On September 21st, the major A-share indices closed the trading day in positive territory, with the Shanghai Composite Index opening higher and advancing nearly 1% throughout the session. More than 4,500 stocks across the market recorded gains, with over 100 hitting their daily limit-up. The combined turnover on the Shanghai, Shenzhen, and Beijing exchanges reached 2.05 trillion yuan, a modest contraction of 44.9 billion yuan compared to the previous trading day. In Hong Kong, all three major indices ended the day higher, with the Hang Seng Index climbing over 1% and the Hang Seng Tech Index closing up 0.40%.
On the trading screens, Hong Kong-listed pharmaceutical stocks displayed broad strength, marking a "triumphant return" for innovative drugs! IMmunotech-B surged 9.72%, and the underlying index of the Hang Seng Stock Connect Innovative Drug ETF Huabao (520880), which has a 100% allocation to innovative drug companies, peaked at an intraday high of 6.15% before closing up 6.04%. AI-driven drug development continued to gain momentum, with the three giants of the WuXi group rising in tandem. The underlying index of the Hong Kong Stock Connect Medical ETF Huabao (159137), which has nearly 70% exposure to AI pharmaceutical companies, closed up 3.82%. A-share medical and healthcare sectors also delivered impressive results, with the underlying indices of the Pharmaceutical ETF Huabao (562050) and the Medical ETF Huabao (512170) rising over 3% and 2%, respectively.
The core catalyst for this rally was the joint release of the "15th Five-Year Plan for the Development of the Pharmaceutical Industry" by ten government departments, including the Ministry of Industry and Information Technology. Shanxi Securities pointed out that the plan sets an average annual growth target of over 20% for the scale of the innovative drug industry, clearly establishing innovation as the primary theme, and recommends focusing on three main investment lines: innovative drugs, CXO, and AI-driven pharmaceuticals. The real estate sector continued its explosive surge, with Greenland Holdings Corporation Limited and China Vanke Co.,Ltd. both hitting their second consecutive daily limit-up. The underlying index of the Real Estate ETF Huabao (159707), which focuses on central state-owned enterprises (SOEs) and high-quality developers, rallied 5.33%, securing its fourth consecutive day of gains.
On the news front, the newly revised regulations for the Housing Provident Fund Management took effect on September 20th, expanding the scenarios for fund withdrawal from six to nine categories, adding new provisions for home renovation and property management fees. Ping An Securities noted that from January to August, the contracted area of second-hand home sales nationwide reached 550 million square meters, a year-on-year increase of 10.6%, surpassing new home sales and marking the official entry into the era of the existing housing stock. Industrial Securities believes that under the current-house-sales system, the payment collection cycle for developers has lengthened, which could accelerate the industry's consolidation towards the top players, potentially making leading central SOEs the core beneficiaries.
Leading Hong Kong-listed internet companies moved higher collectively. Xiaomi Group-W rose over 4%, Alibaba-W gained more than 3%, and the underlying index of the Hong Kong Internet ETF Huabao (513770), which is heavily weighted towards cloud giants like Tencent Holdings and AI application companies across various sectors, closed up 1.72%. Since hitting its H2 low during intraday trading on September 17th, the Hong Kong internet sector has stabilized and recovered, securing its third consecutive day of gains. On the news front, Alibaba's Apsara Conference is scheduled to open tomorrow, which is expected to further strengthen the market's focus on the domestic Agent and AI cloud industry trends.
Looking ahead, Everbright Securities believes that with external disturbances diminishing, the market is likely to continue its upward recovery. On one hand, the Fed's "rate hike hurdle" has been cleared, and it is unlikely to continue with sustained or aggressive hikes, creating a relatively favorable external environment for equity markets. On the other hand, China and the US are in a new round of economic and trade consultations, signaling a positive shift towards a thaw in bilateral economic relations. Combined with the sustained and proactive efforts of domestic pro-growth policies and the gradual release of policy dividends across multiple sectors, the market is poised to gradually emerge into a repair phase. In terms of allocation, these institutions suggest focusing on three key directions: first, the hard technology track, concentrating on sectors like semiconductors, AI, and high-end manufacturing that possess core technological moats and import substitution logic; second, the policy chain, deploying along key policy focus areas, including consumption, real estate, infrastructure, and various sub-sectors; and third, bottom-up prosperous sectors such as agriculture, pharmaceuticals, and non-bank financials, which are driven by their own fundamentals and can offer excess returns during market volatility.
In the first highlight, dense positive catalysts fueled a broad surge in Hong Kong-listed pharmaceutical stocks, with innovative drugs staging a "triumphant return." Leading stocks exploded, with IMmunotech-B soaring 9.72%, Sino Biopharmaceutical climbing 8.23%, and others like CSPC Pharmaceutical Group, Innovent Biologics, and Kelun-Biotech all posting significant gains. The Hang Seng Hong Kong Stock Connect Innovative Drug Select Index, which has 100% exposure to innovative drug companies, closed up 6.04%. The Hong Kong Stock Connect Innovative Drug ETF Huabao (520880), which passively tracks this index, displayed strength throughout the day, breaking through four moving averages—the 10-day, 20-day, 60-day, and 250-day lines—in a single session.
AI-driven drug development continued to heat up, with the WuXi group's three giants rising together. Genscript Biotech extended its gains by 5.24%, hitting a new three-year high, while XtalPi Holdings, a pure-play AI pharmaceutical company, rose nearly 6%. The Hong Kong Stock Connect Medical Thematic Index, which has nearly 70% AI pharmaceutical exposure, closed up 3.82%, and the Hong Kong Stock Connect Medical ETF Huabao (159137), which tracks this index, closed at a nearly six-month high. The innovative drug chain is experiencing a broad-based breakout, fueled by a confluence of catalysts: the implementation of national-level top-down planning, validation of clinical data at WCLC, breakthroughs in AI-driven pharmaceutical development, and the clearing of the Fed's rate hike overhang, suggesting a new round of upside may be on the horizon.
On the policy front, the innovative drug industry has received another national-level strategic endorsement. The "15th Five-Year Plan for the Development of the Pharmaceutical Industry" specifies that by 2030, the innovative drug sector should achieve an average annual growth rate of over 20%, with first-in-class (FIC) drugs accounting for more than 25% of the global share. It also proposes to accelerate the paradigm shift in pharmaceutical R&D, diagnostics, and production management driven by artificial intelligence. On the news front, data for Chinese innovative drugs was prominently featured at WCLC. The 2026 World Conference on Lung Cancer saw record-breaking participation from Chinese innovative drugs, with 19 oral presentations and 45 mini-oral presentations selected.IMmunotech-B and Hansoh Pharmaceutical both validated core data. On the industry side, the industrialization of AI pharmaceuticals is accelerating. On September 18th, China's first original drug developed with AI assistance, Aipuswei, was approved for market. On the same day, XtalPi and Stanford University announced a drug discovery collaboration agreement. On the 16th, events included Eli Lilly's TuneLab partnering with Genscript, Novo Nordisk partnering with Anthropic, and ByteDance's AI pharmaceutical unit securing independent funding.
On the sentiment front, the overhang of Fed rate hikes has been removed. Although the Fed's dot plot signaled a hawkish stance, the market has largely interpreted this as "clearing the bad news," leading to a recovery in global risk appetite. Hong Kong Stock Connect innovative drug companies, being a rate-sensitive sector, are poised to benefit. For full-chain exposure to innovative drugs, two T+0 trading instruments are available: The Hong Kong Stock Connect Innovative Drug ETF Huabao (520880), whose underlying index allocates 100% to innovative drug R&D companies, with 70% of its weight in innovative drug development leaders. The OTC feeder fund is 025221. The Hong Kong Stock Connect Medical ETF Huabao (159137), whose underlying index has nearly 70% AI pharmaceutical content, with representative constituents including XtalPi Holdings, Genscript Biotech, and the WuXi trio. Its OTC feeder fund is 026922.
In the second highlight, the real estate sector continued its upward momentum, with leading developers showing exceptional resilience. China Vanke Co.,Ltd. and Greenland Holdings Corporation Limited both hit their second consecutive limit-up, Binjiang Group and Poly Developments rose over 6%, and China Merchants Shekou gained over 4%. Among popular ETFs, the Real Estate ETF Huabao (159707), which represents the A-share leading developer market, saw active trading with significantly increased capital attention, as its underlying index surged over 5% again. The latest view from Huabao Fund on the recent real estate rally is that three logics are resonating: policy system restructuring, structural stabilization in sales, and the industry's resource concentration towards the top players, highlighting the allocation value of leading developers.
From a policy perspective, Huabao Fund noted that since September, real estate policies have shifted from phased easing to institutional restructuring. The existing-home inventory tone, the advancement of three foundational systems, the revision of provident fund regulations, and the implementation of local rules form the policy backdrop for this round of rally. Under the current policy framework, the industry landscape is likely to accelerate its concentration towards the top. Leading central SOEs, which possess strong capital reserves, smooth financing channels, and a track record of delivering products that have stood the test of the market, are expected to become the core beneficiaries of this institutional transformation. On the sales front, Huabao Fund pointed out the trend of "weak new home sales, strong existing home sales," with leading companies and core cities stabilizing first, and industry concentration accelerating.
From January to August 2026, development investment decreased by 19.9% year-on-year, new home sales area fell 12.1%, and sales value dropped 13.0%. However, existing home transaction area increased by 10.6%, accounting for 52% of total transactions. In August, new home prices in 70 cities fell 0.2% month-on-month and 3.3% year-on-year. Tier-1 city new home prices rose 0.1% month-on-month, with Shanghai up 0.4% month-on-month and 3.0% year-on-year. Tier-1 existing home prices have risen for six consecutive months. Beijing and Shanghai existing home transactions hit record highs for the period, with Beijing up 3.9% and Shanghai up 18.4%. Among the top 20 companies by equity sales, 17 are central SOEs. Furthermore, Huabao Fund believes that in the short term, the current-house-sales system will lengthen the payment collection cycle, transforming the industry towards a manufacturing-like model. Project launch timelines will extend from 6-10 months to 1.5-2.5 years, and the time to positive net cash flow will extend by 6-8 quarters. The available land acquisition funds may decline by 60%-80%, potentially narrowing to 30%-40% considering installment payments. In the medium-to-long term, supply-demand dynamics are improving, with land acquisition and new home sales value potentially bottoming out. Existing home sales will absorb spillover demand, and sales value is expected to expand steadily. New home prices in core tier-1 and tier-2 areas are likely to see moderate growth.
Leading developers, leveraging their land reserves and strong sales velocity, will see resources concentrate towards top companies with strong capital and low financing costs. From a valuation perspective, leading developers, represented by central SOEs and high-quality companies, remain at trough levels. As of September 21st, the CSI 800 Real Estate Index's PB valuation was only 0.5 times, lower than approximately 97% of the time over the past decade, clearly indicating a low-valuation position with substantial room for recovery. For exposure to central SOEs and high-quality developers, the Real Estate ETF Huabao (159707) is worth attention.
In the third highlight, major internet companies moved higher collectively. Xiaomi Group-W rose over 4%, Alibaba-W gained more than 3%, Tencent Holdings was up over 2%, and Meituan-W added more than 1%. The underlying index of the Hong Kong Internet ETF Huabao (513770) closed up 1.72%. Since hitting its H2 low during intraday trading on September 17th, the Hong Kong internet sector has stabilized and recovered, securing a third consecutive day of gains. With the Fed's rate hike decision out of the way, interest rate volatility has declined, and pessimism under liquidity constraints has cooled. Institutions believe the Hong Kong market has short-term rebound potential. On September 21st, the US Treasury Secretary's remarks on debt buyback operations, aimed at increasing liquidity and managing the term structure, were interpreted by the market as a dovish signal, prompting buying in global risk assets. Along with the initiation of consultations between Chinese and US trade teams, Hong Kong market sentiment is undergoing a repair.
On the industry front, Alibaba's Apsara Conference is set to open tomorrow, themed "Intelligence in Action" with Agentic AI at its core, where Alibaba Cloud's core technologies and annual products will be unveiled. New models, new Agents, progress in AI infrastructure upgrades, and data on AI product commercialization and customer adoption are expected to attract market attention, providing new catalysts for the sector. Shenwan Hongyuan Securities noted that the Apsara Conference is expected to further strengthen the market's focus on the domestic Agent and AI cloud industry trends. Both Alibaba and Tencent possess advantages in models, computing infrastructure, and high-frequency application entry points. As Agents progressively move from demo to real production environments, model invocation volumes, inference demand, and corporate AI spending are expected to continue growing. Alibaba Cloud is well-positioned to benefit from the "Model + Agent + Cloud" integrated trend. Furthermore, the "Model + Application + Cloud" closed loop at Tencent is also worth monitoring.
After the pullback in August, Hong Kong internet stocks are once again in a high-value territory. As of September 18th, the CSI Hong Kong Stock Connect Internet Index had a PE (TTM) of 19.58 times, sitting at only the 6.23rd percentile over the past decade. With continued AI development and accelerating commercialization, the Hong Kong internet sector is poised for strategic investment opportunities driven by both earnings growth and valuation recovery. The Hong Kong Internet ETF Huabao (513770) passively tracks the CSI Hong Kong Stock Connect Internet Index, with heavy weights in cloud giants like Alibaba-W and Tencent Holdings, alongside AI application companies across various sectors. Its top ten constituents account for over 83% of the total weight, showcasing significant leadership advantages. It supports intraday T+0 trading and offers excellent liquidity. OTC investors can consider the feeder funds (Class A: 017125, Class C: 017126).
Note: Fees are detailed in the respective fund legal documents. Data sourced from public information from the Shanghai, Shenzhen, and Hong Kong exchanges, as of September 21, 2026. Reminder: Market volatility may be significant in the near term, and short-term gains or losses do not predict future performance. Investors are advised to invest rationally based on their own capital position and risk tolerance, paying close attention to position and risk management. The "AI pharmaceutical content" note: The Hong Kong Stock Connect Medical ETF Huabao tracks the CSI Hong Kong Stock Connect Medical Thematic Index, which covers 17 AI-pharmaceutical related constituents, including pure AI pharmaceutical platforms, AI+CRO, and innovative drug companies with AI pharmaceutical initiatives, with a combined weight of 69.52%.
The views and outlook presented here are for reference only and do not constitute investment advice. Investors should carefully read fund legal documents such as the Fund Contract, Prospectus, and Fund Product Information Summary to understand the risk-return characteristics and choose products that match their own risk tolerance. Past performance of funds does not indicate future returns, and performance of other funds managed by the fund manager does not constitute a guarantee of fund performance.
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