On the afternoon of December 9, the Hong Kong Stock Connect innovative drug sector accelerated its decline, with the pure innovative drug ETF—HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVES (520880)—extending losses by over 2%. Most heavyweight stocks turned red, with AKESO and Sansheng Pharmaceuticals plunging more than 5%, while Innovent Biologics dropped nearly 3%.
"Bottom-fishing" funds showed increased activity, driving a surge in the premium of the Hong Kong Stock Connect Innovative Drug ETF (520880). Notably, over 56 million yuan had already flowed into the fund the previous day.
The Hong Kong innovative drug sector has been undergoing a phase of adjustment since early September. As of press time, the benchmark index tracked by the ETF (520880) has retreated over 19%, fully releasing risks from previous highs. Analysts suggest that the current period may present an optimal opportunity for medium- to long-term allocation in core innovative drug assets.
Positive news emerged as the 2025 National Reimbursement Drug List (NRDL) and the first edition of the commercial insurance innovative drug catalog were released in Guangzhou. The 2025 NRDL added 114 new drugs, including 50 first-class innovative drugs, achieving an overall success rate of 88%, significantly higher than 2024’s 76%. Additionally, 19 drugs were included in the inaugural commercial insurance innovative drug catalog.
Cinda Securities noted that the National Healthcare Security Administration’s release of the first "NRDL + Commercial Insurance Dual Catalog" on December 7 could boost short-term investor enthusiasm for innovative drugs. With recent price corrections in the sector and the unchanged long-term growth narrative of China’s innovative drug industry, the firm recommends focusing on investment opportunities in this space.
To capitalize on the current dip in Hong Kong-listed innovative drug stocks, investors may consider the largest Hong Kong Stock Connect Innovative Drug ETF (520880) and its off-exchange feeder fund (025221). The underlying index, the Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index, offers three key advantages: 1. **Pure and Comprehensive Exposure**: Excludes CXO firms, focusing solely on innovative drug R&D companies. 2. **High Concentration of Leaders**: The top 10 innovative drug leaders account for over 72% of the index, reflecting core industry strength. 3. **Controlled Risk**: Imposes mandatory weight reductions on illiquid constituents to mitigate tail risks.
Data sourced from the Shanghai Stock Exchange shows that as of November 30, the Hong Kong Stock Connect Innovative Drug ETF (520880) held assets of 2.142 billion yuan, with a daily average turnover of 458 million yuan since listing—the largest and most liquid among ETFs tracking the same index.
**Risk Disclosure**: The ETF passively tracks the Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index (base date: December 31, 2020; launch date: July 17, 2023). The index’s annual performance since inception includes: 2021 (-22.72%), 2022 (-16.48%), 2023 (-19.76%), and 2024 (-14.16%). Constituents are adjusted per index rules, and past performance does not guarantee future results. Mentioned stocks are for illustrative purposes only and do not constitute investment advice or reflect fund holdings. The ETF is rated R4 (medium-high risk), suitable for aggressive (C4) or higher-risk investors. All information herein is for reference, and investors bear responsibility for independent decisions. No liability is assumed for direct or indirect losses arising from the use of this content. Past fund performance does not guarantee future returns; investing carries risks.
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