The Hong Kong pharmaceutical sector has returned to volatility, continuing its weak performance today (March 13). Both biotech and medical stocks are under pressure, with the Hong Kong Stock Connect Biotech ETF (520880)—which focuses exclusively on biotech R&D—and the Hong Kong Stock Connect Medical ETF Hua Bao (159137), a popular tool for T+0 trading, both falling 1% for the third consecutive day. However, the continued premium trading in the secondary market indicates active buying interest.
Looking at the performance of individual biotech stocks, Federal Pharmaceutical and Baoji Pharmaceutical-B led the declines, dropping 14.13% and 11.25%, respectively. Companies like Insilico Medicine and Changfeng Pharmaceutical also saw significant declines. In contrast, Lepu Biotech-B and Rongchang Pharmaceutical bucked the trend, rising 4.46% and 3.02%.
This week, the Hong Kong Stock Connect Biotech ETF (520880) has accumulated a decline of 2.87%, marking its third consecutive weekly loss. Over a longer period, the biotech sector under the Hong Kong Stock Connect has been undergoing adjustments since last September, lasting nearly six months. The benchmark index tracked by the Hong Kong Stock Connect Biotech ETF (520880) has retreated more than 27% from its peak last year.
According to the latest analysis from Founder Securities, investors should now increase their focus on and allocation to the biotech sector. The sector may have reached a阶段性底部, supported by four key factors: policy support, accelerated overseas expansion, profit realization, and clinical catalysts, making it an attractive investment with high value.
1. Policy Support: Biotechnology has been included as one of the nation’s "six emerging pillar industries," elevating its strategic importance. 2. Accelerated Overseas Expansion: License-out transaction volumes in the first quarter of 2026 have already approached half of the total for 2025. 3. Profit Realization: Leading companies like BeiGene have officially entered a profit cycle, potentially shifting valuation metrics from price-to-sales to price-to-earnings, which could significantly raise overall valuation levels. 4. Clinical Catalysts: Major academic conferences such as ELCC, AACR, and ASCO are scheduled densely in the first half of the year, further highlighting the clinical value of product pipelines.
Strategically, Founder Securities believes that the biotech sector, after six months of significant correction, has cleared out speculative bubbles. Stock prices are showing positive reactions to business development activities, with market sentiment shifting from overexpectation to fundamentals-driven trends. The firm recommends prioritizing leading companies with strong commercialization capabilities while also considering firms with innovative technology platforms and differentiated strategies.
To capture the rebound opportunities in leading biotech companies, investors may consider the Hong Kong Stock Connect Biotech ETF (520880) and its corresponding feeder fund (025221), which provides 100% exposure to biotech R&D firms. The top ten holdings account for over 70% of the portfolio, emphasizing its focus on industry leaders.
[Special Note on Rebalancing of Hong Kong Stock Connect Biotech ETF (520880)] Effective this past Monday (March 9), the benchmark index of the Hong Kong Stock Connect Biotech ETF (520880)—the Hang Seng Hong Kong Stock Connect Biotech Select Index—underwent a rebalancing, adding 13 constituents with no removals, bringing the total to 50 stocks. Post-rebalancing, the index's relative advantages have been further strengthened: - Updated! Newly eligible biotech stocks are included promptly, ahead of most peer indices. - Comprehensive! The index now covers 50 biotech R&D companies, making it the most extensive Hong Kong Stock Connect index for biotech R&D.
For investors interested in opportunities across the entire biotech industry chain, the Hong Kong Stock Connect Medical ETF Hua Bao (159137) is worth noting. It has nearly 40% exposure to CXO (contract research, development, and manufacturing organizations) and also covers popular themes such as AI healthcare, brain-computer interfaces, and high-end medical devices. Among its 50 constituents, 41 are exclusive Hong Kong-listed stocks not available in the A-share market.
Data sources: China Securities Index Co., Ltd., Shanghai, Shenzhen, and Hong Kong stock exchanges. Institutional views sourced from Founder Pharmaceuticals’ March 10, 2026 report, "Latest Views on Biotech: Confirmation of a Stage Bottom, Four Catalysts for Reversal."
Note: ETF funds do not charge sales service fees. When subscribing or redeeming fund shares, brokerage agents may charge a commission of up to 0.5%, which includes fees collected by stock exchanges and registration institutions. For detailed fund fee structures, refer to 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 and do not represent the holdings or trading activities of any fund managed by the asset manager. The asset manager rates the Hong Kong Stock Connect Biotech ETF and the Hong Kong Stock Connect Medical ETF Hua Bao as R4—moderately high risk, suitable for aggressive (C4) and higher-risk investors. Any information presented (including but not limited to stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are solely responsible for their investment decisions. Furthermore, any opinions, analyses, or forecasts herein do not constitute investment advice, and no liability is accepted for direct or indirect losses resulting from the use of this content. The performance of other funds managed by the asset manager does not guarantee the performance of these funds. Past performance is not indicative of future results. Fund investments carry risks.
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