This year, the Hong Kong stock market's healthcare sector has consistently captured market attention. According to Wind data, as of November 24, southbound capital recorded a net inflow of over HKD 160 billion into the healthcare industry in the past year, ranking third among the 12 Hang Seng primary sectors. Against this backdrop, Fullgoal Fund plans to officially launch the Hang Seng Biotech ETF (Fund Code: 159132) on December 1, providing investors with an efficient tool to gain exposure to leading biotech companies in Hong Kong.
**Subheading 1: Policy, Industry, and Capital Synergy – Decoding the High Appeal of Hong Kong’s Healthcare Sector** The significant inflow of southbound capital into Hong Kong’s healthcare sector is driven by a triple synergy of policy support, industry growth, and capital momentum, propelling new opportunities in biopharmaceutical development.
On the policy front, measures such as the "Support for High-Quality Development of Innovative Drugs" and the HKEX’s Chapter 18A, which provides a fast-track listing channel for pre-revenue biotech firms, have unleashed sustained policy dividends, injecting strong momentum into industry innovation. By Q3, over 100 biopharmaceutical companies were listed on the HKEX, accounting for approximately 15% of the total market capitalization of Hong Kong stocks.
At the industry level, China’s innovative drug R&D capabilities have steadily improved. In 2024, China’s innovative drug pipeline reached 4,804 projects, second only to the U.S. globally. With breakthroughs in clinical research, domestic innovative drug companies have frequently appeared on international platforms like ASCO and ESMO, signaling a shift from "following" to "leading" in global innovation. This progress is translating into commercial value recognition. From 2019 to 2024, the annual compound growth rate of China’s innovative drug license-out deals reached 125%, while outbound transactions in H1 2025 totaled nearly $50 billion, nearing the full-year 2024 level.
From a capital perspective, with the Fed’s rate-cut cycle and looser domestic monetary policies, liquidity in Hong Kong’s healthcare sector is expected to improve further. From January to August this year, financing for domestic innovative drugs surged over 40% YoY, reflecting a rapid recovery in sector funding. Historically, biotech sectors have outperformed during early-stage precautionary rate cuts, and improved financing conditions help lower R&D costs and boost valuations.
**Subheading 2: Focus on Hang Seng Biotech Index – Capturing Dual Investment Themes in Innovative Drugs and CXO** As the benchmark for the Hang Seng Biotech ETF (159132), the Hang Seng Biotech Index (HSBIO.HI) comprises 30 Hong Kong-listed, Stock Connect-eligible biotech, pharmaceutical, and medical device leaders, serving as a key vehicle for accessing core healthcare assets in Hong Kong.
Sector-wise, the index is highly concentrated in high-growth areas like innovative drugs and CXO (contract research organizations), with a combined weighting of nearly 90%. The biotech segment’s weighting has risen to 50.75%, precisely covering cutting-edge innovation. Constituents include industry leaders such as WuXi Biologics, BeiGene, Innovent Biologics, and Akeso, offering investors efficient exposure to the full biotech value chain.
The index employs a quarterly rebalancing mechanism to swiftly adapt to market changes and incorporate high-potential companies. Buffer rules (existing constituents are removed only if they fall below the top 36 by market cap, while new entrants must rank within the top 24) help smooth rebalancing volatility and maintain stability. This methodology underpins the index’s strong performance. Historically, the Hang Seng Biotech Index has shown "high short-to-medium-term elasticity and significant long-term growth." Wind data shows that as of November 3, the index has surged 58.9% since its base date (December 31, 2013), outperforming the Hang Seng Healthcare Index (19.8%) and the Hang Seng Index (12.5%). During healthcare sector rallies, the index demonstrates notable elasticity, with a year-to-date gain exceeding 88% as of November 3, leading its peers.
Additionally, the launch of Hang Seng Biotech Index futures on November 28 marks a milestone for the sector. The introduction of derivatives is expected to attract institutional investors like insurers, mutual funds, and quant hedge funds, leveraging hedging, arbitrage, and leverage functions to enhance ETF liquidity and trading activity.
The proposed fund manager for the Hang Seng Biotech ETF (159132) is Cai Ka'er, Fullgoal Fund’s Quantitative Investment Director, with 12 years of securities experience and over eight years in investment management. Specializing in index and quantitative investments, she currently oversees products totaling over HKD 100 billion, including Fullgoal CSI HK Stock Connect Internet ETF & Link, Fullgoal CSI Healthcare Theme Enhanced Index Fund, and Fullgoal HK Stock Connect Quant Select Fund. With extensive experience in Hong Kong and healthcare-themed ETFs, the Hang Seng Biotech ETF is poised to be a powerful tool for investors seeking opportunities in Hong Kong’s biotech sector.
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