【Overview】Hong Kong Stock Connect Medical ETFs “took over” the gainers list—an investment map at a glance
China Fund News reporter Cao Wenjing
On August 25, the A-share market saw intraday fluctuations, with the three major indices moving in different directions.
As for ETFs, driven by related news, ETFs related to healthcare, robotics, and biopharmaceuticals delivered outstanding performance.
Gold-stock ETFs, rare-metals ETFs, and non-ferrous mining ETFs were among the biggest decliners.
Hong Kong Stock Connect Medical ETF “took over” the gainers list
Today, Hong Kong stock healthcare sector saw a collective rally. The Huabao Hong Kong Stock Connect Medical ETF rose nearly 4.7%, while the Huaxia Hong Kong Stock Connect Medical ETF and the Yongying Hong Kong Stock Connect Medical ETF gained more than 4%. The Silver Age Hong Kong Stock Connect Medical ETF, the CSI Huaxia Hong Kong Stock Connect Medical ETF, the Harvest Hong Kong Stock Connect Medical ETF, the E Fund Hong Kong Stock Connect Medical ETF, and others all rose by more than 3%.
Yongying Fund said that last night, several CXO companies released their mid-year reports. Among them, two Hong Kong-listed medical constituent stocks achieved net profit growth rates of 37.4% and 12.9% respectively in the first half of this year (excluding the impact of exchange rate effects). In addition, the high-growth order situation is impressive. One of the above companies reported a year-on-year growth rate in new orders of 54.59% in the first half, while another company’s order growth rate was 50.4%—laying a solid foundation for further acceleration in earnings growth. Currently, the healthcare sector is in an innovation-accelerating cycle. New technologies such as mRNA vaccines and AI-based drug discovery are emerging one after another, bringing benefits to patients worldwide and also creating new growth opportunities for the industry. The medium- to long-term investment value of the healthcare sector should not be overlooked.
On the policy front, on August 24, the NMPA held an expanded meeting of its executive bureau. It proposed to establish a “services + review and approval” mechanism to accelerate achievement transformation through efficient services. It also supports the high-quality development of generic drugs, strengthens medicine supply safeguards for special populations, expands high-level opening to the outside world, and calls for accelerating the development of a prevention-oriented regulatory model and advancing the construction of smart regulation.
Multiple brokerage research reports believe that AI4S has entered the 3.0 stage. Research-intelligence agents and unmanned laboratories are accelerating upgrades to the research paradigm. AI-based drug discovery is moving from model innovation toward a closed-loop between “dry” and “wet” processes. Upstream research services are the first to see a surge in demand. Meanwhile, financing for innovative drugs and outsourcing rates improve in parallel. A new round of the industry’s upcycle for China’s CXO is gradually taking shape, and the CXO sector may see earnings and valuation resonate together.
Overview of the investment map for Hong Kong-listed medical-related ETFs
Among the Hong Kong-listed medical-related ETF products that have led the market today in terms of price increase, what are the differences and how should investors choose?
The Hong Kong-listed medical ETF closely tracks the CSI Hong Kong Stock Connect Medical Theme Index. This index has a CXO weighting of 52.25%, the highest CXO weighting among all medical theme indexes in the market. The Wuxi AppTec group’s weight is 35.31%, the number one position in the whole market. It also includes leaders in CXO/CDMO, leaders in AI drug discovery and internet healthcare, combining “overseas expansion” upside with performance validation from the order side. The top ten holdings of the index are WuXi Biologics, Wuxi AppTec, JD Health, GenScript Biotech, WuXi Advanced Therapies, Jingjie Huasheng, Sinopharm, Alibaba Health, CSPC Pharmaceutical Group, and BeiGene.
The largest by size is the Yongying Hong Kong-listed Medical ETF, with the latest size of RMB 387 million.
The Biopharmaceutical ETF tracks the CSI Biopharmaceutical Index. The index focuses on sub-sectors of the A-share biopharmaceutical industry’s core leading companies, with relatively large weightings in frontier areas such as CXO (pharmaceutical R&D outsourcing), vaccines, and innovative drugs. Among these, the manufacturing industry (pharmaceuticals, biological products, etc.) accounts for about 71%—76%, while the scientific research and technical services industry (mainly CXO) accounts for about 21%—23%.
The largest by size is the Biopharmaceutical ETF by Tianhong Fund, with the latest size of RMB 4.024 billion.
The index tracked by the Hong Kong-listed innovative drug ETF is the CSI Hong Kong Stock Connect Innovative Drug Index. The index focuses on innovative drug companies within the Hong Kong Stock Connect scope, and the concentration of the top ten weight stocks reaches as high as 70%. The holdings are highly concentrated in companies such as Kangfang Bio, Innovent Biologics, CSPC Pharmaceutical Group, and BeiGene.
The largest by size is the Hang Seng Index Innovation Drug ETF (China AMC?—as named), Harvest Fund (with latest size of RMB 24.333 billion).
Finally, without further ado, “on the menu.”
Investment involves risk; be cautious when entering the market!
Edited by: Zhao Xinliang
Proofread by: Wang Yue
Produced by: Lami
Review: Xu Wen
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