Innovative Drug Stocks Surge, Over 20 A-H Shares Jump More Than 10%, Drug and HK-Connect Innovative Drug ETFs See Heavy Volume and Push Towards 7% Gains, Institutions Eye Bottom Reversal

In early trading on June 29th, A-H share innovative drug stocks suddenly took off, surging in tandem. The HUABAO Pharmaceutical ETF (562050), heavily weighted in A-share innovative drug stocks, and the fully-invested HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection ETF (520880) saw heavy volume and pushed towards gains of 7%.

Over ten A-share pharmaceutical stocks rose more than 10%, with Sunsgene Biotech (300204.SZ) hitting the 20% daily limit up, and Kelun Pharmaceutical (002422.SZ) and Haisco Pharmaceutical Group (002653.SZ) hitting the 10% daily limit. The HUABAO Pharmaceutical ETF (562050), the only on-exchange ETF tracking the pharmaceutical sector, briefly rose as much as 6.87%.

Hong Kong Stock Connect innovative drug stocks surged simultaneously. The HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection ETF (520880), which invests 100% in innovative drug R&D targets, climbed as high as 6.61%, with turnover exceeding 4 billion yuan within the first hour of trading, surpassing the previous day's full-day volume. Ten of its constituent stocks, including core heavyweight Akeso Inc. (9926.HK), gained over 10%.

Catalysts Behind the Rally

On the news front, the National Healthcare Security Administration (NHSA) published a list of drugs that have passed the preliminary review for the 2026 national drug reimbursement list on June 29th. A total of 557 drugs passed the preliminary formal review for the basic medical insurance drug list, and 54 drugs passed the review for the commercial insurance innovative drug list.

Simultaneously, as the mid-year reporting season approaches, the potential for earnings catalysts in the innovative drug sector is drawing market attention. Guojin Securities pointed out that as the global competitiveness of Chinese innovative drug companies' clinical pipelines continues to improve, and with medical insurance policies and commercial insurance increasingly favoring innovative drugs, many innovative drug companies are expected to enter a sustained period of earnings harvest. Against the backdrop of strengthening global interest in innovative drug assets, the current Chinese innovative drug sector faces a divergence between improving fundamentals and declining valuations, presenting high-potential bottom-fishing investment value.

How to Capitalize on the Innovative Drug Rebound

To capture the opportunity in the innovative drug rebound, focus on these two key investment tools.

For pure-play innovative drug exposure, look to the HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection ETF (520880). It invests 100% in innovative drug R&D companies, with its top ten holdings accounting for over 70% of the portfolio, highlighting its concentration in leading stocks. Its underlying assets are Hong Kong-listed stocks, offering high volatility potential and T+0 trading.

For investors seeking to reduce volatility, consider the unique HUABAO Pharmaceutical ETF (562050), the only on-exchange ETF of its kind. It features an exclusive allocation of "75% innovative drugs + 25% traditional Chinese medicine," combining the high growth potential of innovative drugs with the high dividend yield characteristic of traditional Chinese medicine stocks.

Data sourced from the Shanghai, Shenzhen, and Hong Kong stock exchanges, China Securities Index Company, and Hang Seng Indexes Company.

Note: ETF funds do not charge sales service fees. When investors subscribe for or redeem fund units, the subscription/redemption agent may charge a commission not exceeding 0.5%, which includes relevant fees charged by the stock exchange and registration institutions. Please refer to each fund's legal documents for specific fund fee details.

Risk Disclosure: The constituent stocks of indices mentioned herein are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form and do not represent the holdings information or trading trends of any fund managed by the fund manager. The fund manager assesses the risk rating of the HUABAO Pharmaceutical ETF and its feeder fund as R3-Medium Risk, suitable for Balanced (C3) and above investors. The risk rating of the HUABAO Hang Seng Hong Kong Stock Connect Innovative Drug Selection ETF and its feeder fund is assessed as R4-Medium to High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors must be responsible for any independent investment decisions. Furthermore, any views, analysis, or forecasts in this article do not constitute investment advice of any kind to the reader, and no liability is accepted for any direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Past performance of a fund is not indicative of its future results. Fund investment carries risks.