Hong Kong's stock market exhibited a choppy trading session today. The three major indices opened higher but saw gains narrow in the afternoon, with the Hang Seng Tech Index dipping into negative territory. Biotech ETFs advanced across the board, buoyed by supportive policies and robust overseas data. Meanwhile, the successful maiden flight and recovery of the Long March 10B rocket spurred gains in related commercial space ETFs.
At the close, the Hang Seng Index was up 0.6% at 24,175.12 points, with a full-day turnover of HK$3,395.92 billion. The Hang Seng Tech Index fell 0.21% to 4,721.66 points.
Among major Hong Kong-listed ETFs by size, the Tracker Fund (02800) rose 0.65% to HK$24.62. The CSOP 2x Long SK Hynix Daily (07709) fell 6.88% to HK$89.40. The Hang Seng China Enterprises Index ETF (02828) gained 0.49% to HK$82.66.
Sector Performance Highlights
Biotech ETFs experienced a broad rally, driven by favorable policy developments and strong export figures. By the close, the Huatai-PineBridge Hang Seng Biotech ETF (520500.SH) surged 4.41% to 1.422 yuan. The Yinhua Hong Kong Biotech ETF (159567.SZ) climbed 4.36% to 0.694 yuan. The Fullgoal HK Connect Biotech & Healthcare ETF (159506.SZ) advanced 4.07% to 1.228 yuan.
On July 9th, China's National Health Commission released the "National Essential Medicines List (2026 Edition)", which for the first time included innovative drugs within the scope for selection and adjustment, newly incorporating four domestically developed Class I innovative drugs. On the same day, the National Healthcare Security Administration disclosed that commercial insurance-covered innovative drugs are now available at 1,486 designated medical institutions, more than double the number at the start of the year.
Analysts noted that this list revision marks the first time innovative drugs have been a key focus for selection into the essential medicines list, reflecting stronger policy support for high clinical-value innovative products. The commission stated that the adjustment was based on criteria including high clinical value, large patient populations, and suitability for use across healthcare facilities. Future updates aim to shorten the cycle for innovative drugs from market launch to inclusion in the list, further supporting their development.
Regarding overseas expansion, the total value of business development transactions for Chinese innovative drugs in the first half of 2026 reached $99.7 billion, already approaching 73% of the full-year 2025 total. Analysts pointed out that Chinese innovative drugs maintained explosive growth in overseas markets during H1 2026, with their global standing continuing to rise. A recovery in overseas financing is expected to directly translate into increased orders for the CXO industry. The current valuation of the biomedical sector is at a historical low, providing a foundation for recovery.
Commercial Space Activity
The successful maiden flight and recovery of the Long March 10B rocket sparked a surge in related commercial space ETFs. By the close, the GF Satellite ETF (512630.SH) jumped 8.29% to 1.45 yuan. The E Fund Satellite ETF (563530.SH) rose 7.85% to 1.443 yuan. The ChinaAMC Aerospace ETF (159227.SZ) gained 5.45% to 1.141 yuan.
On July 10th, the Long March 10B carrier rocket was launched from the Hainan Commercial Space Launch Site and successfully achieved a controlled recovery of its first stage for the first time. It utilized a globally pioneering net-based recovery system, marking China's official entry into a new era of reusable rockets.
Industry experts highlighted that the net-based recovery technology is a world-first, differing significantly from the landing leg recovery method used by SpaceX's Falcon 9. Its success signifies China has established a new high ground in the field of reusable rockets. It's noteworthy that the landing leg recovery, used by Falcon 9, is currently the world's mainstream and only method deployed at scale for reuse. The core advantage of sea-based recovery lies in its minimal energy consumption and smallest loss of payload capacity. Several domestic commercial rocket companies have explicitly targeted sea-based recovery.
Analysts believe that as commercial space gains increasing strategic importance, the domestic rocket and satellite supply chain deserves greater attention compared to SpaceX's. The recovery success brings expectations of mass rocket production and regular "flight-like" launches closer, with the rocket industry chain being the primary beneficiary, followed by the amplification of satellite launches which will drive related industrial chains including space-based solar power.
Institutional Perspectives
Analysts noted that recent volatility in the AI industrial chain in South Korea and Japan has led to a phase of valuation correction in upstream hardware, prompting funds to seek more cost-effective allocation directions within the AI theme. The Hong Kong internet sector overall is at a low valuation level, with its allocation value gradually becoming apparent. The fundamental AI industry narrative remains unchanged, with major companies beginning to generate tangible data from commercialization paths across infrastructure, models, and applications. At current valuation levels, the sector's upside potential outweighs downside risks.
Other strategists suggested that after hitting bottom, pessimistic sentiment in Hong Kong stocks may lead to a technical rebound, but a trend reversal likely requires fundamental catalysts, pending verification during the Q2 earnings season. On the liquidity front, the market's capacity to absorb selling pressure from upcoming post-IPO lock-up expiries will be tested. Whether southbound and foreign capital can form a combined net inflow is key to determining the strength of short-term liquidity recovery.
ETF Developments
The China Merchants N-Science and Technology Innovation Chip Design ETF (589390.SH) debuted today, closing down 5.99% at 0.989 yuan with a turnover of 256 million yuan. The fund tracks the SSE STAR Market Chip Design Theme Index, focusing on the chip design sector within the STAR Market and covering leading domestic chip design companies.
The Huafu N-HK Connect Information Technology ETF (520750.SH) also listed for the first time today, closing down 1.61% at 0.98 yuan with a turnover of 131 million yuan. The fund tracks the CSI HK Connect Information Technology Composite Index, investing in technology firms within the Stock Connect scope, including internet, semiconductor, and software companies.
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