On January 19th, Hong Kong stocks traded in negative territory throughout the session, with the Hang Seng Index closing down 0.76%. Among industry sectors, pharmaceuticals experienced deeper losses: the innovative drug industry chain saw a full-scale adjustment, AI healthcare concept stocks such as Ali Health continued their decline, and the Huabao Hong Kong Stock Connect Healthcare ETF (159137), which aggregates leading medical companies, alongside the Hong Kong Stock Connect Innovative Drug ETF (520880), which has a 100% allocation to innovative drugs, both fell by over 2%.
Looking specifically at the innovative drug sector, major heavyweight leaders were collectively in the red: Sino Biopharmaceutical fell 6.19%, Akeso declined 3%, Innovent Biologics and Hansoh Pharma dropped over 4%, and 3SBio decreased by 5.51%.
The Hong Kong Stock Connect Innovative Drug ETF (520880) closed down 2.72%, marking its third consecutive negative session and breaching both its 10-day and 60-day moving averages. It traded at a significant premium on heavy volume, with a turnover of 390 million yuan, an increase of over 50% compared to the previous session.
What is behind the consecutive pullback in Hong Kong Stock Connect innovative drug stocks? Analysis suggests that the successive adjustments in Hong Kong-listed innovative drug stocks may result from a combination of sentiment digestion following the JPMorgan Healthcare Conference and cautious waiting ahead of earnings previews. The 44th JPMorgan Healthcare Conference concluded on January 15th. During the event, numerous Chinese innovative drug companies presented and disclosed pipeline progress. Market expectations had largely been priced in beforehand, leading to a potential observation period post-conference as the "good news is out." On the other hand, starting in January, many innovative drug companies will begin releasing their 2025 earnings previews. While awaiting concrete revenue and profit data, the market tends to shy away from uncertainty, particularly for companies that are not yet profitable or are in the early stages of commercialization, putting short-term valuation pressure on them.
With 520880 trading at a wide premium, is a new window for allocating to Hong Kong Stock Connect innovative drugs opening? The Hong Kong Stock Connect Innovative Drug ETF (520880) is fully invested in innovative drug R&D companies. Its continued trading at a premium during today's decline suggests potential funds entering the market on dips. Is the current moment a favorable time for allocation to the Hong Kong Stock Connect innovative drug sector? From a short-to-medium-term perspective, the 2025 earnings previews from leading pharmaceutical companies may hold promise, with better-than-expected results potentially offering valuation repair opportunities. Historically, the first quarter remains a period dense with overseas licensing deals; innovative drug companies possessing valuable pipelines that are not fully priced in—such as those with ADC, bispecific antibody, or small nucleic acid platforms—may warrant attention. Long-term fundamentals for the Hong Kong Stock Connect innovative drug sector remain solid: 1) Continued breakthroughs in出海: Data from PharmCube shows the total value of overseas licensing deals for innovative drugs reached $135.7 billion for the full year 2025, indicating growing global recognition of Chinese pharmaceutical R&D capabilities. 2) Sustained policy support: The National Medical Products Administration approved 76 innovative drugs in 2025, leading globally. Early in 2026, the NMPA continued to optimize the review and approval process for innovative drugs, advancing the "First-in-China" strategy.
Zhongtai International's February 2026 investment strategy for the pharmaceutical sector highlights continued focus on recommending the innovative drug segment. Similarly, Guosen Securities' January 2026 investment strategy for the pharmaceutical and biotechnology industry also recommends maintaining an overweight position in innovative drugs and their industrial chain.
For targeted investment in innovative drugs, consider the high-flexibility T+0 instrument—the Hong Kong Stock Connect Innovative Drug ETF (520880) and its off-exchange feeder fund (025221). The Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index it tracks boasts three distinct advantages, highlighting its allocation value: 1. Pure and Comprehensive. Excludes CXO companies, offering pure-play innovative drug exposure! Provides comprehensive coverage of innovative drug R&D companies. 2. High Concentration of Leaders. The top ten innovative drug leaders account for over 73% of the index weight, representing the core strength of the sector. 3. More Controllable Risk. Imposes mandatory weight reductions on constituents with poor liquidity, effectively managing tail risks.
Data Source: Shanghai, Shenzhen, and Hong Kong Stock Exchanges, public information. Note: The ETF funds mentioned herein do not charge a sales service fee. When investors subscribe for or redeem fund units, the subscription/redemption agency may charge a commission of up to 0.5%, which includes relevant fees charged by the stock exchange and registration institutions. The Hong Kong Stock Connect Innovative Drug ETF Feeder Fund C Share Class does not charge a subscription fee; the redemption fee is 1.5% within 7 days and 0% for 7 days (inclusive) or more; the sales service fee is 0.2%. Risk Warning: The index constituents listed are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings or trading动向 of any fund managed by the management company. The fund manager assesses the risk rating of the Huabao Hong Kong Stock Connect Healthcare ETF and the Hong Kong Stock Connect Innovative Drug ETF 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, and investors are responsible for any independent investment decisions. Furthermore, any views, analysis, or predictions in this article do not constitute investment advice of any kind to the reader, nor shall they be held liable 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 the fund is not indicative of its future results. Fund investment carries risks, and fund investment must be approached with caution.
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