Performance + Going global, two core supports! Innovative drugs are active against the trend, 520880 continues to rise successfully, and the drug ETF has surpassed the half-year line!

Geopolitical situations are complex and ever-changing, with increased volatility in the AH market. This afternoon (April 2), A-shares and Hong Kong stocks accelerated their decline, with the Shanghai Composite and Hang Seng Index both closing down 0.7%. The hot trend of innovative drugs that surged yesterday remains strong, with many stocks defying the market to rise!

Hong Kong Stock Connect innovative drug stocks exhibit high elasticity and high volatility, with seven stocks such as Weili Zhibo-B, Yingxi Intelligent, and BaiAo SaiTu-B fluctuating over 10%. The Hong Kong Stock Connect Innovation Drug ETF Huabao (520880), the 100% innovative drug R&D target, reached a high of 2.5 in the morning session and ultimately closed up 0.19%, holding the half-year moving average. Yesterday, 520880 surged nearly 7%, setting a record for the largest single-day increase.

The A-share pharmaceutical sector shows mixed gains and losses. Leading innovative drug company San Sheng Guo Jian soared 13%, hitting a new high! Traditional Chinese medicine leader Yunnan Baiyao and Jichuan Pharmaceutical also contributed, with the only pharmaceutical sector ETF Huabao (562050) closing up 0.58%, defying the trend with consecutive positive days, and closing above the half-year moving average.

News-wise, San Sheng Guo Jian’s 2025 performance greatly exceeded expectations! Operating revenue reached 4.2 billion yuan, up 252.63% year-on-year; net profit attributable to shareholders was 2.9 billion yuan, up 311.5% year-on-year; non-recurring net profit was 2.77 billion yuan, a staggering increase of 1025%.

Recently, innovative drugs have repeatedly led the entire market, with related ETFs like 520880 frequently hitting new daily涨幅 records. Amid deep market adjustments, innovative drugs still outperform, demonstrating resilience. There may be two core supports behind this trend.

Fundamentally, by 2025, many innovative drug companies such as Cinda Biologics, Rongchang Biologics, BeiGene, NuoCheng Jianhua, Lepu Biopharma, Sihuan Pharmaceutical, and CanSino Biologics are collectively returning to profit, potentially marking the start of an industry profit cycle. As these companies strengthen their own cash-generating capabilities, their valuations will be less affected by changes in interest rate expectations.

On the international front, in the first quarter of 2026, China’s innovative drug licensing (BD) transactions reached 53 deals, with upfront payments exceeding $3.3 billion, and total transaction volume surpassing $60 billion, nearly half of the total for all of 2025.

According to estimates by Pharma Magic Cube and Dongwu Securities, by 2030, China’s innovative drug market size (including hospital sales, off-site sales, BD upfront payments and milestones, and sales sharing) is expected to exceed 2 trillion RMB, with a compound annual growth rate of 24.1%.

Additionally, it’s worth noting that the innovative drug sector has relative immunity to geopolitical conflicts, making it potentially highly cost-effective for allocation in today’s uncertain market environment. To effectively follow the innovative drug rebound, two key tools are recommended:

For investing in innovative drugs, choose the Hong Kong Stock Connect Innovation Drug ETF Huabao (520880), which is 100% invested in innovative drug R&D companies, with over 70% of the top ten holdings, highlighting its leading attributes. Its underlying assets are Hong Kong stocks, offering high elasticity and T+0 trading.

To reduce volatility, consider the Huabao (562050) drug ETF, which has an exclusive allocation of “70% innovative drugs + 30% Chinese medicine,” a rare market offering that combines high-growth potential of innovative drugs with high dividend yields from Chinese medicine, providing both upside and defensive features.

Data sources: China Securities Index Co., Ltd., Shanghai, Shenzhen, and Hong Kong Exchanges, etc. Note: ETF funds do not charge sales service fees. When investors subscribe or redeem fund shares, the broker acting as agent may charge a commission up to 0.5%, including related fees from stock exchanges and registries. For detailed fund fee rates, see each fund’s legal documents.

Risk reminder: The index component stocks mentioned are for display only; individual stock descriptions are not investment advice and do not reflect holdings or trading trends of any fund managed by the fund manager. The risk level of the Huabao drug ETF and its linked funds is rated R3—medium risk, suitable for balanced (C3) and above investors; the Hong Kong Stock Connect Innovation Drug ETF Huabao and its linked funds are rated R4—medium-high risk, suitable for active (C4) and above investors. All information in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, or any form of expression) is for reference only. Investors are responsible for their own investment decisions. The opinions, analysis, and forecasts in this article do not constitute investment advice and do not bear responsibility for any direct or indirect losses resulting from the use of this content. Past performance of other funds managed by the fund manager does not guarantee future results; all investments carry risks.

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