important global platforms for oncology innovation data. This year, 104 Chinese pharmaceutical companies will participate, showcasing over 250 innovative drugs and nearly 400 cutting-edge research成果, including 92 ADC drugs targeting热门靶点 such as HER2 and Trop2, alongside 66 small molecules, nuclear medicines, and cell therapies.
To capitalize on the current buying opportunity in Hong Kong healthcare, consider these two T+0 instruments: For innovative drug exposure, the Hong Kong Stock Connect Innovative Drug ETF Hua Bao (520880) offers pure-play allocation to R&D-focused companies, with over 70% concentration in its top ten holdings. For broader healthcare, the Hong Kong Stock Connect Healthcare ETF Hua Bao (159137) allocates approximately 70% to CXO and AI healthcare, while also covering innovative drugs and medical devices (including brain-computer interfaces). Its top holdings include JD Health and AliHealth.
Data sources: China Securities Index Co., Ltd., Shanghai, Shenzhen, and Hong Kong Stock Exchanges. Note: ETF funds do not charge sales service fees. Brokerages may charge a commission of up to 0.5% for subscriptions or redemptions, which includes fees levied by exchanges and registration institutions. For detailed fund fees, refer to the respective legal documents.
Institutional perspective: Dongwu Securities, April 8, 2026, "Innovative Drug Standard-Bearer: Changes in Medical Insurance's Stance Towards Innovative Drugs."
Risk disclosure: Constituent stocks are shown for illustrative purposes only. Individual stock descriptions do not constitute investment advice and do not represent the holdings or trading activities of any fund managed by the asset manager. The asset manager rates the Hong Kong Stock Connect Innovative Drug ETF, Hong Kong Stock Connect Healthcare ETF, and their feeder funds as R4 - medium to high risk, suitable for aggressive (C4) and higher investors. All information presented is for reference only. Investors are solely responsible for their investment decisions. The views, analyses, and forecasts herein do not constitute investment advice, and no liability is accepted for any direct or indirect losses resulting from the use of this content. The performance of other funds managed by the asset manager does not guarantee future results of the mentioned funds. Past performance is not indicative of future returns. Fund investment carries risks.
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