The AACR Annual Meeting is coming soon. Stay tuned to the SciTech Innovation Drug ETF (589720) and the Hang Seng Biotech ETF (520930).

On April 1, the innovative drug sector was active. The Sci-Tech Innovation Drug ETF (589720) surged 7.42%, the Hang Seng Biotech ETF (520930) rose 6.41%, and the Innovation Drug ETF (517110) jumped 5.79%.

As panic sentiment eased and liquidity warmed up somewhat, it may drive a rebound after oversold conditions in the innovative drug sector. As of March 27, 10 innovative drugs have already been approved for listing in 2026, including 8 domestic innovative drugs, reaching a new historical high for the same period. In terms of performance, the annual reports of leading A+H innovative drug companies are nearing their end; a number of innovative drug companies turned profitable for the first time, multiple companies’ net profits doubled; core pipeline commercialization delivered successful scale-up; and cash flows continued to improve, with many performance highlights emerging.

Regarding the news, the American Association for Cancer Research (AACR) annual meeting will be held in San Diego, the United States, from April 17–22, 2026. This year, more than 100 Chinese pharmaceutical companies will appear at AACR, bringing nearly 400 research findings, covering multiple current popular targets and several cutting-edge technologies.

Due to liquidity shocks caused by global geopolitical conflicts, as well as the earlier escalation of rate-hike expectations, the A/H valuations of the sector are still in a historically low position around the middle-term core range before the market breakout in early April 2025. The inflection in head companies’ earnings and improvement in cash flows may provide left-side support for the sector. Previously, throughout the whole market, the allocation ratio of public mutual funds to medical and biological sectors (especially innovative drugs) dropped to an extremely low historical percentile, leaving the sector’s holdings clean. Since last Friday, funds have shown a return to innovative drugs, and during this week’s high market volatility, it has displayed strong resilience against declines. This may reflect that the previous pullback already priced in a favorable sector value proposition, and that funds are willing to participate in a repair driven by fundamentals that are currently solid combined with valuations at low levels.

Interestingly, last year on April 1, the innovative drug sector also surged. At that time, innovative drugs received multiple positive catalysts: dense BD orders were executed, the earnings of leading companies rebounded, and several pharmaceutical companies achieved high revenue growth or turned profitable. Back then, after experiencing a prolonged four-year period of sluggish performance, the innovative drug sector finally saw a turnaround.

Coming back to today, the external environment still has uncertainties. In the short term, the innovative drug sector may still show a choppy upward trend. Investors who are interested may consider monitoring changes in liquidity and risk preferences and entering in batches on pullbacks.

Risk Warning:

Investors should fully understand the differences between fund regular investment plans (dollar-cost averaging) and savings methods such as periodic lump-sum deposits (zero-balance rollovers). Regular investment plans guide investors toward long-term investing and are a simple and practical way to average investment costs. However, regular investment plans cannot avoid risks inherent in fund investing, cannot guarantee that investors will obtain returns, and are not a substitute for the equivalent financial management method of savings.

Whether it is a stock ETF/LOF fund, it belongs to securities investment fund products with relatively high expected risk and expected returns. Its expected return and expected risk levels are higher than those of balanced funds, bond funds, and money market funds.

When fund assets invest in stocks listed on the STAR Market and the ChiNext Board, they will face unique risks arising from differences in the investment targets, market systems, trading rules, and so on. Investors are reminded to take note.

Short-term sector/fund percentage changes are shown only as supplementary materials to support the article’s analytical viewpoint; they are for reference only and do not constitute any guarantee of fund performance.

Short-term performance of individual stocks mentioned in the article is for reference only; it does not constitute a stock recommendation, nor does it constitute any forecast or guarantee of fund performance.

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The Daily Economic News

(Editor: Dong Pingping)

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