On September 21, a wave of favorable news hit the market, driving a broad rally in Hong Kong-listed healthcare stocks and marking a strong comeback for innovative drugs. Leading companies saw significant gains, with Akeso Inc (HKEX: 9926) soaring 9.72% and Sino Biopharmaceutical Ltd (HKEX: 1177) rising 8.23%. Other major players such as CSPC PHARMA (HKEX: 1093), Innovent Biologics Inc (HKEX: 1801), and Kelun-Biotech (HKEX: 6990) also posted substantial increases.
The Hang Seng Hong Kong Stock Connect Innovative Drug Select Index, which holds a 100% allocation to innovative drug companies, closed up 6.04%. The HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (SH: 520880), which passively tracks this index, traded strongly throughout the day, breaking through four key moving averages—the 10-day, 20-day, 60-day, and 250-day lines—in a single session.
AI-driven drug development continued to gain momentum, with the three WuXi-related entities all moving higher. GenScript Biotech Corp (HKEX: 1548) advanced another 5.24%, reaching a three-year high, while XtalPi Holdings Ltd (HKEX: 2228), a pure-play AI drug development company, surged nearly 6%. The Hong Kong Stock Connect Medical Theme Index, which has an AI drug development exposure of nearly 70%, rose 3.82%, and the HUABAO HONG KONG STOCK CONNECT MEDICAL TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (SZ: 159137), which tracks this index, closed at a six-month high.
The innovative drug sector is experiencing a comprehensive breakout, supported by multiple catalysts, including the implementation of a national strategic plan, validation of clinical data at a major medical conference, breakthroughs in AI-driven drug development, and the removal of concerns over interest rate hikes. The following factors are converging to potentially usher in a new upward cycle.
From a policy perspective, the innovative drug industry has received strong national-level strategic backing. The 15th Five-Year Plan for the Development of the Pharmaceutical Industry has set clear targets: by 2030, the innovative drug sector is expected to grow at an average annual rate of over 20%, and first-in-class (FIC) drugs are expected to account for more than 25% of the global share. The plan also emphasizes accelerating the transformation of pharmaceutical research, diagnostics, and production management through AI-driven approaches.
On the news front, Chinese innovative drug data has been prominently featured at the 2026 World Conference on Lung Cancer (WCLC). Chinese companies achieved a record performance, with 19 oral presentations and 45 mini-oral presentations selected. Both Akeso Inc (HKEX: 9926) and Hansoh Pharmaceutical Group Co Ltd (HKEX: 3692) validated their core data at the conference.
From an industry standpoint, the commercialization of AI-driven drug development is accelerating. On September 18, China's first AI-assisted original drug, Aipuswei, was approved for market. On the same day, XtalPi Holdings Ltd (HKEX: 2228) announced a drug discovery collaboration with Stanford University. On September 16, multiple events unfolded simultaneously, including Eli Lilly's TuneLab partnership with GenScript Biotech Corp (HKEX: 1548), Novo Nordisk's collaboration with Anthropic, and the independent financing of ByteDance's AI drug development unit.
On the sentiment front, the overhang of interest rate hikes has been removed. Last week, the US Federal Reserve implemented its first rate hike in three years. Although the dot plot signaled a hawkish stance, the market has largely interpreted this as a relief from uncertainty, leading to a recovery in global risk appetite. Hong Kong Stock Connect innovative drug stocks, being interest-rate-sensitive, are well-positioned to benefit from this shift.
For investors seeking comprehensive exposure to the innovative drug sector, two T+0 trading tools are available. The HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (SH: 520880), whose underlying index is 100% allocated to innovative drug research and development companies, with approximately 70% of the weight in leading R&D firms, is one option. The corresponding off-exchange feeder fund is 025221.
The HUABAO HONG KONG STOCK CONNECT MEDICAL TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (SZ: 159137) is another option, with an AI drug development concentration of nearly 70% in its underlying index. Representative constituent stocks include XtalPi Holdings Ltd (HKEX: 2228), GenScript Biotech Corp (HKEX: 1548), and the three WuXi-related entities. The corresponding off-exchange feeder fund is 026922.
Data is sourced from public information provided by the Shanghai, Shenzhen, and Hong Kong stock exchanges, as well as the CSI and Hang Seng Index companies. Weight data is as of August 31, 2026. Regarding the "AI drug development concentration" note, the Hong Kong Stock Connect Medical Theme Index covers 17 AI drug development-related constituent stocks, including pure AI drug development platforms, AI plus CRO companies, and innovative drug developers with AI initiatives, with a combined weight of 69.52%.
As for the constituent stock weight allocations, the Hong Kong Stock Connect Medical Theme Index includes the WuXi entities, with WuXi Biologics (HKEX: 2269) at 18.77%, WuXi AppTec (HKEX: 2359) at 14.70%, and WuXi XDC (HKEX: 2268) at 5.54%, for a combined weight of 39.01%. GenScript Biotech Corp (HKEX: 1548) holds an 8.15% weight, and XtalPi Holdings Ltd (HKEX: 2228) holds a 4.02% weight.
Regarding fund fees, ETF funds do not charge sales service fees. When subscribing or redeeming fund shares, the authorized broker may charge a commission of no more than 0.5%, which includes fees collected by the stock exchanges and registration institutions. Detailed fund fee information is available in each fund's legal documents.
As a special reminder, the fund manager has assessed the risk level of the HUABAO HONG KONG STOCK CONNECT MEDICAL TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (SZ: 159137), its feeder funds, the HUABAO HANG SENG HONG KONG STOCK CONNECT INNOVATIVE DRUG SELECTION TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (SH: 520880), and its feeder funds as R4, indicating medium-to-high risk, suitable for investors with an aggressive (C4) risk profile or above.
Risk disclosure: The index constituent stocks mentioned in this article are for illustration purposes only. Descriptions of individual stocks do not constitute investment advice in any form and do not represent the holdings or trading activities of any fund managed by the fund manager. Any information in this article, including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, or any form of expression, is provided for reference only. Investors are solely responsible for any independent investment decisions they make. Furthermore, any views, analyses, or forecasts in this article do not constitute investment advice to readers and the author assumes no responsibility for any direct or indirect losses arising from the use of the content. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Past performance of a fund does not represent its future returns. Fund investment involves risk.
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