Innovative drug profit feast! Hong Kong Stock Connect innovative drugs are active against the market trend, with 520880 outperforming the market. Heavy catalysts arrive in April!

The situation in the Middle East has changed again, leading to a sharp decline in the Hong Kong stock market. In the afternoon of the 26th, the Hang Seng Index accelerated its downward trend, closing down 1.89%. The previously strong pharmaceutical sector turned negative, with the 100% innovative drug development target — the Hong Kong Stock Connect Innovative Drug ETF from Huabao (520880) and the core medical assets in Hong Kong — the Hong Kong Stock Connect Medical ETF from Huabao (159137) halting their two-day winning streak, with fluctuations exceeding 3.5% for both.

The resilience of the Hong Kong Stock Connect innovative drug sector was highlighted, as the Hong Kong Stock Connect Innovative Drug ETF from Huabao (520880) rose nearly 2% at one point during the morning session, ultimately closing down 0.63%, although the decline was significantly less than the broader market. Among the constituent stocks, China Resources Pharmaceutical led with a gain of 7.24%, Lepu Biopharma-B rose 4.67%, and the heavyweight stock Kangfang Biotech increased by 1.56%. On the downside, Innovent Biologics and CSPC Pharmaceutical Group fell over 3.8%, while BeiGene fell nearly 2%.

Strong performance supports the sector’s momentum. Currently, the Hong Kong Stock Connect Innovative Drug ETF from Huabao (520880) has 22 constituent stocks that have released their 2025 annual reports, of which 12 innovative drug development companies achieved profitability, and 13 companies reported double-digit year-on-year net profit growth, with Hutchison MediPharma’s net profit surging over 11 times, while Innovent Biologics, Lepu Biopharma-B, and BeiGene all saw their net profits double.

As companies in innovative drug development accelerate into a harvest period, the corresponding bottom region allocation opportunities in the sector are becoming increasingly prominent. In the secondary market, the Hong Kong Stock Connect Innovative Drug sector has been in a phase of adjustment since September of last year. This past Monday (March 23), the on-market price of the Hong Kong Stock Connect Innovative Drug ETF (520880) hit a new low since its listing.

Looking ahead, significant catalytic events for innovative drugs are on the horizon, making this a relatively good allocation window. The AACR Annual Meeting will be held in San Diego, USA from April 17-22, 2026. According to incomplete statistics, 104 Chinese pharmaceutical companies will showcase over 250 innovative drugs at this conference, significantly increasing the visibility of Chinese innovative drug companies.

Low-level acquisition of core Hong Kong pharmaceutical assets, focusing on two T+0 tools:

Invest in innovative drugs, choose the Hong Kong Stock Connect Innovative Drug ETF from Huabao (520880), 100% focused on innovative drug development companies, with the top ten weighted stocks accounting for over 70%, showcasing prominent leading attributes.

Invest in healthcare, choose the Hong Kong Stock Connect Medical ETF from Huabao (159137), with about 70% of positions allocated to CXO+AI healthcare, balancing innovative drugs + medical devices (including brain-machine interfaces), with the top ten weighted stocks including leading internet healthcare companies like JD Health and Alibaba Health.

Data source: China Securities Index Company, Shanghai and Shenzhen Stock Exchanges, etc. Note: ETF funds do not charge sales service fees. When investors subscribe to or redeem fund shares, the brokerage handling the subscription and redemption may charge a commission not exceeding 0.5%, which includes related fees charged by the securities exchange, registration agency, etc. Fund rates are detailed in each fund’s legal documents.

Risk warning: The index constituent stocks mentioned are for display purposes only, and descriptions of individual stocks do not constitute any form of investment advice, nor do they represent any fund holdings or trading directions under the manager. The risk level assessed by the fund manager for the Hong Kong Stock Connect Innovative Drug ETF and the Hong Kong Stock Connect Medical ETF from Huabao is R4 - medium to high risk, suitable for aggressive investors (C4) and above. Any information appearing in this article (including but not limited to individual stocks, comments, predictions, charts, indicators, theories, and any form of expression) is for reference only, and investors must be responsible for any investment decisions they make independently. Additionally, any viewpoints, analyses, and predictions in this article do not constitute any form of investment advice to readers, nor does it bear any responsibility for direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not constitute a guarantee of fund performance, and past performance does not represent future results; fund investments carry risks.