On October 28, sentiment in the Hong Kong stock market showed some recovery, and innovative drugs along with their supply chain rebounded rapidly! The Hang Seng Stock Connect Innovative Drug Select Index, which is 100% pure innovative drugs, climbed as much as 2.7% during intraday trading, while the Stock Connect Medical Theme Index with high CXO exposure rose 3.5%, eventually closing up 1.31% and 2.1% respectively.
Multiple pharmaceutical stocks surged sharply during the day. Among the top ten gainers on the Stock Connect, pharmaceutical stocks occupied four seats, with BrainAurora-B skyrocketing 52.3% to take the top spot, while Hengrui Pharma and Genscript Biotech both rose around 11%. WuXi AppTec, which delivered its strongest third-quarter report in history, also saw a rebound, closing up 2.69%.
On the news front, BrainAurora announced in its latest filing that it received a Class II Medical Device Registration Certificate from the Beijing Municipal Medical Products Administration on the evening of October 27 for its cognitive function assessment software targeting depression patients. The product is used to evaluate cognitive function in patients with depression. Notably, BrainAurora-B shares have doubled over the past five trading days, with cumulative gains exceeding 141%.
Hengrui Pharma disclosed last night that its revenue for the first three quarters of 2026 was 24.409 billion yuan, up 5.26% year-on-year; net profit attributable to shareholders was 6.923 billion yuan, up 20.38% year-on-year. Third-quarter revenue alone reached 8.953 billion yuan, a record high for the same period, up 20.55% year-on-year; net profit attributable to shareholders was 2.458 billion yuan, up 88.92% year-on-year.
Genscript Biotech may be benefiting in the short term from institutional holdings being revealed. As public fund third-quarter reports are disclosed, well-known fund managers such as Ge Lan of Zhongou and Xie Zhiyu of Xingquan, as well as multiple products under Qianhai Open Source and Hua An, have concentrated positions in the stock, providing institutional endorsement and generating enthusiastic market response.
Since October, Hong Kong pharmaceutical stocks have fluctuated downward due to multiple factors including market sentiment and liquidity. With third-quarter reports being密集 disclosed, can earnings verification drive a recovery rally, and is Hong Kong pharma ushering in a deployment opportunity?
Galaxy Securities' latest strategy note suggests that during the Federal Reserve interest rate meeting window, although conditions for a systematic reversal are not present, structural opportunities after the oversold are concentrated in two lines: dividend stocks and innovative drugs. Among them, the innovative drug and CXO sectors happen to be at the intersection of the ESMO annual meeting conclusion and密集 third-quarter report disclosures, possessing dual support from event catalysts and earnings verification.
Regarding subsequent catalysts, Xingzheng Pharma believes that the innovative drug sector as a whole is currently in an oversold state, with multiple clear catalyst nodes ahead: the core catalyst node is the U.S. approval of Akeso's 112 in November 2026; at the ASH conference and the Pharmaceutical Innovation Conference in December 2026, companies in core tracks such as hematological tumors and breast cancer will release multiple new data sets, which are expected to drive an overall valuation increase for Chinese innovative drug assets.
From a allocation timing perspective, the valuation cost-effectiveness of innovative drugs and their supply chain has become more prominent after the pullback. The underlying index of Huabao Hang Seng Stock Connect Innovative Drug ETF (520880) has a latest price-to-earnings valuation of 30.18 times, already lower than approximately 80% of the time range over the past three years. The underlying index of Huabao Stock Connect Medical ETF (159137) has a latest price-to-earnings valuation of 31.92 times, at the 57th percentile over the past three years.
It is worth noting that ETF funds have already taken action! During yesterday's deep sector adjustment, the underlying index of Huabao Hang Seng Stock Connect Innovative Drug ETF (520880) attracted 100 million yuan in a single day, with the single-day net inflow hitting a new high in nearly 60 days, sending a strong signal.
Full-chain layout in innovative drugs, focus on the T+0 trading tool: Huabao Hang Seng Stock Connect Innovative Drug ETF (520880): the underlying index is 100% allocated to innovative drug R&D companies, with 70% of positions betting on innovative drug R&D leaders. Off-exchange feeder fund: 025221. Huabao Stock Connect Medical ETF (159137): the underlying index heavily weights the innovative drug supply chain, with approximately 50% CXO plus 20% innovative drugs, of which the WuXi group accounts for over 40%. Off-exchange feeder fund: 026922.
[Data Source] Public information from Shanghai-Hong Kong-Shenzhen exchanges, China Securities Index Company, Hang Seng Index Company, etc. Weight data as of September 30, 2026. [Institutional Views] Galaxy Securities, October 25, 2026, "Strategy Weekly: Fed Decision Landing Window, Can Hong Kong Stocks See Sentiment Recovery?" Xingzheng Pharma, October 27, 2026, "ESMO Data Interpretation + Innovative Drug View Report." [Fund Fee Rates] ETF funds do not charge sales service fees. When investors subscribe or redeem fund shares, the subscription and redemption agent broker may charge a commission of no more than 0.5%, which includes related fees charged by stock exchanges, registration institutions, etc. Fund fee rates are detailed in each fund's legal documents. [Special Notice] The fund manager assesses the risk level of Huabao Stock Connect Medical ETF and its feeder fund, and Huabao Hang Seng Stock Connect Innovative Drug ETF feeder fund as R4-medium-high risk, suitable for aggressive (C4) and above investors. [Risk Disclosure] The index constituent stocks mentioned in this article are for display purposes only. Individual stock descriptions do not constitute investment advice in any form, nor do they represent the holdings or trading activities of any fund under the manager. The constituent stocks of the underlying index are adjusted in due course according to the index compilation rules. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, any form of expression, etc.) is for reference only, and investors must be responsible for any investment decisions they make independently. In addition, any views, analyses, and forecasts in this article do not constitute investment advice in any form to readers, nor shall they bear any direct or indirect liability for losses caused by the use of the content of this article. Fund investment involves risks. Past performance of a fund does not represent its future performance. The performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. Fund investment requires caution. MACD golden cross signals have formed, and these stocks are performing well!
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