On May 19th, innovative drug stocks in the A-share and Hong Kong markets experienced a pullback after an initial rise. Related ETFs, including the pharmaceutical ETF HUABAO (562050), which holds A-share innovative drug stocks, and the HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (520880), which focuses exclusively on innovative drug R&D companies, initially gained approximately 1% before retreating into negative territory.
The A-share pharmaceutical sector showed mixed performance. Among the constituents of the pharmaceutical ETF HUABAO (562050), about half advanced and half declined. Kelun Pharmaceutical led gains, rising over 6%. Traditional Chinese medicine stocks such as Jichuan Pharmaceutical Group, Tasty Pharmaceutical, and China Resources Sanjiu also closed higher. In contrast, Hansoh Pharmaceutical and Apeloa Pharmaceutical were among the notable decliners.
Key heavyweight stocks within the Hong Kong Stock Connect innovative drug sector also turned lower. Akeso dropped over 1%, marking its eighth consecutive day of decline. Immunotech-B fell 4%, hitting a nearly 11-month low. The HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (520880), which tracks innovative drug R&D targets, saw its intraday price hit a new historical low, potentially closing lower for a sixth consecutive session.
Notably, 520880 continued to trade at a significant premium intraday, indicating persistent positive sentiment from buyers. Substantial capital has been flowing in on dips, with the fund recording net subscriptions exceeding 700 million yuan over the past 10 trading days as of the previous session, pushing its total fund units to a new high of 5.772 billion.
Is it time to allocate to the innovative drug sector? Many institutional analysts believe that despite short-term pressure, the underlying logic for the innovative drug industry remains robust, with high industry vitality. The current price level may present a favorable opportunity for medium to long-term allocation.
Guolian Minsheng Securities noted that a bottoming and upward trend is highly likely in the near to medium term, suggesting increased sensitivity to recent movements, as technological divergence could lead to a rotation into innovative drug stocks. From an event-driven perspective, Industrial Securities highlighted that the ASCO Annual Meeting is scheduled for May 29th to June 3rd, where several Chinese innovative drug companies are expected to release significant clinical data, potentially catalyzing sector performance.
For investors looking to accumulate core innovative drug assets at lower levels, two primary investment tools are highlighted: For pure exposure to innovative drug companies, consider the HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (520880). It provides 100% allocation to innovative drug R&D companies, with its top ten holdings accounting for over 70% of the portfolio, emphasizing its focus on leading companies. Its underlying assets are Hong Kong-listed stocks, offering high volatility and T+0 trading. For investors seeking to reduce volatility, the pharmaceutical ETF HUABAO (562050) is the sole such ETF available for intraday trading. It features a unique "70% innovative drugs + 30% traditional Chinese medicine" allocation ratio, representing a scarce market offering that combines the high growth potential of innovative drugs with the high dividend yields of traditional Chinese medicine.
Note on the "sole pharmaceutical ETF HUABAO (562050)": According to data from the Shanghai and Shenzhen stock exchanges, as of the current date, the pharmaceutical ETF HUABAO is the only ETF tracking the CSI Pharmaceutical Index in the market.
It is important to note that ETF funds do not charge sales service fees. When investors subscribe for or redeem fund units, the subscription and redemption agency securities firms may charge a commission of up to 0.5%, which includes relevant fees charged by stock exchanges and registration institutions. Specific fund fee rates are detailed in the respective fund's legal documents.
Risk Disclosure: The index constituents mentioned are for illustrative purposes only. Descriptions of individual stocks are not intended as investment advice in any form and do not represent the holdings or trading activities of any funds managed by the fund manager. The fund manager assesses the risk rating of the pharmaceutical ETF HUABAO and its feeder fund as R3 - Medium Risk, suitable for Balanced (C3) and above investors. The risk rating for the HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES and its feeder fund is assessed as R4 - Medium-High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this text (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are solely responsible for their independent investment decisions. Furthermore, any views, analyses, or predictions 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 fund performance is not indicative of future results. Fund investment carries risks.
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