Hexun Investment Advisor Zeng Yuhao: Innovative drugs are just the beginning; in April, attention should still be paid to consumption

On March 31, He Xun Investment Advisory’s Yu Hao Zeng said, “Below 4,000 points, which sector will see a big breakout? I’ve already emphasized that for a week. Why has the entire pharmaceutical sector—especially innovative drugs—led the whole market over the past week, and today it has even come with a major surge?

The line from my video yesterday is the best answer: When the index is oscillating in the 3,800–4,000 point range, buy on pullbacks in two key-weight sectors—Financials, looking at brokers, and Consumer, looking at innovative drugs. One is responsible for the offensive, and the other for defense. Plainly speaking, if these two sectors can’t move, then you really shouldn’t play A-shares for the time being.

Innovative drugs have only been up for a few days, and many people are already thinking about taking profits. But what the main forces want is a clear, flag-waving switch between leadership and lagging. In April, everyone should put aside other distractions and remember these three points: First, high-level big technology has tortured retail investors badly; Second, with 2 trillion in trading value, high-priced stocks will only bleed slowly; Third, this month is earnings season, and the market style is naturally unfavorable to tech stocks.

And innovative drugs combine the defensive attributes of consumer stocks with the price elasticity of technology, so they’re not only stable, but also have a fierce rally—everyone has seen it. In the front ranks of the pharma sector, the past few days have already gained about 30 to 40 percentage points.

Someone may question whether innovative drugs have no performance. Actually, many people may not understand these data: This year’s Q1 overseas licensing for China’s innovative drug industry reached $60 billion. Among 21 major deals worldwide, 15 came from China, and multiple industry leaders returned to profitability. Without even talking about leaders’ profits, last year saw STAR Market’s 28 innovative drug companies achieve overall profitability for the first time. From 2022 to 2024, 40 representative A-share companies in total recorded losses of 18 billion, while in 2025 they posted profits of 2.8 billion—across the whole industry, the trend is improving.

If you ignore these data, you’d think that innovative drugs don’t have staying power. Even more importantly, when you look at the K-line chart and the trend, from the adjustment period starting last August to this March, innovative drugs—and the entire pharmaceutical sector—have for half a year essentially acted as the “blood pack” for tech stocks. Now that tech stocks are facing pressure in the current phase, with the balance of offense and defense reversed, doesn’t the main force know to push a sector with looser structure and healthier chips?

So, it’s still the three things I said yesterday: First, follow the slow bull market and buy on pullbacks in key-weight sectors. Second, view the new energy sector in extreme terms—look only at the best and the worst. Third, when the consumption outlook is the worst, that’s actually when it’s best.”