Afternoon Plunge! HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION ETF (520880) Drops 2.77% to Hit New Low, Led by Heavyweights AKESO and BEIGENE

Deep News12-15 13:40

On the afternoon of December 15, the Hong Kong Stock Connect innovative drug sector accelerated its decline, with the HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION ETF (520880) falling 2.77% to hit a five-month low. Leading stocks slumped across the board, with AKESO dropping over 5%, BEIGENE down more than 6%, and other major players like Sino Biopharmaceutical and Innovent Biologics declining over 3%.

Amid the new low, bargain-hunting funds may be taking action again, as the ETF showed a wide premium in intraday trading, indicating relatively strong buying interest. Last week, funds flowed in for five consecutive days, accumulating net subscriptions totaling over 136 million yuan.

Analysts noted that sentiment toward innovative drugs has recently fluctuated, but the long-term industry trend remains unchanged for 2026, with global competitiveness strengthening, overseas expansion progressing, and commercialization profits materializing. Multiple catalysts are expected in Q1 2026, and the sector may rebound after the current adjustment.

Policy support remains robust. The National Healthcare Security Administration emphasized in a December 13 meeting the need to actively implement commercial insurance coverage for innovative drugs and encourage broader inclusion of reasonable medical expenses outside the basic insurance catalog. It also urged commercial health insurers to increase investment in innovative drugs to boost R&D.

Investors looking to capitalize on the current dip in Hong Kong-listed innovative drug stocks can consider the largest ETF in this category, the HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION ETF (520880), and its linked 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 holdings account for over 72% of the index, representing core innovative drug players. 3. **Controlled Risk**: Imposes mandatory weight reductions for less liquid constituents, effectively managing tail risks.

Data from the Shanghai Stock Exchange shows that as of November 30, the ETF had assets of 2.142 billion yuan, with an average daily turnover of 458 million yuan since listing, making it the largest and most liquid among its peers 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: 2021 (-22.72%), 2022 (-16.48%), 2023 (-19.76%), 2024 (-14.16%). Past performance does not indicate future results. Constituent stocks are subject to change per index rules. Stock mentions 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. Investment decisions carry risks, and historical fund performance does not guarantee future returns.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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