Surging and Pulling Back! CXO and Internet Healthcare Leading the Way, Huabao Fund Hong Kong Stock Connect Healthcare ETF (159137) Successfully Posts Consecutive Gains! Innovative Drug Stocks Show Divergence, 520880 Closes Flat on High Volume

On March 17, the Hong Kong stock market surged then pulled back, and the healthcare sector was no exception.

Hong Kong healthcare core assets—Hong Kong Stock Connect Healthcare ETF Huabao (159137)—touched a high of 3.38% in the morning session and ultimately closed up 0.44%, successfully extending gains for the day. Leading stocks in the CXO and internet healthcare sectors supported the index, with Kingsray Biotech rising 3.74%, WuXi Biologics and related stocks closing in the green, JD Health and Alibaba Health both closing higher, and Ping An Good Doctor up 2.77%.

Analysts pointed out that the healthcare sector currently offers multiple investment opportunities. The CXO industry is experiencing sustained growth driven by a rebound in overseas orders and domestic capacity clearing, with valuation still having room for recovery; medical devices benefit from policies supporting domestic equipment upgrades and expansion into overseas markets, with cutting-edge areas like brain-computer interfaces and AI imaging continuously catalyzing growth; internet healthcare is improving platform operational efficiency amid deeper reforms in medical insurance payments, making profit growth trajectories clearer.

There is no difference in the trend between innovative drugs and medical devices. The Hong Kong Stock Connect Innovation Drug ETF (520880), which is 100% focused on innovative drug R&D, briefly hit 3% in the morning but closed flat, maintaining high trading activity with a volume of 515 million yuan.

The leading stocks in innovative drugs are diverging. San Sheng Pharmaceutical led the gains throughout the day, with a peak increase of over 8%, after its ActRIIA/ActRIIB bispecific antibody SSS67 received FDA approval to begin clinical trials. BeiGene and China Biologic Pharma declined.

From an industry perspective, recently, domestically produced innovative drugs have shown excellent clinical data at academic conferences. Huayuan Pharmaceutical team noted that by 2026, IO2.0 (the next-generation cancer immunotherapy) will undergo further data validation, with ongoing investment opportunities in IO iteration. They remain optimistic about the logic of the innovative drug sector and emphasize bottom-up opportunities.

From an investment timing perspective, Hong Kong healthcare stocks have been adjusting since September last year and are now at a stage low, with leading stocks offering more attractive valuations. For those looking to position for a rebound, two T+0 tools are recommended:

• For healthcare investment, choose the Hong Kong Stock Connect Healthcare ETF Huabao (159137), with about 70% of holdings in CXO and AI healthcare, also including innovative drugs and medical devices (including brain-computer interfaces). Top ten holdings include JD Health, Alibaba Health, and other rare internet healthcare leaders.

• For innovative drugs, choose the Hong Kong Stock Connect Innovation Drug ETF (520880), fully allocated to innovative drug R&D companies, with over 70% of top ten holdings, highlighting strong leadership.

Data sources: China Securities Index Co., Ltd., Shanghai, Shenzhen, and Hong Kong Exchanges. Institutional opinion source: Huayuan Pharmaceutical 20260316 “[Huayuan Pharmaceutical | Innovative Drugs] IO2.0 is about to receive multiple catalysts; firmly optimistic about the sector’s logic and bottom opportunities.”

Note: ETF funds do not charge sales service fees. When investors subscribe or redeem fund units, the broker handling the transaction may charge a commission not exceeding 0.5%, which includes related fees from stock exchanges, registries, etc. For detailed fund fee rates, see each fund’s legal documents.

Risk warning: The constituent stocks of the indices mentioned are for display purposes only. Descriptions of individual stocks are not investment advice and do not represent holdings or trading trends of any fund managed by the fund manager. The risk level assessed for the Hong Kong Stock Connect Innovation Drug ETF and Hong Kong Stock Connect Healthcare ETF Huabao is R4—medium-high risk, suitable for active investors (C4) and above. All information in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, or any other statements) is for reference only. Investors are responsible for their own investment decisions. The views, analyses, and forecasts in this article do not constitute investment advice and do not hold the fund manager liable 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. Investing in funds involves risks.

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