On January 22, the Hong Kong Stock Connect innovative drug sector adjusted for the sixth consecutive day, with the Hong Kong Stock Connect Innovative Drug ETF (520880) opening high but trading lower, currently down 0.75% with a turnover of 200 million yuan. Heavyweight constituents broadly declined, with Sino Biopharmaceutical falling over 2.5% and Innovent Biologics dropping more than 1%.
As prices retreated again, bargain-hunting capital surged, continuously driving up the intraday premium of 520880. Over the previous three trading sessions, more than 155 million yuan flowed into the ETF during declines, pushing its latest fund unit count to 4.382 billion shares and fund size to 2.348 billion yuan - both setting new record highs since its listing!
The Hong Kong Stock Connect Innovative Drug ETF (520880) maintains 100% exposure to innovative drug R&D companies and has frequently attracted capital inflows recently. Is this the opportune moment for phased allocation to innovative drugs? From a short-to-medium-term perspective, leading pharmaceutical companies' 2025 performance forecasts may hold promising surprises, with better-than-expected results potentially driving valuation recovery opportunities. Historically, the first quarter remains a peak period for overseas licensing deals, making innovative drug firms with valuable pipelines yet undervalued (such as those possessing ADC, bispecific antibody, or small nucleic acid platforms) particularly noteworthy.
Long-term fundamentals for the Hong Kong Stock Connect innovative drug sector remain robust: 1) Continuous overseas breakthroughs: Pharmaceutical industry data shows full-year 2025 overseas licensing value for innovative drugs reached $135.7 billion, indicating growing global recognition of Chinese pharma's R&D capabilities. 2) Sustained policy support: The National Medical Products Administration approved 76 innovative drugs in 2025, ranking first globally. Early 2026 saw continued optimization of innovative drug review and approval processes, advancing the "China First" strategic implementation.
Zhongtai International's February 2026 pharmaceutical investment strategy highlights innovative drugs as a key recommendation. Guosen Securities' January 2026 pharmaceutical and biotechnology sector report similarly maintains overweight ratings on innovative drugs and related industrial chains.
For streamlined innovative drug investment, identify the high-flexibility T+0 instrument—Hong Kong Stock Connect Innovative Drug ETF (520880) and its off-exchange feeder fund (025221). The underlying Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index boasts three distinctive advantages with prominent allocation value: 1) Pure and comprehensive exposure. Excludes CXO companies for genuine innovative drug focus, providing comprehensive coverage of innovative drug R&D firms. 2) Dominant龙头 weighting. Top ten innovative drug leaders constitute over 73% weighting, representing core innovative drug strength. 3) Enhanced risk control. Mandatory reduction of illiquid constituent weights effectively manages tail risks.
Data source: Shanghai, Shenzhen and Hong Kong stock exchanges, public information. Note: The mentioned ETF charges no sales service fee. Subscription/redemption agents may charge up to 0.5% commission including exchange and registration fees. The feeder fund C class charges no subscription fee; redemption fee is 1.5% within 7 days, 0% after 7 days (inclusive); sales service fee is 0.2%. Risk disclosure: Index constituents are for display only. Individual stock descriptions don't constitute investment advice nor represent fund holdings. The fund manager assesses Hong Kong Stock Connect Healthcare ETF Huabao and Hong Kong Stock Connect Innovative Drug ETF as R4-medium-high risk, suitable for aggressive (C4) or higher investors. All information herein is for reference only - investors bear responsibility for independent investment decisions. Views and analysis constitute no investment advice, and we assume no liability for direct/indirect losses. Other fund performance doesn't guarantee future results - fund investment carries risks requiring caution.
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Editor: Gao Jia
