Major Hong Kong stock indices saw collective gains today, with most innovative drug concept stocks trending higher. The acceleration of Cell and Gene Therapy (CGT) reviews acted as a catalyst, driving strong performance in ETFs tracking the Hong Kong Stock Connect innovative drug sector, while Korean equity ETFs displayed diverging trends.
By the market close, the Hang Seng Index rose 1.14% to close at 23,616.32 points, with a full-day turnover of HK$314.717 billion. The Hang Seng Tech Index increased 0.94%, closing at 4,541.23 points.
Among major Hong Kong-listed ETFs by size, the Tracker Fund (02800) closed up 1.18% at HK$24.08. The CSOP Samsung Daily (2x) Leveraged Product (07747) rose 7.47% to HK$147.5, while the CSOP SK Hynix Daily (2x) Leveraged Product (07709) fell 6.93% to HK$108.7.
Sector Performance Highlights
1. CGT Review Acceleration Boosts Innovative Drug ETFs
The innovative drug sector showed strong upward momentum today, primarily driven by policy catalysts related to the optimization of Cell and Gene Therapy (CGT) review and approval processes. The recent announcement of preliminary results for the 2026 National Reimbursement Drug List (NRDL) has moved the "NRDL + Commercial Insurance" dual-track negotiation into a substantive advancement stage. Policy support is directly easing constraints on innovative R&D, and coupled with intensive share buybacks by industry capital providing a floor, the innovative drug sector is entering a window for valuation recovery.
Analysis suggests the fundamentals of China's innovative drug industry are steadily improving in the second half of 2026, driven by enhanced R&D quality, validation of global value, and improved profitability. Chinese innovative drugs are gradually entering a phase of "global registration + commercialization realization." Looking ahead to the second half of the year and beyond, major medical conferences and the readout of multiple registrational studies, along with the progression of global late-stage/registrational trials and the gradual realization of overseas commercialization, are expected to collectively drive performance in the innovative drug sector.
Investment recommendations for the second half of 2026 focus on three types of companies within China's innovative drug space: leading pharmaceutical firms with a growing share of innovative drug revenue and strong commercialization and profitability; innovative platforms with core pipelines possessing global Best-in-Class/First-in-Class potential, already in global registration or late-stage clinical phases, and with dense upcoming data and Business Development catalysts; and growing biotech companies with clearly differentiated product mechanisms, growth elasticity, and subsequent catalysts.
By the close, the ICBC Hong Kong Stock Connect Innovative Drug ETF (159217.SZ) rose 2.9% to 1.172 yuan. The E Fund Hong Kong Stock Connect Innovative Drug ETF (159316.SZ) gained 2.86% to 1.152 yuan. The HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (520880.SH) increased 2.73% to 0.452 yuan.
2. Korean Equity ETFs Show Divergent Trends
Korean equity ETFs exhibited mixed performance. The CSOP Samsung Daily (2x) Leveraged Product (07747) closed up 7.47% at HK$147.5. Conversely, the CSOP SK Hynix Daily (2x) Leveraged Product (07709) fell 6.93% to HK$108.7. The TR Korea (02848) declined 2.61% to HK$1,946, and the CSOP Hang Seng Korea Technology ETF (03431) dropped 2.25% to HK$10.87.
The divergence follows public warnings from the Bank of Korea regarding the potential for single-stock leveraged ETFs linked to Samsung Electronics and SK Hynix to amplify market volatility, which triggered significant market fluctuations. Meanwhile, South Korea plans to establish a future response fund to address the so-called "K-shaped" economic polarization and provide housing, entrepreneurship, and employment support for people in their 20s and 30s.
As of July 6th, the intraday performance of Samsung Electronics and SK Hynix shares diverged. Samsung Electronics is scheduled to release its Q2 earnings report on July 7th, with market expectations for its Q2 operating profit to surge approximately 18-fold year-on-year, potentially setting another record high. SK Hynix is set to list a US$29 billion American Depositary Receipt (ADR) offering on Nasdaq on Friday, July 10th, which would be the largest ever for a foreign company.
Notably, recent announcements of long-term investment plans by major Korean chipmakers SK Hynix and Samsung, coupled with Meta's plans to sell excess computing power, have raised market concerns about potential oversupply risks in the chip and computing power markets, leading to a recent collective pullback in chip stocks.
Analysts note that global chip-related stocks are under pressure due to concerns about supply-demand dynamics in the memory market and profit-taking in leveraged ETFs. However, the market is actually facing a severe shortage driven by AI demand. As major chipmakers prioritize production of more profitable High Bandwidth Memory (HBM), supply for conventional DRAM and NAND is constrained. In this context, concerns about oversupply are considered overblown.
Market Perspectives
Analysis suggests that the K-shaped divergence in A-share market structure has somewhat converged. Sectors like pharmaceuticals and automobiles have seen gains, while sectors like communications have adjusted, indicating that existing market funds are likely rebalancing their structural allocations. This rebalancing is influenced by market expectations for potential domestic policies to stimulate domestic demand, as well as developments in overseas markets. Recent volatility has intensified in overseas tech sectors, such as the Philadelphia Semiconductor Index and the Korean stock market, where memory stocks are core components. Conversely, the U.S. Dow Jones Industrial Average continues to hit new highs, influenced by supportive U.S. healthcare policies and receding concerns about interest rate hikes.
With the interim earnings reporting season approaching, the market can move beyond the "silicon vs. carbon" debate and adopt an open mindset to comprehensively assess industry sentiment and whether the performance of key companies exceeds market expectations. Sectors warranting attention include pharmaceuticals, securities firms, non-ferrous metals, coal, new energy, agriculture, chemicals, new consumer sectors, internet, and the domestic AI supply chain. Key themes to watch include commercial aerospace, humanoid robots, and quantum communication.
ETF Developments
1. The China Southern S&P China A-Share Dividend Low-Volatility 100 ETF (515480.SH) debuted today, closing up 1.18% at 1.027 yuan with a turnover of 146 million yuan. The fund tracks the S&P China A-Share Dividend Low-Volatility 100 Index, focusing on high-dividend, low-volatility blue-chip dividend sectors, covering stable dividend-paying stocks in utilities, finance, consumer staples, and other sectors.
2. The CCB A-Share ETF (159066.SZ) also listed for the first time today, closing down 0.91% at 0.978 yuan with a turnover of 35.7509 million yuan. The fund tracks a broad-based A-share index, covering leading companies across all industries in the Shanghai and Shenzhen markets, representing a balanced, broad-market ETF.
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