On July 16th, the A-share market opened lower and continued to decline, with the Shanghai Composite Index closing down 1.85%, falling below the 3900-point mark. Technology stocks plunged in the afternoon, with the ChiNext Index plummeting nearly 3%. In contrast, the previously underperforming pharmaceutical sector showed resilience by rising against the broader market trend. Mainstream capital continued its buying spree for the fourth consecutive day, recording a net purchase of 5.026 billion yuan for the session, ranking second among the 31 primary Shenwan industries.
The medical sector managed to close in positive territory after an initial surge and subsequent pullback. The largest medical ETF by market size, HuaBao Medical ETF (512170), climbed as much as 1.81% intraday before settling with a 0.3% gain, securing its third consecutive positive close against the market's downward trend. Its intraday amplitude exceeded 4%, with trading volume nearing 1.1 billion yuan.
Among its constituent stocks, JiuAn Medical rose 7.48% following two consecutive limit-up sessions, while ZhaoYan New Drug briefly hit its third limit-up in five days before closing 5.2% higher. However, a sharp decline in several leading CXO stocks weighed on the sector, with WuXi AppTec falling 3.42% and PharmaBlock tumbling 8%.
The pharmaceutical manufacturing sector also saw notable strength in specific areas, with innovative drugs and traditional Chinese medicine (TCM) showing robust performance. BrightGene Bio-Medical briefly hit a 20% limit-up before closing 19.92% higher, while SALUBRIS and Haisco Pharmaceutical gained 7%. Leading TCM company Pien Tze Huang surged by the 10% daily limit, and Tong Ren Tang jumped 6.65%.
The market's sole ETF tracking the pharmaceutical manufacturing index, HuaBao Pharmaceutical ETF (562050), surged over 2% in the afternoon to hit a new high for the current rebound. It closed up 0.89%, firmly above its annual moving average, marking its sixth consecutive day of gains with an intraday amplitude close to 5%.
Data shows that the underlying index of HuaBao Pharmaceutical ETF (562050) focuses exclusively on three pure pharmaceutical sub-sectors: chemical drugs, biological drugs, and traditional Chinese medicine. It features a unique allocation of "72% innovative drugs + 22% TCM," combining the high growth potential of innovative drugs with the high dividend yield of TCM.
Key Market Drivers
On the news front, a surge in the price of laboratory monkeys to 200,000 yuan has drawn significant market attention. ZhaoYan New Drug, dubbed the "monkey stock," forecasted its first-half net profit to increase by over 13 times at the maximum. Industry insiders point out that the current monkey price has risen more than 40% compared to the average price of 140,000 yuan per head at the end of 2025. The supply-demand gap for laboratory monkeys is expected to be at least 15,000 to 20,000 over the next two years.
Market analysts suggest the market may be trading on three key narratives: tight supply of laboratory monkeys, a recovery in innovative drug research and development, and a revaluation of CRO assets. For innovative drugs, the initiation of overseas clinical trials has become a core indicator for validating industry momentum.
Supportive Policy Environment
A series of significant policy tailwinds are further aiding the recovery across the entire pharmaceutical chain.
On July 13th, the State Council officially issued the "National Health '15th Five-Year' Plan," which for the first time explicitly proposes "whole-chain support for the development and application of innovative drugs and medical devices."
On July 10th, the State Council in principle approved the "Traditional Chinese Medicine Revitalization and Development '15th Five-Year' Plan," emphasizing the equal importance of Chinese and Western medicine, accelerating the modernization of TCM, and promoting its global presence.
On July 9th, the "National Essential Drug List (2026 Edition)" was officially released after an eight-year hiatus. The new version expands the total number of drugs to 794, with 16 innovative drugs entering the list on a large scale for the first time, accounting for over 5%.
Capital Flows and Investment Outlook
During a period of volatility in the technology sector, the previously underperforming pharmaceutical sector may become the preferred destination for capital rotation. Zhang Fang, fund manager of HuaBao Medical ETF (512170) and HuaBao Pharmaceutical ETF (562050), points out that after experiencing a prolonged and substantial decline, the overall valuation of the pharmaceutical sector is currently at a historically low level, offering relatively high investment value. Therefore, it is more likely to attract capital attention during market style rebalancing.
Key Investment Vehicles to Consider
HuaBao Medical ETF (512170): The largest healthcare ETF by market size, focusing on medical devices (including brain-computer interfaces) and healthcare services (with nearly 30% exposure to CXO), while also incorporating AI healthcare concepts. Off-exchange feeder fund: 012323.
HuaBao Pharmaceutical ETF (562050): The market's only ETF tracking a pure pharmaceutical manufacturing index, featuring a unique "72% innovative drugs + 22% TCM" allocation, combining the high growth of innovative drugs with the high dividends of TCM. Off-exchange feeder fund: 024986.
Data sourced from the Shanghai and Shenzhen Stock Exchanges, China Securities Index Co., Ltd., etc.
Note: The ETFs mentioned do not charge sales service fees. Detailed fund fee structures are available in their respective legal documents.
Risk Disclosure: The constituent stocks of the indices mentioned are for illustrative purposes only. Descriptions of individual stocks are not intended as any form of investment advice and do not represent the holdings or trading activities of any fund managed by the asset manager. The composition of the underlying indices is subject to adjustment according to their respective compilation rules. The annual historical returns/annualized volatility of the CSI Medical Index from 2021 to 2025 were: -14.71%/34.42%, -25.10%/29.45%, -24.25%/18.63%, -17.16%/36.02%, and 3.08%/19.73%, respectively. The annual historical returns/annualized volatility of the CSI Pharmaceutical Index from 2021 to 2025 were: -9.10%/23.43%, -21.09%/25.92%, -3.70%/18.25%, -6.53%/29.46%, and 9.38%/16.12%, respectively. Past performance of the indices is not indicative of future results. The fund manager assesses the risk rating of the Medical ETF Feeder Fund as R4 (Medium-High Risk), suitable for aggressive (C4) and above investors. The risk ratings for the Medical ETF and Pharmaceutical ETF are R3 (Medium Risk), suitable for balanced (C3) and above investors. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors must be responsible for their own independent investment decisions. Furthermore, any views, analysis, or forecasts in this article 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. Fund investment involves risks. The past performance of a fund does not guarantee its future results. The performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. Caution is advised in fund investment.
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