On the morning of March 16, pharmaceutical stocks listed through the Hong Kong Stock Connect program experienced a notable rise. The innovative drug and medical sectors showed a broad recovery. The HK Connect Innovative Drug ETF (520880), which focuses entirely on innovative drug R&D companies, and the HK Connect Medical ETF Huabao (159137), a tool for T+0 trading in Hong Kong medical stocks, both rebounded from being down over 1% to surge more than 1% in a straight line. At one point, the 520880 ETF approached a 2% increase.
Looking at the performance of individual innovative drug stocks, Changfeng Pharmaceutical saw its stock price surge nearly 36% during the session. Yingen Biotech-B and BioMap-B rose over 5%, while heavyweight constituents such as Akeso Biopharma and CSPC Pharmaceutical Group gained more than 4%. On the downside, Zhonghui Biotech-B led the declines, falling 12%, followed by Baoji Pharmaceutical-B, which dropped 5%.
On March 13, Changfeng Pharmaceutical announced that the Investigational New Drug (IND) application for its self-developed inhaled powder candidate drug, ICF001, had been accepted by the National Medical Products Administration (NMPA). This signifies that the company's innovative R&D pipeline in the field of high-end respiratory formulations is accelerating towards the harvest stage.
Founders Securities suggested that investors should currently increase their focus on and allocation to the innovative drug sector. The innovative drug segment may have already reached a cyclical bottom, supported by a confluence of four factors: policy support, accelerated overseas expansion, profit realization, and clinical catalysts, presenting a high value-for-money investment opportunity.
1. Policy Support: The biopharmaceutical industry has been included as one of the "Six Emerging Pillar Industries" by the state, elevating its strategic importance unprecedentedly. 2. Accelerated Overseas Expansion: As of Q1 2026, the transaction value of License-out deals is already close to half of the total for the full year 2025. 3. Profit Realization: Leading companies like BeiGene have officially entered a profit cycle, suggesting a potential valuation shift from Price-to-Sales (PS) to Price-to-Earnings (PE) ratios, which could lead to a significant overall upward revaluation. 4. Clinical Catalysts: The first half of the year features a dense schedule of major academic conferences such as ELCC, AACR, and ASCO, where the clinical value of drug pipelines will be further demonstrated.
To capture the rebound opportunity in innovative drug leaders, consider allocating to the HK Connect Innovative Drug ETF (520880) and its corresponding feeder fund (025221). This ETF provides 100% exposure to companies engaged in innovative drug R&D, with its top ten holdings accounting for over 70% of the portfolio, highlighting its focus on industry leaders.
[Special Notice on Rebalancing for HK Connect Innovative Drug ETF (520880)] On March 9, the rebalancing of the underlying index (Hang Seng Hong Kong Stock Connect Innovative Drug Select Index) for the HK Connect Innovative Drug ETF (520880) took effect. The rebalance involved adding 13 constituents with zero removals, increasing the total number of constituents to 50. Post-rebalancing, the index's relative advantages are further strengthened: - Updated! Newly eligible innovative drug stocks are included promptly, ahead of most comparable indices. - Comprehensive! It provides full coverage of 50 innovative drug R&D companies, making it the most comprehensive Hong Kong Stock Connect index for this sector.
For investors interested in opportunities across the entire innovative drug industry chain, the HK Connect Medical ETF Huabao (159137) is worth noting. It has nearly 40% exposure to CXO (Contract Research, Development, and Manufacturing Organization) companies and also covers popular themes such as AI healthcare, brain-computer interfaces, and high-end medical devices. Among its 50 constituents, 41 are unique stocks listed only in Hong Kong and not available on the A-share market.
Note: ETF funds do not charge sales service fees. When investors subscribe for or redeem fund shares, the subscription/redemption agent may charge a commission of up to 0.5%, which includes relevant fees charged by the stock exchange and registration institutions. Please refer to the legal documents of each fund for detailed fee structures.
Risk Warning: The index constituents mentioned are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings or trading动向 of any fund managed by the manager. The fund manager assesses the risk rating of the HK Connect Innovative Drug ETF and the HK Connect Medical ETF Huabao as R4 - Medium to High Risk, suitable for aggressive (C4) and above investors. Any information appearing in this content (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors must be responsible for any independent investment decisions. Furthermore, any views, analysis, or forecasts herein do not constitute investment advice of any kind to the reader, and no responsibility 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 this fund. Past performance of a fund is not indicative of its future performance. Fund investment carries risks.
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